California Lags Far Behind on Local Government Financial Transparency
Taxpayers have a fundamental right to know how their money is being managed. Three conditions define a best-practice state regime for local government financial reporting. First, the state should require all local governments above a meaningful revenue threshold to produce independently audited financial statements annually. Second, the state should enforce a prompt filing deadline with real penalties and no easy escape hatch. Third, completed audited financial statements should be accessible to the public through a centralized online repository, not buried on an agency website or available only by submitting a public records request.
Why does this matter? Because audited financial statements are an early-warning system. In John Moorlach’s work at CPC’s Center for Public Accountability, he has found a persistent correlation: cities in the worst financial condition are the most likely to be delinquent in releasing their financial statements. When a government is not ready to show the public its books, that is itself a signal worth heeding.
Utah and Florida Set the Standard; and Texas is Catching Up
Utah Code 51-2a requires any local government collecting or spending over one million dollars annually to produce audited financial statements regardless of federal aid or bond issuance. Utah Code 67-3-1 gives the State Auditor authority to withhold state-allocated funds and property tax disbursements from noncompliant entities — a structural penalty that a modest civil fine can never replicate. The Transparent Utah website hosts financial data from approximately 1,000 public entities, and the State Auditor maintains a searchable audit report database freely downloadable without a public records request.
Section 218.39(1) of the Florida Statutes requires every county and every municipality with revenues or expenditures exceeding $250,000 to complete an annual audit within nine months of fiscal year end. The Florida Auditor General maintains a searchable online database where anyone can retrieve any local government audit report by entity type and fiscal year, no request required.
Texas deserves mention for a significant recent improvement. The Lone Star state already had audit and filing requirements on the books but lacked meaningful enforcement until it enacted Senate Bill 1851, which took effect on September 1, 2025. Under SB 1851, any municipality that fails to complete its annual financial audit and financial statements within 180 days of fiscal year end is barred from adopting a tax rate that exceeds the no-new-revenue rate until it comes into compliance. Any citizen can trigger an enforcement review by filing a complaint with the Attorney General. In December, the AG’s office announced an investigation of nearly 1,000 Texas cities that appear to be out of compliance. Texas still lacks a centralized public repository for local audit reports comparable to Utah’s or Florida’s, and SB 1851 applies only to municipalities and not counties or special districts, but the 180-day deadline is commendable, especially given the fact that the federal government gives local government grantees nine months to submit audits.
California’s Structural Weakness
Against that backdrop, California’s framework is deeply inadequate. Rather than enforce a requirement to file independently audited financial statements, the state asks cities and counties to submit unaudited Financial Transactions Reports to the State Controller. The Controller does receive audited financial statements in certain circumstances, but as its single audits page makes plain, those packages are reviewed internally and never posted publicly. Citizens who want a specific agency’s audit must find it on that agency’s own website or file a public records request.
The scale of noncompliance is alarming. When California Policy Center launched its Local Fiscal Health Dashboard in late 2024, it found that 56 of California’s 482 cities were delinquent in submitting their fiscal year 2023 ACFRs, and that 26 of those delinquent entities were simultaneously asking voters to approve tax increases or bonds totaling $534.6 million. In the most extreme cases, Fort Jones in Siskiyou County still had not posted its fiscal year 2019 audited financial statements as of late 2025, more than six years after fiscal year end, and its auditor issued a disclaimer of opinion, declining to express any conclusion about the financial statements at all. The city of San Joaquin in Fresno County presents a similar picture: as of the same date it had not posted its fiscal year 2020 report and had not returned phone calls from researchers inquiring about the delay.
Senator Choi’s Reforms
State Senator Steven Choi (R-Irvine) has pursued two significant bills to address the situation. Senate Bill 595, signed by Governor Newsom in October 2025, establishes a proactive 10-month filing deadline and personal financial penalties of $1,000 to $5,000 on responsible finance officers. But the bill was weakened in committee: a provision directing the Controller to evaluate replacing self-reported FTRs with machine-readable audited financial statements was deleted, and the final law allows the Controller to waive penalties upon “a satisfactory showing of good cause,” an undefined standard that recreates the discretionary escape hatch the bill was meant to close.
Senate Bill 1126, currently on the Senate consent calendar after unanimous votes at every committee stage, would require local agencies to post their audited financial statements on their own websites within 30 days of being completed. It is a meaningful step, but it falls short of the centralized statewide repository that Florida and Utah maintain, where all local government audits are searchable in one place.
California still lacks a universal audit mandate, a non-waivable penalty structure, and a centralized public portal for audited financial statements. Until those gaps are closed, the state will lag the state transparency leaders, a position that the world’s technology leader should be embarrassed to hold.
Marc Joffe is a Visiting Fellow at the California Policy Center.