California Gov. Gavin Newsom speaks to reporters in Stockton, Calif., on Oct. 22, 2025. Justin Sullivan/Getty ImagesCalifornia is staring at another major budget shortfall, as the state’s nonpartisan Legislative Analyst’s Office (LAO) has projected that next year’s deficit will hit nearly $18 billion and described the state’s budget position as “relatively weak.”The LAO report, released on Nov. 19, is an early look at the 2026–2027 budget. It paints a picture of a state with growing obligations, slowing economic momentum, and fewer tools left to steady itself as it faces the prospect of the fourth straight year of operating in the red.
California Faces $18 Billion Deficit Next Year, Deepening Multiyear Budget Crisis
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