California’s Budget Miscalculation Revealed
California officials have been silent about a significant $2 billion budget mistake for several months while warning of serious cuts and pushing forward with a contentious budget process.
The issue originated from two errors in calculations concerning the CalPERS pension plan. Governor Gavin Newsom’s budget proposal from January initially forecasted a $2.9 billion shortage, but concerns arose after officials identified problems with the pension calculations.
The error was first noticed in February, and Gabe Petek, a state legislative analyst, noted in comments to KCRA 3 that his office recognized the double-counting issue and informed lawmakers. “Part of our office’s role is to check the administration’s budget calculations, so in this CalPERS example, you’re right. We did identify the double-counting error and, given the larger nature of this error, notified Congress for situational awareness,” Petek explained.
A spokesperson for Newsom Treasury, HD Palmer, dismissed this claim, stating, “This is not a miscalculation; it is a correction to more accurately estimate how these payments will be made.”
Rep. David Tangipa, R-Fresno and vice chairman of the Assembly Budget Committee, called for a comprehensive timeline detailing when the governor’s office became aware of these discrepancies. He pointed out that residents and city officials were discussing potential cuts to essential services without a clear understanding of the financial situation.
This isn’t the first instance of budgetary miscalculations in California this fiscal year. The Legislative Analysis Service had recognized in its November 2025 fiscal outlook that its deficit forecast was approximately $5 billion lower than anticipated, later adjusting the deficit estimate to $18 billion.
Tangipa expressed his concerns about the government’s outlook. “Californians cannot afford a budget built on wishful thinking and short-term fixes that pushes costs onto future taxpayers,” he cautioned during a hearing in January.
The budget shortfall has followed Newsom for four consecutive years, with deficits of $27 billion in 2023-2024, $55 billion in 2024-2025, and $15 billion in 2025-2026. Following these developments, his revised spending plan is set to be introduced next month.
