Stabilizing California's Budget Through Prevention Investment, Asset Reclassification, and System-Based Revenue Diversification

This working paper proposes a structural framework to reduce fiscal volatility in California’s state budget without broad tax increases or service cuts. The approach is grounded in three mutually reinforcing pillars: sustained land and forest management as preventative infrastructure; reclassification and monetization of underutilized correctional facilities; and incremental diversification toward low-volatility, system-based revenue streams tied to infrastructure, land, and risk exposure rather than personal income. Under conservative assumptions, the framework is capable of funding approximately $5 billion annually in wildfire prevention, reducing long-run disaster and liability costs by $15–20 billion per year, eliminating a regressive and volatile tax without reducing net revenue, and generating approximately $10 billion in durable fiscal headroom at steady state. All fiscal figures are illustrative and intended to compare structural volatility behavior rather than provide a formally scored legislative estimate. The proposal is incremental, stress-tested, and designed to operate within existing statutory authority.