Top Four Times California Burned Taxpayer Dollars

With fraud and wasteful spending spiking online, calls have surged from some users to examine California’s decades of waste. Though Democratic California Gov. Gavin Newsom’s online team has actively attempted to brush aside concerns, billions have been burned by the Democrat-led state.

Independent journalist Nick Shirley’s viral post over the weekend sparked a massive online push to track down fraud and mismanagement of federal dollars after he exposed Somali-run daycare centers in Minnesota. However, while attention has focused on the Midwest, many online have pointed out how California, under majority Democratic leadership for more than a decade, played its own part in wasting taxpayer dollars.

1. COVID-19 Unemployment Insurance Fraud

In March 2020, President Donald Trump signed the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act during the final year of his first term as the United States grappled with the COVID-19 pandemic.

The bill created three temporary federal programs administered by states like California through the Employment Development Department (EDD), including the Pandemic Unemployment Assistance (PUA).

By fall 2021, under President Joe Biden, California’s EDD faced questions about its estimate of fraudulent payouts through the PUA. During an oversight hearing, then-EDD Director Rita Saenz claimed $20 billion of the $170 billion paid out was estimated to be fraudulent.

But in October 2022, LexisNexis Risk Solutions Government Division CEO Haywood Talcove told KCRA3 that the fraud estimate was severely undercounted. His data showed the EDD paid out $177 billion through pandemic programs, with fraud closer to $32.6 billion. Talcove warned that the state would never recover most of it and said he believed the money went to transnational criminal groups, sex trafficking and child extortion.

When recently called out about the EDD’s massive fraud, Newsom‘s press office pushed back on blaming the state’s Democratic leadership, instead saying Trump’s Labor Department admitted its guidance on the new programs was “inadequate.”

However, according to a U.S. Senate Committee on Finance report in May 2024, California’s Labor Secretary at the time, Democrat Julie Su, had the EDD waive basic fact-checking and fraud-prevention requirements for unemployment insurance, contradicting Department of Labor guidance.

2. Never-Ending Homelessness Crisis

While spending on homelessness from state and federal funds totals an estimated $24 billion since 2019, California received an estimated $650 million to $800 million in federal funds for FY 2025.

In previous years, California received closer to $900 million to $1 billion annually from the federal government. The drop in federal handouts from the U.S. Department of Housing and Urban Development stemmed primarily from the end of COVID-19 supplemental funding and Trump administration policy shifts that capped funding for permanent housing projects.

Despite the billions spent by taxpayers, California still holds the top spot for the most homeless people in the United States, according to U.S. News & World Report.

Newsom has touted his administration’s “fight” against the issue, ordering state agencies in 2024 to remove homeless encampments throughout the state after years of buildup.

3. The Never-Finished High-Speed Rail

Although Newsom and his administration attempted to defend the state’s promised high-speed rail project, the originally planned $33 billion system remains unfinished and is projected to cost more than $100 billion.

When voters approved it in 2008, they endorsed $9.95 billion in state bond funding as seed money for an 800-mile system that would carry passengers from Los Angeles to San Francisco, and the Central Valley to coastal cities, at speeds of up to 220 mph. However, by 2025, only a 119-mile initial segment was under active construction, with no operational high-speed track completed.

When the Trump administration criticized Newsom for wasting money on the project and terminated about $4 billion in federal funds, California sued. But on Sunday, the state dropped its lawsuit against the administration.

4. Overspending On Undocumented Immigrants

In January 2024, California completed its largest Medi-Cal expansion phase by providing full-scope coverage to adults ages 26-49 regardless of immigration status. The Democrat-led state became the first to offer comprehensive medical coverage to undocumented immigrants using taxpayer dollars.

Initial estimates projected costs at roughly $1.2 billion for the first six months, rising to $3.1 billion annually. However, by February, a California State Assembly Budget Committee hearing revealed taxpayers were spending more than $8.4 billion in the fiscal year on healthcare coverage for undocumented immigrants.

The $5 billion overrun quickly spread in reports and online as Newsom faced backlash amid the state’s budget deficit for FY 2025.

In June 2025, Newsom and the California Legislature implemented a freeze on new enrollments as part of the 2025-26 state budget, no longer allowing undocumented adults 19 and older to newly enroll in full-scope Medi-Cal starting Jan. 1, 2026.