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

Jan 12, 2026 - Should a stock market downturn occur, income tax revenues would fall considerably. These risks are severe enough that not incorporating them into this year ’s budget, as the Governor proposes, would put the state on precarious footing.
https://lao.ca.gov/Publications/Report/5101

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - Consistent with these trends, collections from the sales tax and corporation tax (adjusted for recent policy changes) have posted below ‑average growth in recent months. Income Tax, Fueled by Exuberance Over Artificial Intelligence (AI), Remains Lone Bright Spot.
https://lao.ca.gov/Publications/Report/5091

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - After the special session, the sections were amended to allow funds to be used to reimburse local governments through June 2026 for (1)  unmet response and recovery costs, and (2)  lost property tax revenue.
https://lao.ca.gov/Publications/Report/5079

Rethinking California's Reserve Policy

Apr 10, 2025 - Proposition  4 sets up a system in which all tax revenues —with only limited exceptions —are counted at some level of government (for example, the state, or a city, county, or school district). Funds transferred between these entities of government are counted at some part of the structure.
https://lao.ca.gov/Publications/Report/5028

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

May 17, 2025 - This budget problem is driven by two key factors: higher baseline spending, most notably in Medi‑Cal, and lower revenues, reflecting diminished expectations for both the personal income tax and the corporation tax.
https://lao.ca.gov/Publications/Report/5044

The State Appropriations Limit

Apr 21, 2021 - For example, counties can use any of the following population adjustments in calculating their limits: ( 1)  t he change in population within the county, ( 2)  t he change in population in the county and all counties that have contiguous borders with it, or ( 3)  t he change in population within the incorporated portion of the county.
https://lao.ca.gov/Publications/Report/4416

The 2023-24 Budget: Overview of the Spending Plan (Final Version)

Oct 16, 2023 - The 2023 ‑24 total also includes $135  million for contingencies related to the 2023 storms —$40  million for the communities of Planada in Merced County and Pajaro in Monterey County, which experienced severe damage and displacement from the storms, and $95  million for other response and recovery activities.
https://lao.ca.gov/Publications/Report/4788

Flexible Funding to California in the American Rescue Plan

Mar 23, 2021 - Cities and counties will receive fiscal recovery funds based on a set of formulas that considers the jurisdiction ’s population, among other factors. The federal government will distribute funds directly to all counties and cities with populations greater than 50,000.
https://lao.ca.gov/Publications/Report/4407

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

Jan 13, 2025 - Significant Changes to Solutions From June 2024 Budget Package Managed Care Organization (MCO) Tax Package. Some of the largest budget solutions in the June budget package involved the MCO tax, a tax on health plans that supports the Medi ‑Cal program.
https://lao.ca.gov/Publications/Report/4951