On Wednesday, the state’s nonpartisan Legislative Analyst’s Office published its fiscal outlook for the 2026-2027 fiscal year — and it’s not pretty.

“Under our revenue and spending estimates, the Legislature faces an almost $18 billion budget problem in 2026-27,” the LAO reports. “This is about $5 billion larger than the budget problem anticipated by the administration in June, despite improvements in revenue.”

New revenues, they explain, are almost entirely consumed by mandated spending obligations like Proposition 98, which requires minimum funding levels for the state’s education system.

In addition, perennial problems like rising pension costs and health benefits for government retirees continue to erode finite resources.

The report also notes that California will be spending $850

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