The 2026-27 Budget: How to Use One-Time Revenue Improvements

Feb 20, 2026 - For example, we recommend the Legislature: Do Not Suspend the $3  Billion True Up Into the Budget Stabilization Account (BSA). The Governor ’s budget proposes suspending a roughly $3  billion true-up deposit that otherwise would be required in 2025-26.
https://lao.ca.gov/Publications/Report/5133

California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - To do this, we add a stock market indicator to our forecast models alongside other the economic variables. The added risk variable weighs on the range of revenue outcomes that we view as most plausible.
https://lao.ca.gov/Publications/Report/5104

Rethinking California's Reserve Policy

Apr 10, 2025 - For example, in 2018 ‑19, the Legislature created the Budget Deficit Savings Account —which was used to temporarily hold a $2.6  billion optional deposit into the BSA —and the Safety Net Reserve —a reserve specifically dedicated to CalWORKs and Medi ‑Cal.
https://lao.ca.gov/Publications/Report/5028

The State Appropriations Limit

Apr 21, 2021 - Since 2018, the Governor also declared states of emergency related to various wildfires. For example, the Governor declared a state of emergency related to the Camp wildfire on November 8, 2018, and related to the LNU Lightning Complex and other wildfires burning statewide on August  18, 2020.
https://lao.ca.gov/Publications/Report/4416

The 2023-24 Budget: Initial Comments on the Governor's May Revision

May 15, 2023 - The 2018‑19 budget created the Safety Net Reserve to set aside funds for future costs of two programs—CalWORKs and Medi‑Cal—in the event of a recession. Absent policy changes, these programs typically experience increased expenditures during a recession when unemployment increases and program caseloads rises.
https://lao.ca.gov/Publications/Report/4769

The 2022-23 Budget: State Appropriations Limit Implications

Mar 30, 2022 - (As of 2018 ‑19, cities and counties had over $150  billion in collective room under their limits. As a result, changing this definition is unlikely to result in very many local governments exceeding their limits.
https://lao.ca.gov/Publications/Report/4583

The 2021-22 Budget: The Governor’s Proposition 2 Proposals

Apr 26, 2021 - In particular, the Legislature deposited an additional $2  billion into the BSA in 2016-17 and an additional $2.6  billion in 2018-19. However, a portion of these deposits ultimately were used to fund required true ups.
https://lao.ca.gov/Publications/Report/4418

Flexible Funding to California in the American Rescue Plan

Mar 23, 2021 - The state is not expected to experience a reduction in General Fund revenue in 2020-21 or 2021-22 compared to 2018-19 (the baseline revenue year in the ARP). Specifically, General Fund revenues (excluding constitutional reserve deposits) were $143  billion in 2018-19, while comparable revenues for 2020-21 and 2021-22 currently are estimated to be $158  billion and $161  billion, respectively.
https://lao.ca.gov/Publications/Report/4407

The 2021-22 Budget: Initial Comments on the Governor’s May Revision

May 17, 2021 - The state is permitted to use the fiscal relief funds: (1)  to respond to the public health emergency or negative economic impacts associated with the emergency; (2)  to support essential work; (3)  to backfill a reduction in revenue that has occurred since 2018 ‑19; or (4)  for water, sewer, or broadband infrastructure.
https://lao.ca.gov/Publications/Report/4432

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - Second, while our revenue estimates hedge against a market downturn, they do not reflect the revenue declines the state would experience in a recession. Third, the state has used most of its budget resiliency tools to address prior deficits.
https://lao.ca.gov/Publications/Report/5091