NATIONAL / CALIFORNIA — August 23, 2026
For more than a decade, California’s independent state auditor has done exactly what the Legislature asked it to do: dig into state agencies, expose waste and mismanagement, and hand lawmakers a roadmap for fixing it. According to a CBS News California investigation, lawmakers have used that roadmap only rarely — enacting just one in four audit recommendations directed specifically at them, and allowing roughly three-quarters of all state audit warnings to go unaddressed altogether. The result, CBS found, is more than 300 outstanding statutory fixes and a bill that runs into the tens of billions of dollars in wasted, lost, or mismanaged public money.
The investigation, which built what it calls a first-of-its-kind Audit Accountability Tracker, didn’t just find inaction. It found active opposition: dozens of audit-backed bills were quietly killed in committee by the Legislature’s former majority leadership, and Gov. Gavin Newsom vetoed at least a dozen more audit-recommended measures during his tenure. In 2022, the newly appointed state auditor stopped issuing the annual reports that had historically summarized outstanding legislative recommendations, making it harder for the public — and for nearly a third of the current Legislature who weren’t in office when many of the audits were issued — to track what had and hadn’t been fixed.
The response from Sacramento has been a mix of contrition and defensiveness. New Legislative Audit Chair John Harabedian, a Democrat, called the findings a “wake-up call” and pointed to a new class of lawmakers and incoming state leadership as an opportunity to finally act. Senate Republican Leader Brian Jones agreed the numbers were “ridiculous,” a rare moment of bipartisan alignment on a subject that usually breaks down along partisan lines. Grant Parks, the current state auditor, has continued releasing individual reports — including a recent review of securities accountability at the State Treasurer’s Office — even without the annual summary rollups that used to accompany them.
The audit failures matter well beyond the abstract question of good governance, because they land directly on top of a state budget that is already under sustained strain. Gov. Newsom released his final proposed budget in January projecting a “small and manageable” $2.9 billion deficit for 2026-27, built on an assumption of $42.3 billion in additional revenue relative to prior projections. The Legislature’s independent budget analyst, Gabe Petek, saw it differently: his office pegged the state’s actual operating deficits at $27 billion in 2027-28, $22 billion in 2028-29, and $23 billion in 2029-30 — a chronic, structural gap between what California collects and what it has committed to spend.
By May, Newsom’s revised budget claimed to eliminate the deficit entirely through 2028, in part by depositing $9.7 billion into a new surplus holding account and cutting $1.8 billion in General Fund spending. But Petek’s office again pushed back, noting the “balance” relies heavily on one-time maneuvers — reserve withdrawals, internal borrowing, and other budgetary “solutions” — rather than a genuine fix to the underlying imbalance. On that more conservative measure, the state faces a structural deficit of roughly $400 million in 2025-26 and $14 billion in 2026-27, even after the May Revision. California’s reserve fund, once as high as $28 billion, now sits at roughly $14 billion after two consecutive years of withdrawals, and the state has borrowed more than $20 billion from other internal funds — debt that comes due in future years regardless of who succeeds Newsom in Sacramento.
The roots of the imbalance are structural rather than cyclical. Since Newsom signed his first budget in 2019-20, state spending has climbed 72%, from $203 billion to $349.4 billion, while revenue over the same period grew only 60%, largely on the back of a 48% rise in Californians’ personal income. California’s population, by contrast, has been essentially flat at around 39.6 million, and national inflation over the period has averaged roughly 29% cumulatively — meaning spending growth outpaced both population and inflation by a wide margin. Assemblymember David Tangipa, R-Fresno, has been blunt about where he places the blame, writing in a December op-ed that a Newsom presidency would be, in his words, a fiscal and governance disaster of historic proportions. Newsom’s team, for its part, frames the May Revision as a disciplined, tightfisted plan that intentionally avoids new ongoing commitments in order to leave his successor a balanced first year.
That is where the audit failures and the budget crisis converge. The state auditor’s office has spent years flagging specific, quantifiable sources of waste, fraud, and duplicative spending — the kind of findings that, if acted on, could meaningfully narrow a deficit now measured in the tens of billions annually. Instead, California has been drawing down reserves, borrowing internally, and betting on continued revenue growth from an increasingly concentrated tax base, while dozens of the very fixes recommended by its own watchdog sit unenacted in the Legislature. Newsom has already voiced opposition to a labor-backed ballot measure that would impose a one-time 5% wealth tax on billionaires to help fund health care and education — meaning that, absent either new revenue or a serious commitment to the audit backlog, California’s next governor inherits both the structural deficit and the accountability gap that helped create it.
The stakes are compounded by timing. California’s next governor takes office in January 2027 with far less room to maneuver than Newsom had in 2019, when the state carried reserves closer to their $28 billion peak rather than today’s roughly $14 billion cushion. That leaves two blunt options for the incoming administration: raise new revenue, which Newsom has already resisted in the case of the proposed billionaire wealth tax, or make the structural spending cuts neither party’s legislative leadership has shown much appetite for tackling.
The audit backlog offers a third path that costs nothing to attempt and has simply gone untried at scale. A decade of individual state auditor reports have identified specific, dollar-denominated inefficiencies that add up to a meaningful fraction of the current deficit if implemented consistently. Whether the incoming Legislature treats the new Audit Accountability Tracker as a genuine to-do list, or, as CBS News California’s investigation suggests happened under the outgoing majority, as a list of inconvenient asks to quietly shelve, will shape California’s fiscal trajectory as much as any single line item in Newsom’s final budget.
For a state that prides itself on transparency, the auditor’s tracker now stands as an uncomfortable public ledger: not of what California doesn’t know about its own finances, but of what it has been repeatedly told and chosen not to fix.
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