Newsom administration allegedly knew of $2B California budget error for months: report
California Democrats have been aware for months that the Governor had a nearly $2 billion budget accounting error. Gavin NewsomThe January spending plan projects a deficit of nearly $3 billion for the next fiscal year, according to a report.
The error, linked to CalPERS, the state’s public employee retirement system, could narrow the projected shortfall. But state analysts warn that California still faces much larger long-term budget problems, with annual deficits estimated at $20 billion to $35 billion.
State legislative leaders learned of the problem as early as February after it was flagged by the nonpartisan Legislative Analysts Office, but did not publicly disclose it until it was reported in April. Kcra 3.
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Governor Gavin Newsom speaks at a news conference at San Lorenzo High School as he signs an executive order to expand women’s access to capital and wealth-building opportunities on March 18, 2026 in San Lorenzo, California.
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The analyst’s office said Newsom’s administration double-counted some retirement contribution rates, creating a $1.6 billion error.
Another miscalculation involving future contribution estimates added another $450 million.
The total of the two errors amounts to roughly $2 billion.
“Given its size and complexity California’s budgetLegislative Analyst Gabe Petek told KCRA 3 that there are no calculation errors or formula errors etc. “It’s not uncommon for us to encounter errors caused by this,” he said. “In fact, part of our office’s role is to serve as a check on the administration’s budget calculations.”
The issue is expected to be corrected in Newsom’s updated May budget proposal, Petek said.
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A view of the California State Capitol in Sacramento, California, on August 19, 2025.
The Newsom administration has disputed the characterization of the issue as a mistake, saying the regulation reflects a change in the way the state estimates retirement-related payments.
“This is not a calculation error. This is a revision to better estimate how payments are made,” Ministry of Finance spokesman HD Palmer told the press.
Since the issue remained internal, the failure to make a public statement came under scrutiny after MPs warned the public about the budget deficits.
in it January overview While the Legislative Analyst’s Office said the governor’s budget projects a $2.9 billion deficit for 2026-27, it also warned that the state faces multi-year deficits ranging from $20 billion to $35 billion annually.
California Governor Gavin Newsom delivers his final State of the State Address at the California Capitol on January 8, 2026 in Sacramento, California.
The office called these long-term deficits “alarming” and said they were increasing Serious concerns about California’s fiscal health sustainability.
The same report noted that the governor’s budget was only “roughly balanced” due to high revenue assumptions, but warned that a potential downturn in the stock market could sharply reduce income tax revenues and put the state in a more unstable situation.
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Lawmakers are expected to accelerate negotiations next month after Newsom releases his revised budget.
Fox News Digital contacted governor’s officeThank you to the Department of Finance and the Legislative Analyst’s Office for your comments.
Original article source: Newsom administration allegedly knew about $2 billion California budget error for months: report
