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Gavin Newsom is set to leave California a shocking legacy of a structural budget deficits of between $20 and $30 billion – as his administration admits they have no idea how much it spends on state worker’s salaries.
And the report by the state’s Legislative Analyst’s Office is so damning, it may even change the math on Newsom’s expected run for president, with a prominent political analyst Thad Kousser warning: “He will face immense scrutiny as we head toward a potential presidential run.”
California’s budget hawks, the LAO, which have provided fiscal and policy advice to the Legislature for 75 years, noted in their report that revenue may be up $100 billion since Newsom took office in 2019.
However, costs to maintain services have also increased and the state has squandered surpluses with discretionary spending.
Shockingly, the report also highlights how California officials cannot fully account for how much taxpayer money it spends on employee compensation or how many workers are paid with general fund dollars.
Lawmakers were stunned over the report’s findings and immediately took aim at California’s commander-in-chief.
“Governor Newsom’s colossal spending disaster will likely be his biggest legacy: recurring deficits of tens of billions of dollars despite growing revenue,” state Sen. Roger Niello (R-Fair Oaks) told The Post.
The LAO also found about 70% of the $100 billion increase in spending was used to sustain existing services, including programs such as Medi-Cal, K-14 education, developmental services and in-home supportive care.
But the remaining 30% included a vast expansion of university funding, childcare, police oversight, firefighting services and Medi-Cal coverage — including health care of undocumented immigrants.
The LAO said eliminating all discretionary expansions adopted since 2019 would save about $15 billion — just half of the potential annual shortfalls.
“As noted by the Legislative Analyst’s Office report, ‘underlying costs and discretionary choices were never affordable,’” Niello said.
Assemblymember David Tangipa was furious over the report’s findings.
“We’re looking at deficits in the tens of billions and the state can’t even tell you how many people it’s paying or what they cost?” he scoffed.
“The LAO says the data isn’t reliable.”
Tangipa added, “That should stop everyone in their tracks.”
Tara Gallegos, a spokesperson for Newsom, disputed the report’s findings on “new” spending under the governor since 2019.
“This isn’t spending on new programs — it’s the cost of maintaining existing commitments like schools, health care, and services for vulnerable Californians,” Gallegos wrote in an email.
“The governor has consistently called for fiscal discipline: the state must manage long-term obligations, curb spending, and maintain a balanced budget.”
H.D. Palmer, a spokesperson for the state’s Department of Finance, told The Post that steps are being taken to address spending, and he defended Newsom’s approach to not leaving a deficit wasteland in his wake.
“He’s made it very clear with his statements to address the deficit not just this fiscal year, but the following year when he’s not in office,” Palmer said.
Recent gains in state revenue tied to the stock market and technology sector have temporarily improved California’s near-term outlook, but the report warns that long-term imbalances will remain without policy changes.
Budget analysts expect the deficits to persist even during periods of strong revenue growth, and part of the problem is a glaring lack of data on public employee costs.
“We cannot say with certainty how much General Fund the state spends on salaries or benefits, or how many full-time equivalents are filled using General Fund resources,” the LAO report states.
Tangipa, who has been banging the drum on runaway spending since joining the Legislature in 2024, ripped into the state’s handling of huge surpluses in recent years.
“Sacramento burned through a massive surplus and now nobody can give a straight answer on where the money went,” Tangipa said. “People balance their budgets every month. Why can’t the state even count its own payroll.”
“Absolutely ridiculous.”
Thad Kousser, a political science professor at UC San Diego, told The Post that Newsom and the Legislature will almost certainly pass a balanced budget as required by June 15, but “gimmicks” could be employed.
If budget issues persist ahead of the 2028 presidential campaign, Newsom may feel the pinch.
“Gavin Newsom will absolutely be held accountable for California’s financial health, growth and every policy that has come out of his time as governor,” Kousser said.
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