California Democrats were aware for months of an approximately $2 billion budget accounting error, even as Gov. Gavin Newsom’s January spending plan projected a roughly $3 billion deficit for the upcoming fiscal year, according to a report
California Democrats were aware for months of an approximately $2 billion budget accounting error, even
California Democrats were aware for months of an approximately $2 billion budget accounting error, even as Gov. Gavin Newsom’s January spending plan projected a roughly $3 billion deficit for the upcoming fiscal year, according to a report.
The error is tied to the state’s public employee retirement system, California Public Employees’ Retirement System, and could reduce the size of the projected deficit. However, state analysts have cautioned that California continues to face significantly larger long-term fiscal challenges, with annual deficits projected between $20 billion and $35 billion.
According to a memo cited by KCRA 3, state legislative leaders were informed of the issue as early as February after it was flagged by the nonpartisan Legislative Analyst’s Office, but the matter was not publicly disclosed until April, Fox News reports.
The Legislative Analyst’s Office said the administration of Newsom double-counted certain retirement contribution rates, resulting in an estimated $1.6 billion error. A separate miscalculation involving projected future contributions added approximately $450 million more. Combined, the two errors total roughly $2 billion, noted Fox.
“Given the size and complexity of California’s budget, it is not uncommon that we come across errors stemming from calculation mistakes or formula errors etc.,” Legislative Analyst Gabe Petek said in a statement to KCRA 3. “Indeed, part of the role of our office is to serve as a check on the administration’s budget calculations.”
He added that the error is projected to be corrected in Newsom’s upcoming May budget proposal. Newsom’s administration has disputed the characterization of the issue as an error, stating that the adjustment reflects a change in the state’s method of estimating pension-related payments.
This isn’t a calculation error
“This isn’t a calculation error. It’s a revision to better estimate how these payments are made,” Department of Finance spokesman H.D. Palmer told the outlet.
The delayed public disclosure has drawn scrutiny, as lawmakers had been warning about budget shortfalls while the issue remained internal.
In its January budget overview, the Legislative Analyst’s Office said the administration of Newsom projected a $2.9 billion deficit for the 2026–27 fiscal year, while also cautioning that the state faces ongoing multiyear deficits estimated between $20 billion and $35 billion annually, said Fox.
The Legislative Analyst’s Office described the projected long-term deficits as “alarming,” warning they raise significant concerns about California’s fiscal sustainability.
The report also said the budget proposed by Newsom was only “roughly balanced,” relying in part on higher revenue assumptions. Analysts cautioned that a potential downturn in the stock market could significantly reduce income tax revenues, further weakening the state’s financial outlook.
Also, California has experienced net outmigration of residents in recent years, with most citing the ballooning cost of living and onerous regulations imposed by the Democrat supermajority.
Newsom confirmed last week that he is considering a run for president in 2028 but
Newsom confirmed last week that he is considering a run for president in 2028 but stopped short of declaring his candidacy. While acknowledging his interest in a potential campaign, Newsom said he has not yet made a final decision on whether to enter the race.
“Yeah, I’d be lying otherwise,” Newsom told “CBS News Sunday Morning” after he was asked whether he was considering a run for what would be the Democratic nomination. “I’d just be lying. And I’m not — I can’t do that.”
In recent months, Newsom has visited several key early primary states, including South Carolina, and launched a podcast where he has sharpened his debate skills through exchanges with conservative guests, the New York Post reported.
He has also used his social media accounts to engage directly with Republican critics, often posting exaggerated or satirical responses that mimic former President Donald Trump’s distinctive, capitalization-heavy writing style.
Newsom, who is barred by term limits from seeking a third term as California governor, will leave office at the end of his current term, which expires next year.
“Polls regularly peg the slick-haired pol as a top contender in a Democratic primary,” The Post noted.
