California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - After the dot-com bust and the Great Recession, it took four and five years, respectively, for revenues to recover. Incorporating revenue risk into the budget now, therefore, reflects prudence, not pessimism.
https://lao.ca.gov/Publications/Report/5104

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - For California, the dot ‑com era —when stocks rose and then fell precipitously in response to widespread adoption of the internet —offers the most salient example. The internet has proven to be a transformative technology and, yet, the stock market ’s initial reaction was clearly overly exuberant.
https://lao.ca.gov/Publications/Report/5091

Whether or Not to Tap Reserves to Solve Estimated Budget Problem Emerges as Key Fiscal Decision Facing California’s Legislature

Apr 19, 2023 - Other downturns, such as the 2001 so-called dot-com recession, had severe fiscal implications while inflicting somewhat milder economic damage. The 2008 Great Recession had brutal effects on both the state ’s economy and budget.
https://lao.ca.gov/Publications/Report/4762

The 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - Three of those —the recession in the early 1990s, the dot ‑com bust in the early 2000s, and the Great Recession —resulted in large revenue shortfalls and ensuing multiyear deficits, even for some years after each recession ended.
https://lao.ca.gov/Publications/Report/4687

Rethinking California's Reserve Policy

Apr 10, 2025 - In March of 2004, on the heels of the dot ‑com bust, voters passed Proposition  58, which created the Budget Stabilization Account (BSA). In the 2006 ‑07 budget, the Legislature deposited $472  million into the BSA and in 2007 ‑08 deposited $1.5  billion.
https://lao.ca.gov/Publications/Report/5028

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

May 17, 2025 - We Estimate Governor Addressed a $14   Billion Budget Problem. Overall, our assessment of the state ’s budget condition for 2025 ‑26 is similar to that of the administration. While we estimate the administration addressed a $14  billion budget problem, the Governor cited a figure of $12  billion.
https://lao.ca.gov/Publications/Report/5044

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - This  budget problem is slightly higher than the one addressed by the Governor in the May Revision (around $14  billion), and results from two somewhat offsetting differences. First, compared to the May Revision, the final budget package assumed higher revenues in major taxes by $1.1  billion, reflecting cash receipts to date, which have come in slightly higher than the administration ’s May estimates.
https://lao.ca.gov/Publications/Report/5079

The State Appropriations Limit

Apr 21, 2021 - The state ’s appropriations subject to the limit fell substantially during the dot ‑com bust in the early 2000s and again during the Great Recession due to the significant decline in state revenues during those downturns.
https://lao.ca.gov/Publications/Report/4416

The 2025-26 Budget: Multiyear Budget Outlook

May 24, 2025 - In some cases, such as K-14 education and Department of Developmental Services, slower growth is primarily due to changes in our underlying assumptions. In others —most notably Medi-Cal —reduced growth mainly reflects the choices in the May Revision.
https://lao.ca.gov/Publications/Report/5052

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

May 17, 2025 - On May 14, 2025, Governor Newsom presented a revised state budget proposal to the Legislature. This annual proposed revised budget is referred to as the May Revision. In this brief, we provide a summary of and comments on the Governor’s revised budget, focusing on Governor’s proposals for and the overall condition of the state General Fund—the budget’s main operating account.
https://lao.ca.gov/Publications/Report/5044/2