State budget more vulnerable than ever to stock market decline

Zero in on 2000-03. Notice how revenues peaked at $76 billion in 2000 and then fell below that level for three years. Aggregate revenues over those three years fell $30 billion short of the revenues the state would’ve collected had they continued at the 2000 level. Because Governor Gray Davis and the legislature had awarded big compensation increases and enacted new spending programs before the peak and the state had no Rainy Day Fund, after the peak they had to borrow, make cuts, and raise taxes.