This is one of the downsides of having the state budget be so heavily dependent on a highly progressive income tax. Incomes at the top of the income distributi

This is one of the downsides of having the state budget be so heavily dependent on a highly progressive income tax. Incomes at the top of the income distribution are relatively volatile, so boom-bust cycles in the broader economy have an outsized impact on state finances. (The top 1% of income earners pay about half of California's income taxes.) Unfortunately in a recession, state income falls right when services are needed the most. This hasn't led to any problems in most voters' memories since the last recession was now 14 years ago. But it has always just been a matter of time. Any more stable alternatives aren't really political feasible in California. If anything, the political appetite in the state is to continue to increase taxes at the upper end of the income distribution. Income taxes at the middle and lower end are already high enough that voters probably wouldn't go for increasing their own tax rates. (Same with sales taxes.) Increasing the proportion of taxes that come from property taxes would probably provide a more stable revenue stream for the state, but would in effect require Prop 13 to be repealed, which is also a non-starter. The state rainy day fund is meant to help counteract against this, but the fund essentially has a cap due to the Gann Limit, which limits its utility. The Gann Limit in general requires the state to return revenues in excess of a certain amount back to taxpayers. The way the political winds are shifting, the Gann Limit will probably be repealed in the next decade or so, though whether or not those extra funds will make it into the rainy day fund is unclear.