The mistake, tied to the state\u2019s public employee retirement system, CalPERS, could shrink that projected deficit. But state analysts warn California still faces far larger long-term budget problems, with annual deficits projected at $20 billion to $35 billion.<\/p>\n
State legislative leaders learned about the problem as early as February, after it was flagged by the nonpartisan Legislative Analyst\u2019s Office, but did not publicly disclose it until it was reported in April, according to a memo reported by KCRA 3<\/a>.<\/p>\n HOUSE COMMITTEE LAUNCHES INVESTIGATION INTO ‘RAMPANT’ CALIFORNIA HOSPICE FRAUD<\/a><\/p>\n Gov. Gavin Newsom speaks at a press 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, Calif. (Tayfun Coskun\/Anadolu)<\/p>\n The analyst\u2019s office said Newsom\u2019s administration double-counted some retirement contribution rates, creating a $1.6 billion error.<\/p>\n Another miscalculation involving future contribution estimates added another $450 million.<\/p>\n Together, the two errors total roughly $2 billion.<\/p>\n “Given the size and complexity of California\u2019s budget<\/a>, 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\u2019s budget calculations.”<\/p>\n Petek said the issue is expected to be corrected in Newsom\u2019s updated May budget proposal.<\/p>\n NEW EXPOS\u00c9 CLAIMS CALIFORNIA LOST AT LEAST $180B TO FRAUD UNDER GAVIN NEWSOM<\/a><\/p>\n A view of the California State Capitol on Aug. 19, 2025, in Sacramento, California. (Justin Sullivan\/Getty Images)<\/p>\n Newsom\u2019s administration has disputed characterizing the issue as an error, saying the adjustment reflects a change in how the state estimates pension-related payments.<\/p>\n “This isn\u2019t a calculation error \u2014 it\u2019s a revision to better estimate how these payments are made,” Department of Finance spokesman H.D. Palmer told the outlet.<\/p>\n The lack of public disclosure has drawn scrutiny, as lawmakers had been publicly warning of budget shortfalls while the issue remained internal.<\/p>\n In its January overview<\/a> of the governor\u2019s budget, the Legislative Analyst\u2019s Office said the administration projected a $2.9 billion deficit for 2026-27, while also warning the state faces multiyear deficits ranging from $20 billion to $35 billion annually.<\/p>\n California Governor Gavin Newsom delivers his final State of the State Address at the California Capitol Building in Sacramento, Calif. Thursday, Jan. 8, 2026. (Jessica Christian\/San Francisco Chronicle)<\/p>\n The office called those long-term deficits “alarming” and said they raise serious concerns about California\u2019s fiscal<\/a> sustainability.<\/p>\n The same report said the governor\u2019s budget was only “roughly balanced” because of higher revenue assumptions, while warning that a potential stock market downturn could sharply cut income tax revenue and put the state on more precarious footing.<\/p>\n![\"Governor](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/04\/1776533227_289_gavin-newsom-san-lorenzo-fox-news-001.jpeg\")
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