As part of a state government reorganization, one department in California was split into two this year, costing taxpayers an additional $2 billion.

A 2025 reorganization plan by Gov. Gavin Newsom called for dissolving the California Business, Consumer Services and Housing Agency and replacing it with two new departments: the Business and Consumer Services Agency and the Housing and Homelessness Agency, according to the now-defunct agency’s website.

According to the 2026-27 state budget passed this year, taxpayers are paying for the new Housing and Homelessness Agency in the amount of more than $4.43 billion, on top of paying almost $17 million to reorganize its predecessor.

Taxpayers also will pay more than $1.5 billion for the newly-created Business and Consumer Services Agency, bringing the total to $5.39 billion to pay for two new agencies.

That's up from $3.44 billion for the closed-down agency in the 2024-25 fiscal year.

The move follows a government reorganization plan backed in summer of 2025 by Newsom. The Demoratic governor said the plan was prompted by the state's growing homelessness. Newsom’s office declined to comment for this story, instead sending a press release issued more than a year ago announcing the creation of two new government agencies.

“Obviously, [Newsom] is doing this because he’s hoping to streamline processes and be able to deliver care more effectively. Presumably that’s the goal,” Wayne Winegarden, an economist at Pasadena-based Pacific Research Institute, told The Center Square on Friday. “Even if this is the right thing to do, it’s not getting to the core of the issue, which is how do we help these people and get people not just off the streets, but in a more sustainable position where they can get back to sustainable living, become employed and move on with their lives.”

Creating two new agencies from one now-closed one doesn’t solve the problem of housing and homelessness, Winegarden said.

“Homelessness remains a big problem and housing and affordability remains a big problem,” he said. “The burdens of starting a new business and all those things, those problems are inherent in the regulatory structure. So putting a new agency in charge of that regulatory structure, even if you get a few efficiencies, you’re not going to be changing the problems.”

Orphe Divounguy, The Center Square’s chief economist, said more units of government isn’t necessarily a good thing.

“If the split was done because it creates some sort of efficiency, then so be it. But ultimately, I’d want to find out why the split in the first place,” Divounguy said. “It’s really important to understand how well this organization was doing at meeting its objectives, evaluating its impact first, and if it was doing a great job, then why the split? And if it wasn’t doing a good job, do they think the split is going to improve outcomes?”

Tomiquia Moss, the former secretary for the Business, Consumer Services and Housing Agency and now the secretary of the new Housing and Homelessness Agency, did not respond to The Center Square's request for comment. Officials with boards, programs and commissions under the umbrella of Moss’s new agency also did not respond to The Center Square.

Rohit Chopra, the new secretary of the Business and Consumer Services Agency, did not respond to The Center Square.

The Center Square reached out to 20 state politicians on both sides of the aisle for this story who sit on housing, homelessness, business and consumer-related committees in the Legislature. All either declined to talk to The Center Square for this story or did not respond, instead deferring to the Governor’s Office, which would not comment for this story. Several tax-related organizations, groups that work on housing issues and California’s business climate and political economists at Stanford University also did not respond to The Center Square's request for comment or declined to comment.