Overview
- California’s nonpartisan analyst says the $349.9 billion May budget revision still leaves a structural deficit, with ongoing revenues falling short of ongoing costs.
- The plan balances on paper by pulling about $20 billion from reserves through withdrawals and skipped deposits and by borrowing roughly $4 billion.
- The administration says the approach keeps the next two budgets in balance and argues larger cushions would require deep cuts or higher taxes.
- The analyst projects operating gaps of about $10 billion a year from 2026–27 through 2029–30.
- Reserves would shrink to $19.5 billion by June 2027, and the office warns revenues tied to AI‑fueled stock gains could swing hard, prompting a call for about $24 billion in lasting fixes.