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Feb 23, 2026

California Gov. Gavin Newsom Just Got Busted - Investigators Found The Money He's Been Hiding

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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. 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.

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