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California’s Homelessness Industrial Complex: Where Did the Money Go?


Newsom's Veto of Audit Bill Betrays Transparency

In a move that has ignited bipartisan outrage and fueled accusations of concealing waste, California Governor, Gavin Newsom, vetoed Assembly Bill 2903 on September 25, 2024. The bill was a piece of legislation that promised to shine a much-needed light on the state's staggering $24 billion expenditure on homelessness programs. This bipartisan bill, which sailed through the State Assembly with a unanimous 72-0 vote and the Senate with an equally decisive 40-0, sought to mandate annual public reports on program expenditures, outcomes, and effectiveness. Yet, Newsom dismissed it as "unnecessary," citing existing oversight mechanisms that critics argue have proven woefully inadequate. As California grapples with the nation's largest unhoused population (around 180,000 people, with a 6% increase from 2022 to 2023 despite the billions poured in), this veto raises profound questions about accountability, potential fraud, and the governor's priorities.


The backstory is damning. In April 2024, the California state auditor released a scathing report evaluating homelessness spending from fiscal years 2018-19 through 2022-23. The findings were stark: while $24 billion was allocated across various initiatives, the state failed to consistently track outcomes or measure effectiveness. Some programs were evaluated, but others lacked any data on their impact, even as homelessness numbers climbed. The auditor's recommendations were clear--implement improved oversight, including annual reporting on costs and results to safeguard taxpayer funds. AB 2903 was crafted precisely to address these gaps, building on the auditor's call for transparency without imposing significant new costs. Similar bills, like AB 2570 and AB 2093 aimed at enhancing accountability, met the same veto fate, suggesting a pattern of resistance to scrutiny.


Newsom's veto message claimed the bill duplicated efforts already handled by the state's Homelessness Accountability Unit and ongoing data collection. He touted his administration's broader anti-fraud measures, including blocking $125 billion in potential fraud across programs like unemployment benefits during the COVID-19 pandemic and pursuing legal actions against fund misusers. But these defenses ring hollow when applied to homelessness spending. If existing mechanisms are so effective, why has homelessness worsened? Why did the auditor's report expose such glaring deficiencies in tracking? Critics, including Congressman Kevin Kiley (R), have lambasted the decision as an overt attempt to "conceal waste and fraud," especially given the bill's universal support. Even investor, Chamath Palihapitiya, publicly questioned the veto, calling it "curious" and implying a deliberate evasion of transparency.


Public reaction has been swift and severe. Online forums, from Reddit to social media, buzz with frustration. Users decry the situation as a "scam" and wonder aloud why a governor would block an audit of public funds. This sentiment is amplified by ongoing federal investigations (initiated under the Trump administration) into potential corruption in California's programs, with federal prosecutors charging individuals for misusing homelessness grants while more charges are expected. Newsom's office has dismissed these probes as politically motivated, particularly those linked to former President Trump. Such deflections do little to address the core issue: California's homelessness crisis persists amid unchecked billions.


This veto isn't an isolated incident. It occurs against a backdrop of other controversial decisions, such as vetoes on bills addressing elder financial fraud (e.g., SB 278), which have been conflated in public discourse as evidence of a broader aversion to accountability. While Newsom's administration emphasizes proactive steps, the reality is that without mandatory, public evaluations, taxpayers are left in the dark. The state's unhoused population continues to suffer, and resources that could make a difference are potentially squandered.


In vetoing AB 2903, Newsom has not only snubbed a rare, bipartisan consensus but also undermined public trust. California deserves better than platitudes about existing oversight. It needs real transparency to ensure that $24 billion, and any future funds actually combat homelessness rather than vanish into bureaucratic black holes. As discussions rage into 2026, with federal scrutiny intensifying, one thing is clear: this decision may haunt Newsom's legacy, painting him as a guardian of opacity over progress.


The story doesn't end with this veto. Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mehmet Oz has warned that California's healthcare fraud dwarfs other states' issues, stating that the Minnesota scandals are "just the tip of the iceberg." In a January 2026 news conference and subsequent interviews, Oz estimated up to $4 billion in abuses, particularly in hospice and home health care, with 18% of national home healthcare billing originating from Los Angeles County alone—calling it suspiciously high and linked to exploitation by foreign-based gangs. While these comments focus on Medicare and Medicaid, they underscore a broader pattern of systemic corruption and oversight failures under Newsom's leadership, signaling that more revelations will emerge through escalating federal investigations into California's programs, including homelessness.


Sources on Newsom's Veto of AB 2903

  1. Governor Newsom Vetoes Bipartisan Legislation Improving Accountability Over Homelessness Spending

  2. Newsom Vetoes Bill to Track Homelessness Spending

  3. SEP 25 2024 - Governor of California (Veto Message PDF)

  4. Newsom vetoes bill aimed at tracking state spending on homelessness, housing programs

  5. Newsom Vetoes Bill that Would Require Annual Report on Homeless Program

  6. Gov. Newsom vetoes homelessness spending accountability bill, arguing 'similar measures' already in place

  7. Newsom vetoes unopposed bill to require public reports on homeless spending outcomes

  8. Newsom vetoes bipartisan accountability legislation aimed at state spending on homelessness crisis

Sources on California State Auditor Report on $24 Billion Homelessness Spending (2024)

  1. Homelessness in California: The State Must Do More to Assess the Cost-Effectiveness of Its Homelessness Programs

  2. San José and San Diego Must Do More to Plan and Evaluate Their Efforts to Reduce Homelessness

  3. California fails to track its homelessness spending or results, a new audit says

  4. 2023-102.2 Homelessness in California

  5. Despite California Spending $24 Billion On It Since 2019, Homelessness Increased. What Happened?

  6. How effective are California's homelessness programs? Audit finds state hasn't kept track well

  7. Audit finds California spent $24B on homelessness in 5 years, didn't consistently track outcomes

  8. Statement from Assemblyman Josh Hoover following Oversight Hearing on Homelessness

  9. Here's how much California spends on each homeless person

Sources on Federal Investigations into California Homelessness Fraud (2025-2026, Trump Administration)

  1. California sues Trump administration over 'baseless and cruel' freezing of child-care funds

  2. Trump Launches National Fraud Enforcement Division as Newsom's California Drowns in Billions of Waste and Mismanagement

  3. Trump launches fraud investigation into California's spending

  4. Families remain concerned amid pause in federal child care funds

  5. Trump lists his demands in $10B California childcare fraud probe

  6. California: Newsom's 'National Model' for Homeless Wracked by Fraud

  7. Newsom launches website tracking Trump's top 10 criminal cronies as new data shows California crime continues to drop

  8. Fact Check Team: Trump administration's homelessness policy faces legal fight

  9. Federal judge blocks Trump administration's freeze of $10 billion in child-care funds

Sources on Dr. Mehmet Oz's Statements on California Medicare Fraud (Compared to Minnesota, 2026)

  1. Dr. Oz Visits California to Target 'Fraud'

  2. US Department of Justice and Dr. Oz targeting California over alleged medical fraud

  3. Dr. Oz touts health care fraud crackdown on L.A. 'foreign influences'

  4. Dr. Oz on Medicaid fraud 'fact-finding mission' in Minnesota, $2B could be at stake

  5. ‘Boots on the Ground’: Dr. Oz, CMS Leaders Visit Fraud-Ridden States

  6. Federal officials target California health care fraud, invoke Minnesota prosecutions

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