How Prop 41 Audits Work

Proposition 41 requires the California State Auditor to review programs that would be funded by new or higher special taxes. To understand how these audits work, please see the following step-by-step explanation.

​

Who Does the Audits?

The California State Auditor, which the Legislative Analyst’s Office (“LAO”) describes as "an independent and nonpartisan office in state government" that "reviews how well the state and local governments follow the law, use money, and run their programs." The State Auditor already does this kind of review today for government agencies, either when directed by State Law or the bipartisan Joint Legislative Audit Committee. That independent report "may present recommendations for the entity to improve its operations."

​

When Does the First Audit Happen?

Before the proposed tax appears on the ballot. When a citizen initiative containing a special tax reaches 25 percent of the signatures needed to qualify, the State Auditor begins a one-time financial and performance audit of each program that would receive the money. In the LAO's words, the State Auditor "would review programs funded by the tax before the initiative appears on the ballot." If the initiative qualifies, the auditor's executive summary is printed in the Voter Information Guide right after the LAO's impartial analysis, and the full audit is posted publicly.
 

What Does the Audit Look At?

A Prop 41 audit would look at all of the following for programs funded by new taxes:
 

• Whether the program is achieving its intended goals

• Whether the program gets the most out of every dollar

• How much fraud, waste, and abuse exists in the program; and the adequacy of safeguards to prevent it,

• Whether the program follows the law

• Whether the data utilized by the program is reliable, and

• Whether the program has adequate accountability and oversight.
   

The audit must also include recommendations on how the program could reduce its annual costs by 10 percent. The State Auditor also invites input from the LAO as part of the audit.

​

What Happens After a Tax Passes?

For all special taxes adopted or increased by the voters or the Legislature after January 1, 2026, the State Auditor will conduct a follow-up audit every four years for each program that receives funding the tax. These ongoing audits cover the same questions, add recommendations for improving effectiveness and reducing cost, and require the State Auditor to invite public input.

Does The Audit Decide Whether a Program Gets Funded?

No. The audit produces findings and recommendations, and both are public. Whether the tax passes is up to voters. How programs are funded from year to year is up to the Legislature. Those decisions stay where they are today.  Instead, the ongoing audits are intended to assist decisionmakers and the public in tracking progress over time.

​

Does The 10 Percent Figure Mean a 10 Percent Cut?

No. The measure requires the State Auditor to include recommendations on how a program could achieve savings of at least 10 percent a year. Acting on any recommendation is a separate decision by the Legislature or voters. The LAO's fiscal analysis says that to the extent programs adopt the recommendations, the measure "could result in savings or improved services at existing funding levels," and that "the degree to which this would occur depends on future decisions."

​

Could a Program Be Cut Without Review?

No. Prop 41 does not cut any programs and does not give the State Auditor the power to cut any programs.  Under Proposition 41, a program funded by a new special tax is audited before the tax goes to voters and again every four years while the tax is in place. Any change to its funding happens after that review and would be up to the Legislature or voters, with the auditor's findings available to everyone on an ongoing basis.

​

Who Pays for the Audits?

If voters approve the tax, the State Auditor is reimbursed from the revenue the tax generates. If the initiative fails or never qualifies, the General Fund pays for the one-time audit, which the LAO estimates at "the low millions of dollars for each two-year election cycle." Printing the summary in the Voter Information Guide could cost "a few hundred thousand dollars per qualified initiative."  The potential savings from the audits could be significant, far outstripping any initial costs.

​

What Is the Overall Fiscal Effect?

California’s state budget is $352 billion annually.  If audits help improve spending and save even 1% of that money, it would be a savings of $3.5 billion for taxpayers, against a relatively low cost of millions of dollars.  The outcome depends on future decisions by voters and the Legislature—although the audits would provide them with new information to help guide those decisions.

Read More from the Non-Partisan Legislative Analyst’s Office: LAO’s fiscal analysis of Proposition 41 can be found here:

​

• Nov. 3, 2026 LAO analysis, https://lao.ca.gov/BallotAnalysis/Proposition?number=41&year=2026;
   

• Jan. 27, 2026 analysis LAO and Department of Finance analysis, https://lao.ca.gov/BallotAnalysis/Initiative/2025-040.