California Goes from a Surplus Budget Of $97 Billion in 2022 to Major Downturn
January 20, 2026
SACRAMENTO–California’s heavy reliance on wealthy earners’ income tax and capital gains caused a record $97.5 billion surplus in 2022 during an economic boom which was then followed by an estimated $56 billion deficit over the next two fiscal years. Now the Legislative Analyst Office is warning that the State faces an $18-$35 billion deficit by fiscal year 2027-28.