The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - The 2026-27 Budget: California's Fiscal Outlook Executive Summary Not Safe to Bet Artificial Intelligence ( AI) Fueled Exuberance Is Sustainable. Both the California and U.S. economies currently face significant headwinds.
https://lao.ca.gov/Publications/Report/5091

The 2026-27 Budget: Overview of the Governor's Budget

Jan 12, 2026 - That said, recent budgets have set the SFEU bet ween $3.5  billion and $4.5  billion, so the Governor ’s budget proposal to set the balance to $4.5  billion is generally in line with recent policy.
https://lao.ca.gov/Publications/Report/5101

New Inflation Poses Not So New Budget Risk

Dec 15, 2022 - First, what is the main channel through which high inflation affects the state’s budget condition? Second, how exposed is the state’s cost structure to the effects of high inflation? The broader concerns related to inflation also give rise to an important question from the opposite direction: Should the Legislature consider whether its policy choices will influence the level or direction of inflation in the economy?
https://lao.ca.gov/Publications/Report/4653

California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - As we described in our November Fiscal Outlook , the recent stronger-than-expected revenue trends are almost entirely explained by the personal income tax (PIT), which has seen double digit growth this year.
https://lao.ca.gov/Publications/Report/5104

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - However, about $4  billion of the budget problem results from new, discretionary General Fund spending in the budget package, as well as some budget actions adopted in a special session, which we describe in the box below.
https://lao.ca.gov/Publications/Report/5079

The 2025-26 Budget: Initial Comments on the Governor's May Revision

May 17, 2025 - Revenues for prior and current years are up a total of $6  billion, primarily reflecting stronger ‑than ‑expect personal income tax collections which are running $4  billion ahead of prior projections as of April.
https://lao.ca.gov/Publications/Report/5044

The 2025-26 Budget: Undertaking Fiscal Oversight

Feb 24, 2025 - Notably, this figure excludes special funds, which support a variety of other programs (some of which are of interest to the Legislature, like unemployment insurance and high-speed rail). We focus on General Fund here because it is the state ’s main operating account and faces significant fiscal pressure in coming years.
https://lao.ca.gov/Publications/Report/4983

The 2025-26 Budget: Multiyear Budget Outlook

May 24, 2025 - The Legislature likely will need to adopt additional solutions that increase ongoing revenues or reduce ongoing spending —both of which involve the most difficult and consequential trade-offs for policy makers.
https://lao.ca.gov/Publications/Report/5052

Rethinking California's Reserve Policy

Apr 10, 2025 - This risk is larger for the capital gains approach—which relies on specific assumptions about inherently unpredictable capital gains—than our simpler alternative—which relies only on more general assumptions about revenue volatility broadly.
https://lao.ca.gov/Publications/Report/5028

The 2025-26 Budget: Overview of the Governor's Budget

Jan 13, 2025 - Some of the largest spending augmentations proposed include: (1) $60  million to provide additional grants under the Cal Competes program; (2)  the intent to partially restore an ongoing reduction to the trial courts, which, if enacted, would cost $42  million ongoing; and (3)  the Governor ’s proposed expansion to College Corps, which would cost $5  million in 2025 ‑26, but grow to $84  million  ongoing.
https://lao.ca.gov/Publications/Report/4951