Section 1. Title.
This Act shall be known and may be cited as the Improving Transparency, Effectiveness,
and Efficiency in California Government Act of 2026.
Section 2. Findings and Declarations.
The People of the State of California hereby find and declare the following:
(a) Every day, Californians are facing an affordability crisis. Costs for housing, food,
electricity, health care, home and auto insurance, and many other life necessities continue to
escalate.
(b) Californians are already among the highest-taxed people in the United States. A
recent analysis by a non-partisan research institute concluded that California ranks 48th in the
nation in subjecting its population to taxes, when considering individual income taxes, sales
taxes, property taxes, and other forms of taxation. California has the highest state sales tax in the
nation, the highest top income tax rate, and the highest tax on gasoline, among other indicators.
( c) Public programs provide much-needed services, including to children, families and
the most vulnerable in our state. But billions of our tax dollars have flowed into programs like
homelessness efforts, with far too little to show for it.
( d) Before asking taxpayers to pay even more of their hard-earned money to support
programs that are ineffective, we must institute greater transparency and trackable progress of
program improvements to ensure we stop funding failure and start funding successful outcomes.
Government must use our tax dollars more wisely.
(e) Some of these efforts are already underway. For example, the Newsom
Administration has sought to increase efficiency in government through greater utilization of
technology and automation, creation of an Office of Data Innovation, and modernizing the
Department of Motor Vehicles. This is consistent with earlier efforts President Obama
undertook at the federal level aimed at reducing waste in government and cutting
underperforming programs.
(f) However, while these existing efforts are a good start, more should be done to reduce
inefficiency and cut government waste. For example, recent studies have found that as much as
25 cents of every dollar in some programs are lost to inefficiency or waste.
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(g) Nonetheless, the Legislature and special interest groups continue to propose new and
higher taxes for pet projects without doing the hard work of ensuring that government programs
are already using their existing revenues as effectively and efficiently as possible. Californians
have a right to require that state government improve the effectiveness and efficiency of
programs and cut waste before asking us to pay even higher taxes-which just make our cost-ofliving crisis even worse.
(h) In 1979, California's voters approved a state spending cap to help check wasteful
spending and encourage more effective government-and to return any excess revenues above
the limit to taxpayers. However, in the years since, special interests have repeatedly passed new
taxes that exempted themselves from the state spending limit. This pushes taxes even higher and
makes it less likely that excessive state revenues will be refunded to taxpayers.
(i) In order to ensure that state spending does not spiral further out of control before the
new efficiency and transparency requirements of this Act can have their intended effect, we must
prevent any new taxes from being exempt from the state spending limit. Protecting this voterapproved state spending limit is critical for getting state government to be better stewards of
Californians' tax dollars as intended by this Act. Government is more likely to spend taxpayer
dollars effectively and efficiently when government has to live within its means under the state
spending limit.
Section 3. Statement of Purpose.
In enacting this Act, the purpose and intent of the People of the State of California is to
require the California State Auditor to conduct upfront and ongoing audits of all state programs
that are targeted to receive revenue from new or higher special taxes. The audits must identify
areas of potential savings and improvements and the results must be shared with the public in
order to ensure that extra funding is actually needed, that public programs are delivering results,
and that taxpayer dollars are not being lost to inefficiency, waste, or abuse-while also
prohibiting exemptions from the state spending limit that forces efficiency and discipline upon
state government.
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Section 4. Article XXIV is added to the California Constitution, to read:
SECTION 1.
ARTICLE XXIV
PROTECTING TAXPAYER DOLLARS
Pre-Election Audits for Special Tax Initiatives.
(a) When a certification for a proposed special tax initiative is submitted to the Secretary
of State pursuant to subdivision (a) of Section 9034 of the Elections Code, the California State
Auditor shall commence with the preparation of a pre-election financial and performance audit
of each of the program(s) that would receive moneys from the special tax.
(b) A pre-election financial and performance audit shall, at a minimum, address all of the
following matters:
(1) Whether the program is currently acquiring resources such as staff, equipment,
technology and computer software, and facilities at the lowest cost for the required quality.
(2) Whether the program is maximizing its output for every dollar spent.
(3) The extent to which the program is actually achieving its intended goals and
outcomes.
( 4) The amount of actual and potential fraud, waste, and abuse in the program, and the
adequacy of existing systems intended to prevent fraud, waste, and abuse.
( 5) An assessment whether the program is following relevant laws, regulations, and
internal policies.
(6) An assessment whether the program has identified its biggest threats and has a plan to
mitigate them.
(7) The extent to which data used, or relied upon, by the program to make decisions is
accurate and reliable.
(8) Whether the program possesses adequate lines of accountability and oversight.
(9) How the program's costs compare to any analogous programs in the non-government
sector.
( 10) Recommendations on how the program could achieve a budgetary savings of at least
10% annually.
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( c) In preparing a pre-election financial and performance audit required by this section,
the California State Auditor shall invite input from the Legislative Analyst's Office ("LAO"),
and may rely on information contained in LAO reports, analyses, and recommendations.
( d) The California State Auditor shall include an executive summary in the pre-election
financial and performance audit that summarizes all of the findings and recommendations on the
matters described in subdivision (b ).
(e)(l) Copies of the pre-election financial and performance audit shall be delivered to the
Governor, the Legislature, and the Secretary of State, and shall be posted on the California State
Auditor's website and made available to the public.
(2) If the special tax initiative qualifies for the ballot as provided in Article II, the
executive summary from the pre-election financial and performance audit shall be printed in the
state voter information guide immediately following the impartial analysis prepared by the
Legislative Analyst. The California State Auditor shall complete the pre-election financial and
performance audit, including the executive summary, by a date sufficient to meet the state voter
information guide public display deadlines.
(t) If the special tax initiative is approved by voters, the California State Auditor shall be
reimbursed from the revenue generated by the special tax initiative for reasonable costs incurred
in preparing the pre-election financial and performance audit, as determined by the Controller.
SEC. 2.
Ongoing Audits for All New or Higher Special Taxes.
(a)(l) For all special taxes enacted by the Legislature or by a statewide initiative measure
on or after January 1, 2026, the California State Auditor shall conduct ongoing financial and
performance audits of each program that receives moneys from the special tax.
(2) Starting from the effective date of the special tax, an ongoing financial and
performance audit shall be completed every four years.
(b) An ongoing financial and performance audit required by this section shall address the
following:
(1) All of the matters described in subdivision (b) of Section 1 of this article.
(2) Recommendations on how the program could improve effectiveness and cut costs or
otherwise reduce the burden imposed by the program on taxpayers and state revenues.
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(c)(l) In preparing the ongoing financial and performance audits required by this section,
the California State Auditor shall invite input from the Legislative Analyst's Office ("LAO"),
and may rely on information contained in LAO reports, analyses, and recommendations.
(2) The State Auditor shall also invite input from the public to inform the standards it
uses in measuring the effectiveness of programs and its determinations of how tax dollars can be
spent more effectively.
( d) The California State Auditor shall be reimbursed from the revenue generated by the
special tax for reasonable costs incurred in preparing the ongoing financial and performance
audits, as determined by the Controller.
SEC. 3.
Prohibition on Exemptions from the State Spending Limit.
(a) No state tax that is enacted or talces effect on or after January 1, 2026 shall be
exempted or excluded from the Government Spending Limitation.
(b) The State of California shall not impose, collect, or enforce any state tax that is
enacted or talces effect on or after January 1, 2026 if the state tax is exempted or excluded from
the Government Spending Limitation.
SEC. 4.
For purposes of this article:
(a) "California State Auditor" means the California State Auditor as described in Chapter
6.5 (commencing with Section 8543) of Division 1 of Title 2 of the Government Code.
(b) "Exempted or excluded from the Government Spending Limitation" means either of
the following:
(1) The revenues from the state tax are deposited, in whole or in part, into a particular
fund or account outside of the General Fund, and appropriations from that particular fund or
account are not included in the appropriations subject to limitation of each entity of government
and the State of California under Article XIII B.
(2) The appropriations limit for the State of California is increased by statute pursuant to
Section 4 of Article XIII B.
(c) "Government Spending Limitation" means Article XIII B.
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( d) "Special tax" means a tax that can only be used to fund specific, as opposed to
unlimited, purposes.
(e) "Special tax initiative" means an initiative measure proposed pursuant to Section 8 of
Article II, or Section 3 of Article XVIII, that contains a special tax.
SEC. S.
This article applies to all statewide initiative measures submitted to the electors on or
after January 1, 2026, including measures that appear on the ballot at the same election at which
the measure adding this article is approved by the electors.
Section 5. Conflicting Measures.
(a)(l) In the event that this initiative measure appears on the same statewide election
ballot as another initiative measure that (A) imposes different audit rules on special taxes; or (B)
contains a state tax that is exempted or excluded from the Government Spending Limitation, then
that other initiative measure shall be deemed to be in conflict with this measure. In the event that
this initiative measure receives a greater number of affirmative votes, the provisions of this
measure shall prevail in their entirety, and all the provisions of the other measure shall be null
and void.
(2) For purposes of this section, "special tax" shall have the same meaning as set forth in
Section 4 of this Act.
(b) If this initiative measure is approved by the voters but superseded in whole or in part
by any other conflicting initiative measure approved by the voters at the same election, and such
conflicting measure is later held invalid, this measure shall be self-executing and given full force
and effect
Section 6. Severability.
The provisions of this Act are severable. If any portion, section, subdivision, paragraph,
clause, subclause, sentence, phrase, word, or application of this Act is for any reason held to be
invalid by a decision of any court of competent jurisdiction, that decision shall not affect the
validity of the remaining portions of this Act. The People of the State of California hereby
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declare that they would have adopted this Act and each and every portion, section, subdivision,
paragraph, clause, subclause, sentence, phrase, word, and application not declared invalid or
unconstitutional without regard to whether any part of this Act or application thereof would be
subsequently declared invalid.
Section 7. Effective Date.
This Act shall take effect at the earliest possible date in accordance with Section 10 of
Article II of the California Constitution. This Act shall become operative on the same day it
takes effect.
Section 8. Liberal Construction.
This Act shall be liberally construed to give effect to its intent and purposes.
Section 9. Legal Defense.
The purpose of this section is to ensure that the people's precious right of initiative
cannot be improperly annulled by state politicians who refuse to defend the will of the voters.
Therefore, if this Act is approved by the voters of the State of California and thereafter subjected
to a legal challenge which attempts to limit the scope or application of this Act in any way, or
alleges this Act violates any state or federal law in whole or in part, and both the Governor and
Attorney General refuse to defend this Act to the fullest extent possible on behalf of the State of
California, then the following actions shall be taken:
(a) Notwithstanding anything to the contrary contained in Chapter 6 (commencing with
Section 12500) of Part 2 of Division 3 of Title 2 of the Government Code or any other law, the
Attorney General shall appoint independent counsel to faithfully and vigorously defend this Act
to the fullest extent possible on behalf of the State of California.
(b) Before appointing or thereafter substituting independent counsel, the Attorney
General shall exercise due diligence in determining the qualifications of independent counsel and
shall obtain written affirmation from independent counsel that independent counsel will
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faithfully and vigorously defend this Act to the fullest extent possible. The written affirmation
shall be made publicly available immediately upon request.
( c) In order to support the defense of this Act in instances where the Governor and
Attorney General fail to do so despite the will of the voters, a continuous appropriation is hereby
made from the General Fund to the Controller, without regard to fiscal years, in an amount
necessary to cover the costs of retaining independent counsel to faithfully and vigorously defend
this Act on behalf of the State of California to the fullest extent possible.