The 2021 Follow the Money Report
Billions in California Taxpayer Dollars Needlessly Wasted Documented in Howard Jarvis Taxpayers Foundation Report
This Article Was Contributed by the Howard Jarvis Taxpayers Association
“Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.”
― Dr. Seuss, The Lorax.
The consequences of California’s failure to provide meaningful accountability manifest in declines in venture capital investment, tourism, and Congressional representation. Once again, around this year’s “Tax Day” (e.g., the IRS tax filing deadline), the Howard Jarvis Taxpayers Foundation has once again issued its annual edition of the Follow the Money Report detailing examples of government waste, fraud, and abuse in the past year that total in the billions.
The examples in this new report should be grounds for them to ask hard questions to the political class which continues to fail to prevent such abuses from occurring. Among the examples cited in the report are a $1.7 billion contract awarded to a COVID testing lab whose employees had been reported sleeping on the job and billions of new delays and cost overruns in the state’s high speed rail program.
“When California taxpayers must struggle to make ends meet more than ever with inflation and gas prices at record highs, there is truly no excuse for politicians to spend their hard-earned money so recklessly,” said Jon Coupal, Chairman of the Howard Jarvis Taxpayers Foundation. “Taxpayers now need accountability more than ever,” he said.
This last year, the State of California once again ranked the worst in the nation to do business, according to an annual report by “CEO Magazine,” and numerous examples of waste, fraud and abuse totaling billions of taxpayer dollars “down the drain” and were reported by independent investigations. However, none of that is new. For years, Sacramento has tied up small business owners in red tape and wasted the people’s hard-earned tax dollars without much in the way of political repercussions.
Perhaps it is exactly this lack of consequence for their mismanagement that has made the political class believe they can continue to abuse the public trust forever without jeopardizing their position of power. However, this last year brought signs that people may no longer be willing to look the other way just because the weather is pleasant. For the first time ever, Silicon Valley, long one of California’s biggest economic engines, saw its share of venture capital investment nationally fall below 20%.
Meanwhile, tourism, long a California strength, continued to suffer in 2021 despite a $95 million marketing blitz by the Newsom administration. California tourism in 2021, while up from 2020, still lagged far below its 2019 performance, with many travelers opting to go instead to Florida, which made major gains. California’s ongoing exodus of jobs and productive citizens also resulted in the state’s first-ever loss of a Congressional seat, indicating the state’s political power in Washington may be on the decline if the policies driving this exodus remain unaddressed.
California’s new budget system, a program dubbed “Fi$Cal,” is now years behind schedule and hundreds of millions over budget. This disaster, which some have suggested could have been averted completely by using an off-the-shelf solution, has been discussed in the Follow the Money report before because the delays have turned into an ongoing saga that may even threaten California’s credit rating. The latest target completion date is now the summer of 2022, but this date has been pushed back five times already from its original target of 2016, so whether this time is the true completion date is anybody’s guess.
An investigation by auditors at the nonprofit OpenTheBooks.com found Los Angeles lifeguards can make a virtual fortune. They found in 2019, 82 lifeguards made over $200,000 and seven made over $300,000, including the value of benefits.
It’s Your Money, But You Can’t See the Checkbook …
Can you imagine if you or I told the IRS we “can’t locate” our records? The Federal government, hundreds of large cities and 49 states are all able to produce a checkbook detailing their spending. However, in California a watchdog organization has been requesting this information for nearly two years and has yet to receive the records, with State Controller Betty Yee saying she “can’t locate” them. In fact, the organization requesting the records says not a single transaction out of $320 billion of spending has been disclosed.
DMV Employees Admitted Taking Bribes for Licenses
Five Department of Motor Vehicle (DMV) employees at the agency’s Torrance and Lincoln Park offices admitted taking bribes in exchange for issuing licenses to unqualified drivers. Tens of thousands of dollars were received in connection with the scandal and the employees involved admitted to taking bribes several times a week. The scam was discovered by a DMV investigator who noticed an unusual pattern associated with the fraudulent applications.
California’s “First Partner” Jennifer Siebel Newsom Receives Corporate Donations
An investigation by the Sacramento Bee found Governor Newsom’s wife’s nonprofit, an organization focusing on gender equity in film, has received $800,000 in donations from companies involved in lobbying the state. These companies, which have also donated to the Governor’s political activities, include PG&E, Kaiser Permanente, AT&T, and Comcast. The Governor denies the donations to his wife’s nonprofit have any inappropriate influence on his decisions, stating in response to reporters’ questions, “There’s no correlation, period, full stop. Absolutely none.”
Top Union Leader Charged with Tax Fraud, Embezzlement, Perjury and Failure to Pay Taxes
The executive director of the Service Employees International Union (SEIU_, the state’s largest union and an advocate of higher taxes, resigned after being charged with numerous crimes including failure to pay her own taxes. Under this official’s tenure, the union donated more than $6 million to Gavin Newsom’s anti-Recall campaign.
State Employment Chief Says She Doesn’t Know Why Unemployment is High
California’s unemployment rate soared to historic highs as strict COVID-19 rules combined with the state’s usual high tax and anti-business political stance. However, when Assemblyman Kevin Kiley questioned the Director of the Employment Development Department on why unemployment was so high she was absolutely baffled, and said she would have a “research team” look into it.
Regular Californians Told to “Stay Home Save Lives” While Politicians Enjoy Junkets
Although many Californians continued to live under strict COVID-19 rules, legislators themselves enjoyed trips to Pebble Beach, Australia, Scotland, Portland and Maui. Many of these trips were paid for by lobbyists with important business before the Legislature. These all-expenses-paid trips give lobbyists an opportunity to discuss their issues while they wine and dine politicians, giving them an additional level of access not enjoyed by regular constituents.
State Employees Embezzle $2.7 Million Intended for AIDS Patients
State employees conspired to bilk the California Office of AIDS of $2.7 million through a scheme where fake invoices were submitted on behalf of a company that didn’t actually exist. The funds embezzled were used to fund travel, cruises, parties and trips to sporting events. The fraud was first discovered when an official asked for more information on the fake company, but not until millions had already been stolen. Government watchdogs pointed to the situation as an example of why more safeguards are needed to ensure taxpayer funds are spent appropriately.
Congressman’s Son Accepted to Stanford University Following $50,000 Donation
Democrat Representative, Ted Lieu, donated $50,000 of campaign funds to Stanford University before his son was accepted, Federal Election Commission reports have revealed. The contributions were first exposed by an anonymous Twitter account, which was subsequently banned by the social media giant.
Los Angeles City Councilmember Charged with Funneling Lucrative Contracts to the University of Southern California in Exchange for a Professorship and Scholarship for Disgraced Son
A federal grand jury indicted South Los Angeles City Councilmember, Mark Ridley-Thomas, on charges of funneling millions of dollars of contracts to the University of Southern California in exchange for an admission with a full scholarship and a paid professorship for his son. His son, Sebastian Ridley-Thomas, is himself no stranger to scandal. Sebastian Ridley-Thomas was a State Assemblymember embroiled in a “#metoo” scandal before resigning his position with the Assembly to become a professor, despite lacking a graduate degree.
Inland Empire Superintendent Earns $600,000 Plus a Year
Including benefits, the superintendent of Ontario Montclair schools routinely receives over $600,000 a year. His high rate of compensation includes various benefits including an ability to cash out sick time, resulting in a 2019 salary of $561,748, more than the President of the United States earns at $400,000 annually.
California Diversity Bureaucrat Doesn’t Even Live in California
California’s Superintendent of Equity, a brand-new position paying $180,000 a year, resigned after Politico revealed he didn’t even live in California, but lived in Philadelphia where he ran a business. Further questions were raised about the ethics of how he was hired. The position was not found to have been publicly posted on the state’s website and the official’s resume did not show any experience working with California school districts. Meanwhile, it was revealed he had a decades-long friendship with the State Superintendent of schools.
Unpaid Utility Bills Rise to $1.25 Billion
A report on COVID-19 by the California Public Utilities Commission revealed the state’s public utilities have unpaid bills totaling $1.25 billion, the costs of which are ultimately shouldered by ratepayers who do pay their bills. Contributing to Californians’ increasing inability to pay their bills may be the state’s “decarbonization” efforts. In fact, in the last seven years, rates charged by San Diego’s electric company Pacific Gas & Electric (PG&E), and Southern California Edison, increased 48%, 38%, and 6% respectively.
Carbon Credit Scheme Harming, Not Helping, the Environment, Study Finds
California has sold millions of carbon credits, but a new analysis found there are problems with the official forest maps that create opportunities for participants to game the system. The projects then funded may be counter to the plan’s emission reduction goals. The analysis was conducted by CarbonPlan, a nonprofit organization, in association with experts from universities including UC Berkeley and Columbia. Businesses including large oil companies have had to spend billions to purchase these credits and those costs are ultimately shouldered by consumers, especially fuel consumers.
Residents of Nancy Pelosi’s District to Receive Subsidies to Buy Electric Fireplaces
Residents of Speaker Nancy Pelosi’s district will receive $2.1 million in federal tax dollars in partnership with a $205,000 contribution by the Bay Area Air Quality Management District to replace their wood fireplaces with electric ones. While ostensibly meant to improve air quality, it certainly raises questions about why the funds were directed to this particular area. Furthermore, the allocation duplicates incentives for removing wood burning fireplaces which were somehow included in the coronavirus relief plan.
Authorities Charge Four with $20 Million Theft Associated with Non-Existent Solar Project
The Los Angeles County district attorney charged four men including a former state senator with stealing $20 million intended for a solar project. One of the individuals is accused of spending over $8 million of these funds on personal items.
California Bans Gas Powered Lawn Mowers and Leaf Blowers, Pledges $30 Million for Electric Equipment
As part of the California Legislature and the California Air Resources Board’s ongoing drive to save the planet, officials have decided gas powered lawn mowers and leaf blowers will no longer be made available to consumers after 2024. The plan also includes spending $30 million to incentivize the purchase of electric lawn mowers and leaf blowers, which will still be allowed.
Free Money! City of Los Angeles Cuts Police Funding, Diverts Funds to Free Money Payouts
Los Angeles Mayor Eric Garcetti’s budget included $24 million dedicated to no-strings-attached $1,000-a-month payments to Angelenos. Low-income parents and people suffering from medical conditions are expected to receive priority in the selection process. An additional $6 million diverted from the Los Angeles Police Department is set to provide payments to single parents in Los Angeles City Council District 9, which includes the communities of South Central and downtown. Considering that these payments are paid for by police cutbacks, who are the recipients supposed to call if their check is stolen?
25 Lucky LGBT Seniors in West Hollywood to Get $1,000 Checks
25 LGBT senior citizens will receive unconditional $1,000-a-month payments under a new program in partnership with the University of Pennsylvania and an organization of mayors advocating more such “universal basic income” programs be adopted nationally. While some in the community expressed concerns over why the program leaves out other groups considered marginalized, officials argued they lacked full control of the program due to the partnership. Specifics related to funding the program also remained to be finalized.
San Francisco Plans to Pay People $300 a Month to Not Shoot Others
Ten individuals in San Francisco deemed to be at risk of being part of a shooting will receive $300 a month to behave better. These payments, which are funded by a nonprofit through a partnership with the city, will be in the form of gift cards, and the payments can be bumped up to $500 if the individuals participating also perform some volunteer work.
Health and COVID-19: How Do Electric Cars Prevent Coronavirus?
Governor Newsom’s COVID-19 relief budget raised some eyebrows when a closer look at the proposal revealed it included $1.5 billion for electric car infrastructure and incentives. In fact, the amount of money allocated to electric cars was nearly triple the $575 million planned for helping small businesses weather the pandemic.
Counties That Vote for the Majority Party Get More Coronavirus Relief
Although rural, more Republican-leaning counties are no less susceptible to the effects of the COVID-19 pandemic, the state auditor found large cities were prioritized for receiving relief. Do you think this was a coincidence or a conscious decision to favor counties that are more supportive of our state’s majority political party?
EDD and Bank of America “Nifty Little Kickback Scheme”
While many Californians struggled to receive unemployment benefits, the Employment Development Department (EDD) and Bank of America were receiving revenue every time debit cards issued by the agency were swiped, according to a CalMatters report. Although officials said they did not know how much money Bank of America received, and Bank of America itself declined to comment, the EDD reported receiving $5.2 million in September alone in response to a public records request by CalMatters. “This is essentially a nifty little hidden kickback scheme,” said Assemblymember Jim Patterson.
Big Businesses Give Big to Gov. Newsom and Receive Lucrative Contracts
Governor Newsom raised over $200 million in “behest payments,” mostly for COVID-19 relief programs. These donations, which were made at the Governor’s request, included payments from healthcare companies that received lucrative state contracts. Is this really appropriate? You be the judge.
When You’re the Government You Pay When You Want …
Have you ever gotten a threatening letter from the government over an unpaid tax bill or fine? They want to be paid on time and they’re not afraid to threaten drastic consequences if ordinary taxpayers can’t pay up. However, when it comes to them, they don’t hold themselves to the same standard they expect from the rest of us. When Los Angeles experienced a fiscal crisis, the city simply blamed the coronavirus pandemic and told their creditors they would have to wait.
California Spends $50 Million on “Glitchy” COVID-19 Appointment Website
Only 27% of Californians who received coronavirus vaccinations used “MyTurn” to schedule their appointments due in part to multiple glitches in the hastily built site. The site failed to list many providers and pharmacies where Californians could be vaccinated and the site also frustrated and confused people by requiring multiple logins. The contract to build the site itself was awarded to Blue Shield of California on a “no bid” basis.
Who Wants to Be a Vaccinated Millionaire?!
As part of its drive to get Californians vaccinated against COVID-19, the state resorted to lottery-style payouts and prices. Under this plan, 10 Californians received $1.5 million each in prizes, 30 got $50,000 and 2 million were eligible for $50 gift cards.
Laboratory Awarded $1.7 Billion Contract Despite Reports They Were Sleeping on the Job
Whistleblowers exposed a COVID-19 test facility for serious problems including lab technicians sleeping while processing samples and test swabs found in bathrooms. First, state officials denied the existence of any problem at all. While they later did acknowledge “serious deficiencies” were present, they still renewed a contract worth $1.7 billion with the same lab.
Housing: When Does an 8-Foot Shed Cost $130,000?
When the Government is the One in Charge of Buying It!
A program to build “tiny home villages” in Los Angeles consisting of 64-square-foot aluminum and composite sheds, paid $130,000 each for the structures, ten times what other cities spent, according to a Los Angeles Times report.
Tents That Cost More Than Luxury Apartments
The San Francisco Chronicle reported 260 tents that the City of San Francisco maintains in six “sleeping villages” cost the city $5,000 per tent per month, or $60,000 annually. In addition to tents, the sleeping villages provide access to showers and 3 meals a day, but some have raised concerns about the cost. At $5,000 per tent per month, the rent on a luxury apartment would be less, and the rent on an average 1-bedroom apartment in San Francisco would be less than half.
Rent Relief Money Gets Stuck in Bureaucracy
The U.S. Treasury allocated $900 million to provide rent relief for San Francisco residents, but as of mid-July only about 10% of the money had actually reached residents. The program was heralded as an unprecedented collaboration of multiple levels of government but the money, however well intentioned, seems to have gotten stuck in the bureaucracy.
Los Angeles Area Nonprofit Staff Embezzled $400,000 in Homeless Funds
Three nonprofit staff members for a Los Angeles based nonprofit were charged with embezzling $400,000 intended to assist people experiencing homelessness. The staffmembers enlisted friends and family members to apply for assistance with falsified documents. The fraud occurred in 2017 but since being brought to light the women involved have been charged with 56 felonies including embezzlement and grand theft.
Trains: Contractor Calls High Speed Rail Construction Delays “Beyond Comprehension”
A letter from one of the main contractors working on the high-speed rail project expressed dismay over delays related to the state securing right-of-ways, suggesting delays and cost overruns on the project would continue to worsen. The letter, obtained by the Los Angeles Times, stated: “It is beyond comprehension that as of this day, more than two thousand and six hundred calendar days after (official approval to start construction) that the authority has not obtained all of the right of way … ”
Trains: Central Valley High-Speed Rail Segment a Year Behind and $1.4 Billion Over Budget
A segment of California’s troubled high-speed rail project under construction in the Central Valley will again have its completion date pushed back. This development is just the latest in a long series of delays and cost overruns related to the high-speed rail project, a scheme which has changed considerably and at least doubled in estimated cost from what was originally approved by voters.
Subways: How Does a Subway in Nancy Pelosi’s District Prevent Coronavirus?
Many members of Congress expressed dismay when a federal coronavirus relief package included $141 million for a South Bay BART project benefiting Speaker Nancy Pelosi’s district. While transit ridership has been declining throughout California long before the pandemic, ridership crashed especially once people began working from home and avoiding crowds, making the allocation especially nonsensical.
Trains: High-Speed Rail Contractor Four Years Behind and Over Budget
California’s high-speed rail officials awarded a contract for construction of a Central Valley segment of the route to the lowest bidder, a Spanish company named Dragados. Dragados promised it could deliver $300 million in cost savings with design changes. These design changes were later abandoned and Dragados is now four years behind schedule and has only completed 50% of the work it had planned. The High-Speed Rail Authority bears a share of the responsibility both for not doing its due diligence on the feasibility of the proposal itself and by failing to deliver 278 of 998 land parcels needed to complete construction.
Light Rail: 30 New Light Rail Trains in the Bay Area
San Francisco County Supervisors approved $200 million for 30 new light rail trains and new parking meters. However, given that transit ridership was falling even before the pandemic, whether this is actually a good idea is an appropriate question.
It’s always important to note that the waste, fraud, and abuse listed in the “Follow the Money” report is not a full list of government ineptitude and corruption for the year — it’s simply a selection of examples that were publicly exposed by watchdog organizations, media investigations and official inquiries. The fact that the Howard Jarvis Taxpayers Foundation can compile such a report annually, each with new revelations of billions of dollars wasted, illustrates the extent of the problem.
People once flocked to California from around the country and around the world. Today, people are leaving in droves to go to states like Texas and Florida where taxes and lower and state governments are less overbearing. What is the solution? Perhaps the political class will continue to abuse their power with impunity so long as they know there will be no real consequence for their failed leadership. The first step, however, is simply to raise awareness among our friends, neighbors, and communities so that our fellow citizens can at least be informed about the situation at hand. You can help bring about this increased awareness by sharing this report with others.
About the Author. Eric Eisenhammer serves as Director of Grassroots Operations at Howard Jarvis Taxpayers Foundation and is Chief Executive Officer of Dauntless Communications. He earned his Master of Public Policy Administration from Sacramento State University and Baccalaureate in Business Administration with an emphasis in Finance from California State University, Northridge. He has worked on numerous political campaigns around California and Nevada and has served as a legislative aide and Senate Fellow in the Sacramento State Capitol. The opinions expressed in this article are those of its author and not necessarily those of the Apartment Association of Greater Los Angeles. This article is being reprinted with permission from the Howard Jarvis Taxpayer Association and the author.