2026-27 California Budget Take: The Challenges & Opportunities Ahead

Just as certain as New Year’s Resolutions will be forgotten by the third week of January, the familiar and comforting march of the legislative and state budget statutory deadlines will guide us through fully ten months of our year. While a well-trodden path, 2026 will undoubtedly hold a few unknowns, detours, and surprises.

What we know now is that our state’s budget situation won’t be as dire as was forecast. That said, this is a January 10 budget forecast going into an election year, so there will be the forecast (now better) and the reality (probably not as great as we’d all like to think).

So, the budget reality of 2026 will be balanced between a desire to not reduce or axe popular programs, whatever damage must be mitigated from DC directives, and hope the economy continues on a stable path.

As a true product of the post-war California dream, I’d say it’s time to wake from our slumber and take business retention, job creation, and thoughtful development more seriously. With two decades of perspective on actions in and around the Capitol and being a taxpayer myself, I would encourage my friends in office to find a policy path on both affordability and economic growth.

Economic development aside, for any party with a stake in the budget process, come prepared with solid data told in a concise way to support your asks: what are the real human costs? What federal matching dollars get left on the table? Are there creative solutions you can offer? Be prepared to illustrate your data – first person anecdotes backed up by solid, clear data can make all the difference.

For legislation, cost impacts – while always important – will be magnified significantly. Does your organization have cost saving ideas? Law or regulatory changes to spur economic growth? Statute changes that are cost neutral? Rosier numbers aside, expect costly priorities to be held in Appropriations or to be vetoed by the Governor. Better yet, find a way to hold the costly proposals off a few years – your chances of success will go up exponentially.

Look to 2026 as a time for creative, thoughtful solutions that protect people, spur innovation and economic growth, and cut waste and increase efficiencies. Good luck, everyone!