California Governor Gavin Newsom has vetoed Assembly Bill 1608, a measure that would have given the Office of Inspector General overseeing the California High-Speed Rail Authority new hiring flexibility and contracting powers — two weeks after the same office found the authority approved nearly $600,000 in unallowable travel expenses for its consultants.

The bill, authored by Assembly Transportation Committee Chair Lori Wilson, a Suisun City Democrat, would have allowed the inspector general's office to hire more highly trained staff for audits and investigations, and to sign contracts under $1 million without routing them through other state agencies.

The veto lands on a project already under scrutiny for cost and schedule performance. Auditors found in September that High-Speed Rail Authority consultants flew first class, took luxury car rides and visited a nightclub on taxpayer dollars. The legislative auditor's office, created in 2022 to conduct independent reviews of the long-delayed bullet train program, has never been fully staffed because it lacks the authority to recruit the expert staff its audits require, Inspector General Ben Belnap said in recent public hearings.

As of last month, three of the office's eight full-time audit and review positions remained vacant, Belnap told CalMatters. Staffing shortfalls have already delayed oversight work: the office planned to examine this spring how the authority approves change orders — contract adjustments that frequently carry substantial price tags — but postponed the review until fall.

"I just don't think we can afford any more delays," Belnap said. "This project needs timely oversight right now."

Belnap has also sought authority to purchase software and other services without first clearing requests through state agencies that oversee general contracting and technology projects, a process he said can take months to years. In one case, his office wanted to spend $300,000 on software allowing tipsters to submit complaints confidentially. Navigating the state's contracting process added more than $1 million to the cost and delayed the purchase by over a year, he said.

"I've got to figure out how to get around these processes, not because I don't respect the guardrails, but those guardrails … are expensive and, in this case, completely unnecessary," Belnap said.

In his veto message Wednesday, Newsom urged the inspector general's office to work within existing channels. He said his administration has supported the office "through targeted actions," and noted that it approved a separate measure earlier this year shielding the agency's sensitive records and whistleblower information from public disclosure.

"The Office should continue working with the appropriate state agencies to address its operational needs through existing processes rather than receive broad, permanent exemptions from generally applicable statewide administrative safeguards," Newsom wrote.

Belnap said he was disappointed by the decision but that the governor's staff offered to help clear some procurement and staffing hurdles, an offer he plans to accept. He signaled he will press ahead regardless of the veto's outcome.

"If it's just more of the same, then I'll have to think outside the box," Belnap said. "I'm just not going to allow the veto of AB 1608 to affect this office any longer."

Wilson was not immediately available for comment Thursday afternoon.

The veto leaves the inspector general's office with three vacancies in its audit division and a change-order review now scheduled for fall — meaning scrutiny of one of the project's most significant cost drivers will arrive months later than the office's own schedule called for.