California Assembly Republican Caucus
Nonpartisan analyst warns California is “ill-prepared” for downturn despite record revenues.
SACRAMENTO — Assembly Republican Leader Heath Flora today responded to the nonpartisan Legislative Analyst’s Office’s assessment of Governor Newsom’s May Revision. The LAO serves as the Legislature’s independent fiscal advisor and is widely regarded as the state’s top nonpartisan budget authority. The office warned California is “ill-prepared for even a slip-up in revenues” and vulnerable to deficits approaching $100 billion following a market correction.
“The state’s current fiscal situation is genuinely unprecedented.”— Legislative Analyst’s Office, May 2026
“You should not be running operating deficits during a historic revenue boom,” said Leader Flora.
“Assembly Republicans have been warning for years that Sacramento is addicted to spending money it does not have. Democrats spent every surplus dollar they could get their hands on, drained reserves, and left California dangerously exposed when the economy slows down. The LAO is warning exactly what Republicans have been saying for years.”
The LAO also warned:
“The existence of any operating deficits during a revenue boom of this magnitude is itself a warning sign.”— Legislative Analyst’s Office, May 2026
Assembly Republicans are calling on the Governor and legislative Democrats to adopt the LAO’s recommendations, including depositing $20 billion into state reserves, rejecting nearly $10 billion in discretionary spending commitments, and addressing the state’s growing structural deficit before California faces a deeper fiscal crisis.
“Families across California are expected to live within their means,” Flora added. “Those families deserve a government that does the same.”
