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California’s budget shortfall may hit nearly $18 billion next year—$5 billion worse than June estimates.

AI-driven stock market gains boosted state revenues, but analysts warn the exuberance is likely temporary and unsustainable.

SACRAMENTO — California’s budgetary woes are worse than expected, forcing state lawmakers to grapple with a nearly $18 billion shortfall next year, according to a new report from the Legislative Analyst’s Office.

This figure is $5 billion more than previous estimates in June.

Despite improvements in state revenue, the report said mandatory spending requirements under Proposition 98, which sets minimum annual funding for public schools, and Proposition

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