Category: State Ievel issues

  • The Many Flavors of California Fraud

    You have to take notes to keep track of all the flavors of fraud being uncovered in California. Not that you would read about even half of it in the SF Comicle or other establishment press. The drumbeat is loud elsewhere, and today’s drum majorettes are highlighting the “wildlife butterfly bridge” in LA to help mountain lions cross 101 in Agoura Hills. Scoped at $50 million in 2022, it’s now at $114M and counting since it’s not finished. Considering its short span (210 feet), it might rival high-cost rail or the state capitol annex on a percentage basis.

    It turns out the $31 billion with a “b” EDD fraud is just the tip of the fraud iceberg. There’s the homeless-industrial complex fraud, the drug treatment center fraud, Medicaid fraud, autism fraud, hospice fraud, Proposition signature gathering fraud, the community college financial aid fraud, the commercial driver’s license fraud, the non-profit fraud and the cap-and-trade sleight of hand.

    I’m sure there are more flavors, so we will just use this post as the “fraud bucket” to be continually filled. When you hear we need this bond measure or that tax rate increase or that new fee, remember how leaky the bucket is.

  • Schiff Watch: Priorities, priorities

    Some things politicians do are real head-scratchers and it often comes down to priorities–or misguided priorities. One of our US Senators, Adam Schiff, makes me feel like I have fleas there is so much scratching going on. I’ll use this post as an occasional catchall bucket to track priorities starting with this one from the WSJ:

    Sen. Adam Schiff (D., Calif.) on Tuesday introduced legislation seeking to explicitly ban any entity regulated by the Commodity Futures Trading Commission from listing a contract “that involves, relates to, or references” terrorism, assassination, war or death.

    Federal law gives the CFTC the authority to prohibit event contracts involving war, terrorism, assassination or any activity that violates federal or state laws or is against the public interest. The bill seeks to explicitly ban such contracts from being listed, according to Sen. Schiff’s office.

    “With regulators turning a blind eye, prediction markets have rapidly become the Wild West,” Sen. Schiff said in a statement. “As the CFTC seeks to rewrite the rules of the road, Congress must make clear that these death bets are unequivocally prohibited, and this bill would do just that.”

    Like this is in the Top 50 things our senator should be worrying about. There’s massive fraud taking place all over the country including our Golden State. Energy prices are rising especially including our Golden State. Critical Federal employees are working without pay. The roads are a mess and transit is broke. But we should be concerned about prediction markets? Even the CFTC thinks this is misguided head-in-the-sand thinking.

    CFTC Chair Michael Selig came out swinging in favor of prediction markets in February, saying he sees their platforms as a way for society to channel the wisdom of crowds for useful information, offering a check on news media and other gatekeepers.

    Watch this space for more questions on priorities.

  • High-Cost Rail- Part 166: Another half billion gone

    The drumbeat of bad news on the high-cost rail fiasco just keeps getting louder to the point where the Legislature may shift into opaque mode going forward. From ABC 10 yesterday:

    SACRAMENTO, Calif. — California’s High-Speed Rail Board of Directors approved a settlement costing more than half a billion dollars, a move that comes as lawmakers debate how transparent the long-delayed and over-budget project should be.

    During a January meeting, the High-Speed Rail Authority’s board of directors approved more than $500 million to settle a dispute with a company contracted to design portions of the project. The settlement was approved as a change order, meaning it involved changes within an original contract, and the amount was decided during a closed session meeting.

    “Negotiate and finalize an appropriate settlement change order with DFJB up to an amount of $537.3 million,” said Adam Brezine, chief counsel for the High Speed Rail Authority.

    I can’t help but think that number is probably right around what we are short to do the Broadway grade separation. Hundreds of millions flying out the door due to incompetence. And the going forward solution?

    Citing those delays and concerns, (Assemblywoman Lori) Wilson introduced Assembly Bill 1608, which would provide additional tools for the Office of the Inspector General to conduct audits of the high-speed rail project.

    However, the bill includes language that would prohibit the inspector general from making a report public if it determines the report would, in part, “reveal weaknesses that could be exploited by individuals.”

    Wilson says she is open to amendments or clarifications, and that “weaknesses” is a standard audit term. Audits exist to find weaknesses and there are plenty to choose from on high-cost rail. Let’s air the dirty laundry so we can stop bleeding. That’s a change order I can live with.

  • Mahan: From San Jose to Sacramento?

    Even with Gov. “Kneepads” Newsom termed out of Sacramento and travelling the world to lay the groundwork for a presidential run, the race for governor has been a total yawn so far. Katie “Get out of my f*^%king shot” Porter is toast. As Randy Wong said today on the John Phillips Show (12-3pm 810am KSFO), “people either don’t know who Tom Steyer is or really don’t like him” regardless of how many expensive commercials he runs during Warriors games. The rest are pretty much ho-hum at best. The saddest is Tony Thurmond, state superindendent of public instruction, which would be the biggest example of the Peter Principle in history.

    But the news this morning that San Jose major Matt Mahan’s wife gave him to go ahead to jump into the race, as he relayed in an interview with Ashley Zavala of KCRA Sacramento, has invigorated the race to the June 2nd primary. Per the SF Standard:

    But Mahan does have some aces to play: He has won the ardor of some of California’s technology crowd, including Y Combinator leader Garry Tan and entrepreneur Jesse Tinsley. That cohort alone could provide the millions needed to propel him to Sacramento. He has also carved out a moderate, party-bucking lane on homelessness and criminal justice (e.g. a big Prop 36 supporter) that a large swath of voters might find appealing, as Democrats continue their soul-searching after the 2024 election. And in a political environment where bucking the status quo is in vogue, Mahan has been quick to criticize the state’s leadership, which could excite both disaffected voters and well-heeled donors.

    As mayor, Mahan has pushed for stricter rules on unsheltered homelessness, is an advocate for interim shelter sites, and often rails against state regulations he says stymie housing production. He is considered an ally to business interests, and, like San Francisco’s mayor, has largely stayed out of national political conversations. He has instead argued that his energy should be spent on combating local issues. His term in San Jose runs until 2028, after he handily won reelection in 2024.

    A reasonable person could ask, “why would you want the job?” when the next governor will inherit budget deficits as far as the eye can see–or passed it, if (when) the stock market hits its next speed bump. The emerging story is the public service unions and the health care unions with their “billionaire tax” vs. the “center-lane” candidate who can line up enough millions to level the advertising playing field. And if Mahan loses, he still has a job for two more years. Popcorn anyone?

  • Transportation Monies: $187.1M

    I wanted to dig a little deeper into the DJ story about $200M going for road upgrades this past week. Whenever I see this sort of number being trumpeted as a standalone factoid, I get curious about the entirety of the picture. On the surface it sounds like a lot of money, but there are about 750,000 people on the county. The DMV doesn’t make it easy to figure out how many licensed drivers there are in the county, but 70% isn’t a bad guess. Call it 525K. The actual budget number from the TA press release last June was $187.1M for a per driver capita expenditure of $356 per fiscal year. Given the cost of any noticeable road improvement, $187.1M won’t go far.

    Not that I want more taxes like Measures A and W that fill this fund or higher gas taxes, but just the Broadway grade separation is $500-600M and climbing by the year. And the TA’s funding included bicycle and pedestrian improvements as well. As a state, we don’t fare well on national rankings:

    California’s road condition rankings vary by study but generally place it poorly, often in the bottom 10 to 15 states, with reports citing significant percentages of roads in poor condition, ranking low in pavement quality for urban/rural interstates and arterials

    It didn’t used to be this way. When I got here in 1981, the roads were awesome compared to New England roads. As they should be. What went wrong? The state is certainly spending a ton of money on something–the tale of the tape is

    California’s state budget has significantly increased under Governor Newsom, growing from around $200 billion in 2019 to proposed levels near $350 billion for 2026-27.

    Bringing some salaries at places like the TA back to earth and making the EV drivers to pay their “fair share” would be a good start. Let’s hope the next governor can rein in the top line spending while reallocating more to infrastructure like roads, reservoirs otherwise things will only get worse out on the asphalt.

  • Smaller state districts? Sure, why not?

    Even a blind squirrel finds a nut once in a while and so it was this week with the SF Comicle Open Forum column. Under the title State needs to expand Legislature, some SF attorney made the case that we need smaller Assembly and State Senate districts leading to more elected members. I seldom think we need more politicians, but he makes an interesting point.

    California has fewer legislators per capita than any other state. The Assembly has 80 seats and the Senate 40, figures established in the 1879 Constitution and left unchanged even as the population grew from under 1 million to nearly 40 million.

    Today, a single state senator represents more people than live in South Dakota. Districts of this scale make competitive elections the exception rather than the rule. Reaching such a vast number of residents requires money, name recognition and organizational infrastructure that challengers rarely have. The mechanics of campaigning tilt toward incumbents and the dominant party. A UC Berkeley Institute of Governmental Studies poll in 2022 found that a majority of respondents believed the state was headed in the wrong direction. That same year, almost every legislator seeking reelection kept their seat.

    Geography adds a separate problem. When a district stretches across counties and communities, minority-party voters in suburban and exurban areas are often lost in electorates so large that their preferences barely register. We saw the consequences of this dynamic in 2024 when Republicans won nearly 41% of the Assembly vote but secured only 25% of the seats.

    The true irony of all this is that the Legislature foisted five tiny little city council districts on us at the local level. Back in 2021, with a push by a SoCal lawyer, we lost citywide council elections thus we each lost four of our five votes. Some people lost all five of their votes when no candidate stepped up to run. Similar micro-districting happened to school boards, water districts, et al. But not in Sacramento. Maybe it’s time, but the self-preservation force is strong for the status quo.

  • High-Cost Rail – Part 165 Bonta retreats

    The news that AG Rob Bonta has dropped the lawsuit against the Feds to “recoup” $4 billion in high-cost rail subsidies had all the markings of a holiday news drop. I saw it flicker by on X a couple of days ago from Rep. Kevin Kiley, but otherwise it was very quiet. But wait! The SF Comicle actually ran a piece about the retreat that provides us with a good holiday belly laugh:

    “This action reflects the State’s assessment that the federal government is not a reliable, constructive, or trustworthy partner in advancing high-speed rail in California,” a spokesperson for the rail authority wrote in a statement. “As a result, the State has opted to move forward without the Trump administration. We regret that they will not share in California’s success.”

    Looking back at the previous 164 posts I don’t see any successes. Quite the opposite. Money is being flushed down the drain with no end in sight. And they think they will con private investors to join in as noted in Part 164.

    “Federal dollars remain a fraction of our high-speed rail investment and the action will not diminish the project, which is primarily state-funded,” said state Sen. Dave Cortese, D-San Jose, who chairs the Senate Transportation Committee and a major advocate for the rail line. “We have not anticipated receiving that money now for the better part of the year so in a sense it’s been written off.”

    Even before the federal funding came under threat, the rail authority CEO Ian Choudri, who was appointed in August 2024, had begun to focus on luring private investors to complete the project more quickly.

    One has to wonder when Gov. Newsom will finally do his patented flip-flop, kill the thing and preserve his presidential aspirations from being railroaded into the ground? I can’t imagine Bonta pulled the plug on the lawsuit all by himself. The $1 billion per year from Cap and Trade just prolongs the bleeding.

  • Diane Papan: Legislative highlights

    Our rookie assemblywoman Diane Papan just sent us all a mailer listing the legislative highlights for this year. Let’s have a look:

    AB 93: Data centers: Water use reporting

    AB 900: Stewardship of conserved lands

    AB 527: Geothermal exploratory projects

    AB 1250: Paratransit service

    AB 60: Safer cosmetics for California families

    AB 650: Cutting through bureaucracy to build homes

    AB 411: The Caring About The Terrain, Livestock, and Ecosystems (CATTLE) Act

    There you have it–postage paid State of California Assembly. It was quite a year.

  • Cut housing regulations? Start here.

    Politicians across the political spectrum rail against excessive regulations on building housing. CEQA is being gutted and onerous quotas are being foisted on cities and towns all over the state. Very few cities are trying to maintain some sense of order and quality of life since they know just pushing housing without all the other infrastructure is insane. The Merc sizes the problem in a piece about San Mateo County, Half Moon Bay, Belvedere and Clayton not having state-approved plans yet.

    In total, the Bay Area’s 110 local governments are responsible for adding 441,000 new homes between 2023 and 2031, up from 187,990 in the previous eight-year cycle. So far, the region is far behind schedule in meeting the ambitious new goal, in part because of high interest rates and other market forces.

    Despite the threat of stricter penalties, housing advocates say the few remaining municipalities without completed housing elements appear to lack a sense of urgency in obtaining the state’s sign-off.

    “They’re mostly small and wealthy jurisdictions that probably feel they don’t have any obligation and that they can hire enough lawyers to get out of whatever obligation the state imposes on them,” said Matt Regan, a housing policy expert with the Bay Area Council, a pro-business group.

    I keep waiting for some “small wealthy jurisdictions” to lead the legal way out of this mess. We don’t need a lot of lawyers, just a couple of really good ones. 441,000 new units over the next six years? It just not sustainable. Not even close. Here in the County the Merc notes

    On the Peninsula, San Mateo County received a similar letter from the accountability unit in September. County officials said they are working as “expeditiously as possible” to finish their required rezoning process by the middle of next year, attributing the delay to “difficulties of navigating the many new housing laws” passed in recent years. They said the county had not received a builder’s remedy application.

    There’s quite a bit of County land “up the hill” from the Easton Addition in B’game. What if the County decides easy access to 280 and a fairly well-run water system make for a good target location? Will they be funding and building another water tank, sewer line, school and sheriff sub-station. I doubt it.

    For all the talk of authoritarianism spilling out of Sacramento, this top-down issuance of quotas and heavy-handed penalties merits a long look in the mirror. The RHNA numbers are where the next cut should come from.

  • Smelling smoke in Sacramento: Is there fire?

    I’m smelling smoke in Sacramento and wondering how big the fire might get. When the SF Comicle decides to do a full-page piece on a corruption indictment of a very senior Newsom ex-staffer you know they are getting in front of something that blew up on X just a day or two ago. The SacBee led four days ago, and the WSJ was on it two days ago when one Dana Williamson appeared in court, but the Comicle has a way of ignoring or burying these stories on A10. Before anyone’s TDS gets triggered the WSJ writes:

    A federal investigation involving prominent former aides to Democratic politicians could generate uncomfortable questions as California pols seek higher office. The feds allege a conspiracy among former aides to raid a campaign account by billing it for bogus services. Since the investigation began during the Biden administration, it won’t be easy for Democrats to dismiss it as Trump lawfare.

    Apparently the Feds first reached out to Williamson asking questions about the Gavinor but she told them she Knew Nothing. She now sees where that got her. The smell of smoke is strong because all the support Newsom gave Biden before his TV crack-up. It couldn’t be retribution.

    Williamson was Newsom’s chief of staff until last November when she alerted Newsom of the investigation. Her little team is accused of (and two have plead guilty to bank and wire fraud) skimming $10K a month out of a dormant Xavier Becerra campaign account totaling $180K. The would-be governor Becerra called it a “gut punch”. But wait, there’s more from the SacBee:

    The charges also accuse Williamson of filing false tax returns, claiming more than $1 million in business deductions for personal expenses, including trips to luxury resorts in Mexico, designer handbags, jewelry, home furniture, and travel on private jets. The indictment also alleges that Williamson provided government information to a company involved in litigation with the state and lied about it to the FBI.

    All sorts of money has been sloshing around Sacramento for a long time. High-cost rail is billions over budget. Lost EDD money totalled $31 billion and Williamson is also accused of filing a fraudulent PPP claim. Non-profits and NGOs get grant money all the time for all sorts of things. The Newsom tab to solve homelessness is somewhere between $24 and $37 billion. And Williamson worked as director of public affairs for PG&E from 2006 to 2011. I bought extra popcorn today.

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