Economy

Calif. faces $18B budget hole despite rising tax revenues

The Legislative Analyst’s Office cautioned that the stock market may be overheated.

Sophie Quinton

03:42 PM, Nov 19, 2025

California Gov. Gavin Newsom delivers a briefing of his proposed 2025-26 state budget at California State University, Stanislaus, in Turlock, Calif., Monday, Jan. 6, 2025, (AP Photo/Rich Pedroncelli).

California lawmakers will likely need to close a $18 billion budget hole next session even as tax revenues grow, according to the Legislative Analyst’s Office, a nonpartisan agency that advises the Legislature. 

It will be the fourth straight year of deficits in the Golden State. 

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