LAO: California May Revision rests on one‑time fixes; recommends $24 billion in general‑fund solutions

The Legislative Analyst's Office warned Assembly Budget Subcommittee No. 6 that California’s May Revision budget relies on one‑time resources and leaves the state with a structural deficit, and urged lawmakers to favor ongoing solutions and large prudential reserves.

"The budget is only balanced because of reliance on one‑time resources like reserves," Drew Soderborg of the LAO told the subcommittee. He said the office favors three steps: maintain proposed ongoing solutions, make a $20 billion discretionary deposit into the Budget Stabilization Account, and set aside $4 billion to pay for new borrowing — a package that would require identifying about $24 billion in additional general‑fund solutions relative to the May Revision.

The LAO recommended against approving new, uncertain spending unless the Legislature offsets it with dollar‑for‑dollar reductions elsewhere. "Practically, our recommendations mean not approving any new spending," Soderborg said.

Members used the LAO presentation as the baseline for questions across departments. Several lawmakers repeated the LAO’s caution when hearing separate departmental proposals — from court interpreter funding to prison staffing packages — asking officials to explain how each request would fit into the state’s limited fiscal room.

The subcommittee heard LAO cautions early in the session and did not take any votes; members signaled they will weigh these recommendations through the budget negotiations and asked departments for more detailed program metrics and trade‑off analyses.

What happens next: The May Revision moves into the full budget deliberation; lawmakers said they will weigh high‑priority proposals against the LAO’s recommendations on near‑term fiscal stability.