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Senate budget committee hears governor's 2026–27 proposal as LAO warns of revenue downside risk
Summary
Department of Finance told the Senate the governor's 2026–27 budget is balanced in the budget year with $23 billion in reserves but carries a $2.9 billion budget‑year shortfall; the Legislative Analyst's Office cautioned that recent revenue gains are concentrated in the stock market and urged the Legislature to plan now for multiyear deficits rather than wait for the May revise.
The California State Senate Committee on Budget and Fiscal Review on Jan. 27 heard the Department of Finance and the Legislative Analyst's Office present the governor's proposed 2026–27 budget and field questions from members. Chair John Laird opened the hearing and emphasized public participation and an accelerated subcommittee schedule to consider the plan.
Erica Lee, chief deputy director at the Department of Finance, told the committee the governor's proposal would include about $350 billion in total expenditures, roughly $250 billion of that from the general fund, and carry a budget‑year shortfall of about $2.9 billion while holding approximately $23 billion in reserves. "The budget this year includes about $350,000,000,000 in expenditures, of which about $250,000,000,000 is general fund," Lee said. She said roughly $42 billion in upgraded revenue estimates underlie much of the administration's capacity to propose limited…
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