LAO says CDCR is Nearly $1 Billion Over Governor’s Plan, Making Prison Spending a Major Driver of California’s Budget Problem 

Sacramento, CA – Californians United for a Responsible Budget (CURB) today responded to the Legislative Analyst’s Office (LAO) 2026-27 Fiscal Outlook, which finds the state faces an almost $18 billion budget problem in 2026-27 and structural deficits of about $35 billion per year beginning in 2027-28.

In its breakdown of why spending is running above prior estimates, LAO identifies Corrections as one of the largest upward adjustments. LAO estimates corrections costs are roughly $0.9 billion higher across the budget window than the Governor’s 2025-26 spending plan assumed, due to CDCR’s ongoing costs exceeding its budget and some planned “efficiencies” and savings never materializing.

Corrections is the third-largest contributor to the $5.7 billion increase in “other spending,” behind only statewide expenditures and the vast federal H.R. 1-related costs.

“Taken at face value, the LAO report confirms what communities have been saying for years: California cannot sustainably balance its budget without further reducing the size and cost of the prison system,” said Brian Kaneda, Deputy Director of CURB. “Corrections remains a major source of fiscal pressure, and the LAO is clear that the Legislature is facing a structural deficit problem, not one-time gaps. Structural deficits are chronic; they do not resolve without real policy change.”

State budget documents and independent analyses show that closing prisons generates substantial ongoing General Fund savings: The Newsom administration and CDCR estimate that closing a single prison saves about $150 million per year in operating costs alone.

Gov. Gavin Newsom recently announced the closure of California Rehabilitation Center (CRC) in Norco. “We applaud Governor Newsom for overseeing multiple prison closures and for continuing to engage with the issues at hand,” Kaneda said. “At the same time, the LAO’s outlook makes clear that California must further reduce prison spending to address its projected multi-year deficits. Our state cannot afford wasteful corrections spending while facing deep federal cuts that will harm our most vulnerable community members.”

Advocates say that the state continues to plan and fund major prison infrastructure and program experiments inside CDCR, like the struggling “California Model” initiative. Policymakers are considering single-celling expansions and programs like the Male Community Reentry Program (MCRP) as system-wide solutions. Instead, CURB is calling for a moratorium and rigorous review of existing and proposed detention capital projects that are not strictly necessary to protect the immediate health and safety of incarcerated people.

“The realistic path toward a stronger California is decarceration, facility closure, and sustained investment in community-based care,” Kaneda said. If we adopt an economically smart plan for safe closures and stop pouring money into failing prisons, we can protect vital services and start to repair the harm of past budget choices.”