California’s 2026-27 budget cleared the legislature earlier this week—but key negotiations with the governor remain unfinished as the state confronts difficult long-term fiscal realities. This year’s budget plan was bolstered by an increase in projected revenue driven by AI-related stock market gains. But future budgets may not be as fortunate: recent increases in General Fund spending could lead to sizable ongoing state budget deficits annually in the years ahead.

How should the state tackle its long-term budget crisis? Nearly half of Californians favor an approach that mixes spending cuts with tax increases, and majorities support increasing allocations to the state’s Rainy Day Fund.

These preferences reflect a broader shift in how Californians view the size of their state government. Our May 2026 survey found just over half of Californians (55%)saying they want to pay lower taxes and have a state government that provides fewer services.

When asked specifically how to deal with the state’s projected long-term budget gaps, nearly half of Californians say they prefer a mix of spending cuts and tax increases (46%), slightly fewer say mostly spending cuts (40%), and a small number say mostly tax increases (11%).

Partisans are divided in their preferences: nearly two in three Democrats prefer a mixed approach, while overwhelming shares of Republicans prefer mostly spending cuts. Independents are closely divided between the two.

Across California’s regions, about half prefer a mixed approach—except in the Central Valley, where 39% say mostly spending cuts.

Increasing the amount allocated to the Rainy Day Fund sparks rare bipartisan agreement. Two in three Californians (68%) favor raising the allocation cap from 10%, although Democrats are much more likely than independents and Republicans to be in favor of this approach.

Agreement is widespread across the state. About six in ten or more across regions are in favor. Residents in the Central Valley are the least likely—and those in the SF Bay Area the most likely—to hold this view.

Views on the size of government impact how Californians want to address these issues. Among those who prefer a larger government with more services, 73% want to address deficits through a mixed approach. Among those who prefer a smaller government with fewer services, 63% say mostly spending cuts—but, notably, 25% in this group prefer a mixed approach. When looking at changes to the Rainy Day Fund, support is higher among those who want a larger state government (83%) than among those who prefer lower taxes and fewer services (59%).

California’s next governor will have to make tough choices early on to address long-term budget issues. In the months ahead, the state budget should be a key topic in debates and town halls as Californians weigh their choices for November’s election. Stay tuned to the PPIC Statewide Survey as we continue to monitor Californians’ views on the state budget.