By Issues & Insights Editorial Board | April 10, 2025
When the Justice Department announced a criminal investigation into rampant waste and fraud in California’s multi-billion-dollar homelessness boondoggle, our first question was, why stop there? The state has poured hundreds of billions of taxpayer dollars into a bullet train, water reservoirs, COVID relief, free health care, public schools, and has nothing to show for any of it.
Why should anyone outside California care? Because the state wasn’t just wasting its own taxpayers’ money – a lot of it came from Uncle Sam. And because the state’s current governor desperately wants to succeed Donald Trump in the White House.
A year ago, an audit found that the state had no idea why the $24 billion it had spent on more than 30 programs had no impact on the homeless population.
Now, the feds have launched a criminal investigation into this fraud. “Taxpayers deserve answers for where and how their hard-earned money has been spent. If state and local officials cannot provide proper oversight and accountability, we will do it for them. If we discover any federal laws were violated, we will make arrests,” said U.S. Attorney Bill Essayli.
The Trump administration has also launched an investigation to see where $4 billion in federal money went for California’s never-ending bullet train project, which was supposed to cost $33 billion and would – when completed in 2020 – zip riders more than 400 miles from downtown Los Angeles to downtown San Francisco in just over two hours.
The price tag is now more than triple the initial estimate, and the state has no idea when – or if – it will ever be completed. Just building a 119-mile stretch through California’s central desert is now projected to cost more than $35 billion and won’t be completed for at least five more years.
Also this week, Republicans in the state legislature called for an audit of Medi-Cal, California’s version of Medicaid, to find out exactly how much taxpayer money was going to pay benefits to illegal immigrants.
“Over the past six years, general fund spending on Medi-Cal has nearly doubled,” wrote San Diego Republican Assemblyman Carl DeMaio. “The governor’s administration admits that nearly one half of the growth … results from California’s expansion …. to undocumented immigrants.”
The audit came in response to Newsom’s request for a $6.2 billion bailout of the program.
Meanwhile, California lost $20 billion in COVID-related unemployment money – the most of any state – to “fraudsters using stolen social security numbers and stolen or made up names,” according to NPR. Not surprisingly, the state is barely lifting a finger to get that money back.
As NPR put it, “critics say the California money recovery effort remains feeble, with too few people held to account, and that the real fraud figure is likely far higher.”
Next on the waste-and-fraud hit parade are the billions spent to prevent and fight wildfires, a scam that came into high relief as thousands of homes burned to the ground around Los Angeles earlier this year. As we noted in this space, “California has wasted fantastic sums of money” on forest management and building reservoirs.
One investigation found that “Newsom overstated, by an astounding 690%, the number of acres treated with fuel breaks and prescribed burns in the very forestry projects he said needed to be prioritized to protect the state’s most vulnerable communities.”
In 2014, California voters overwhelmingly approved a $7.5 billion water bond proposal, nearly $3 billion of which was set aside to build new reservoirs. More than a decade later, not a single new reservoir has been built.
Last September, the state ditched a plan to nearly double the size of the Los Vaqueros Reservoir in Contra Costa County (which is east of San Francisco), after it couldn’t resolve bureaucratic infighting. The state can’t even figure out how to redirect money already allocated to that project.
California taxpayers should also demand an investigation into what happened to all the education money the state poured into its public schools. Since 2013, per-pupil spending has more than doubled, yet test scores have either remained flat or have fallen over those same years. (California’s teachers are the highest paid in the nation.)
“Let’s not kid ourselves,” writes Zac Townsend, “California’s government is rife with waste. As a state data official, I saw first hand how departmental silos obscure spending, how outdated systems hide inefficiencies, and how fraud festers in a budget so vast it defies comprehension. The Legislative Analyst’s Office routinely flags billions in questionable allocations, yet we rarely see follow-through.”
That follow-through is never going to happen so long as California remains a one-party state run by grifters, con men, and radical leftists who infest the Democratic Party.
Issues & Insights was founded by seasoned journalists of the IBD Editorials page. Our mission is to provide timely, fact-based reporting and deeply informed analysis on the news of the day – without fear or favor.
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