Major Silicon Valley employers have announced significant job reductions in recent months. Oracle this month cut more than 500 Bay Area positions as part of a much larger global reduction reportedly affecting about 30,000 workers. Meta is set to begin laying off 3,000 employees in July across Menlo Park, Sunnyvale, Burlingame, San Francisco and Fremont. LinkedIn also plans to eliminate more than 500 positions in Sunnyvale, San Francisco and Mountain View. Cisco, based in San Jose, cut more than 200 Bay Area jobs last October and announced in May that it would eliminate about 4,000 jobs worldwide, even as the company reported record earnings.

Despite those announcements, the Bay Area economy has not shown the kind of widespread distress normally associated with a recession. Housing remains difficult to afford in San Francisco and surrounding communities, and the region continues to be a major driver of California’s economy.

Sarah Bohn, vice president and director of the Public Policy Institute of California’s Economic Policy Center, said the current wave of layoffs is slower than the pace seen in 2022, when many technology companies moved aggressively to shrink payrolls after rapid pandemic-era hiring.

Employment and job growth in the Bay Area have been relatively flat over the past year, Bohn said. While that does not signal strong expansion, she said it does suggest the technology sector has moved past the sharpest phase of its post-pandemic correction.

Technology also continues to have one of the lowest unemployment rates in the economy. Many workers who lose jobs in the sector are able to find new positions relatively quickly, Bohn said, particularly because of the size and depth of California’s technology labor market.

Jeff Bellisario, executive director of the Bay Area Council Economic Institute, said the impact of layoffs has also been softened by severance packages and the financial position of many technology workers. Strong stock market performance has helped some laid-off employees maintain spending power while searching for their next job.

Still, economists caution that the outlook could change if large-scale job cuts continue. A prolonged series of layoffs could eventually be reflected more clearly in regional employment numbers.

The labor market is also changing as technology companies invest in growth areas that do not always require the same level of staffing. Bellisario pointed to data centers and artificial intelligence as examples of areas where companies may expand without adding as many employees as they once did.

The result is a more competitive environment for some technology workers. Opportunities remain, Bellisario said, but the hiring market is no longer as overheated as it was just a few years ago.

In statewide political developments, Democrat Xavier Becerra has taken the lead in California’s primary race for governor, though his likely November opponent has not yet been determined. Republican Steve Hilton holds a narrow advantage over Democrat Tom Steyer for the second spot. If Hilton advances, Becerra would enter the general election as the favorite in a state where registered Democrats significantly outnumber Republicans. A Becerra-Steyer matchup would instead set up a high-profile contest between two Democrats.

Ballot counting could continue for days or weeks. President Donald Trump and Assistant U.S. Attorney Bill Essayli have raised concerns about widespread election fraud, though no evidence has been presented. Essayli said multiple investigations are underway. California Democratic officials have acknowledged the state’s slow vote count but defended the integrity of the election process.

Other statewide races are also taking shape. In the insurance commissioner race, Democrat Jane Kim has advanced and may face Democrat Ben Allen. For lieutenant governor, Democrat Fiona Ma has advanced and could face Republican Gloria Romero. Sonja Shaw and Richard Barrera advanced in the race for superintendent of public instruction. In the treasurer’s race, Democrat Eleni Kounalakis and Republican Jennifer Hawks advanced.

In congressional races, Rep. Kevin Kiley, who left the Republican Party to run as an independent in a different district, is positioned to face Democrat Richard Pan, a former state senator who holds a slim edge for second place in California’s 6th District. In California’s 7th District, Democratic Rep. Doris Matsui advanced and could face Sacramento City Councilmember Mai Vang, also a Democrat.

In Los Angeles, Republican Spencer Pratt has fallen behind Democrat Nithya Raman in the race to determine who will challenge incumbent Mayor Karen Bass in November.

Gov. Gavin Newsom’s budget proposal is also drawing concern from California’s life sciences industry. The plan would limit the amount of tax credits businesses can claim each year, affecting fewer than 100 of the largest corporate taxpayers in the state. The administration estimates the proposal would generate about $850 million in revenue during the 2026-27 fiscal year.

The proposed limit would reduce the value of California’s research and development tax credit, a provision long used by biotechnology, pharmaceutical and medical device companies. Industry representatives warn that reducing the credit could make it harder for companies to remain in California, build facilities or hire workers.

Tim Scott, president and chief executive of Biocom, said the credit plays an important role in keeping life sciences jobs and investment in the state.

The proposal has particular relevance in Southern California, where San Diego is one of the nation’s leading biotech hubs. Industry groups argue that lowering the credit could put California at a disadvantage against other states competing for research facilities and high-wage scientific jobs.

Other issues under discussion across California include proposed changes to how the state distributes funding for supportive services for older adults. Maral Karaccusian, director of the Los Angeles County Aging and Disabilities Department, has warned that the changes could reduce funding for high-need communities and jeopardize meal services for thousands of elderly residents.

Advocates are also urging lawmakers to preserve Treatment Atlas, a free online tool that provides information about whether addiction treatment facilities use evidence-based practices. Author David Sheff has called on the state to protect the program during budget negotiations.

Additional stories drawing attention around California include state workers protesting Gov. Newsom’s return-to-office mandate with another billboard; a long-delayed affordable housing project in Half Moon Bay facing renewed opposition; and Imperial County considering a moratorium on data centers.

In Southern California, federal training exercises with military-style helicopters have been tied to FBI preparations ahead of the World Cup. In San Diego, a Trump administration official has discussed a vision for additional desalination plants along the California coast. Meanwhile, Fresno County officials are preparing for a projected $300 million deficit, with expected cuts to social services tied to federal budget legislation cited as a major factor.

Original source: CalMatters

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The gloomy headlines illustrate how the press and corporate leaders often oversimplify big-company departures from California, leading citizens and state officials to under-examine the factors that lessen the impact of corporate departures and overstate their importance. The same type of doomsaying has played out with other big companies whose headquarters are leaving or have left the state, including Tesla, Oracle and SpaceX. 

In Chevron’s case, discussions of the exit tended to miss or downplay a few key points. Despite talk tying the move to regulations and climate-change litigation in California, CEO Mike Wirth said repeatedly that the relocation was about moving to “the energy capital of the world,” not policy differences with state officials. Also, Chevron already had three times as many workers in Texas as in California at the time it decided to move. And few observers bothered to note the major operations Chevron would retain in the state, including refineries and oil fields.

With other exits, pundits often don’t examine the true effects on state tax revenue. Or take into account the fact that some companies leave key people in California or eventually return. And expansions by companies or startups that pop up here don’t get as much attention, either, the governor and some economists say.

“This is a long narrative in California — about businesses moving out,” said Ted Egan, chief economist for San Francisco. “At the same time, you need to talk about businesses starting up.” 

Understanding the nuances of corporate exits is important because the departures can influence state policy and affect confidence among consumers and businesses. For example, the prospect of tech companies fleeing the state was raised this year by opponents of a California bill, eventually vetoed by the governor, that would have made tech companies test for critical harms from large artificial intelligence systems. Similarly, when Democratic Assemblymember Alex Lee of San Jose proposed a wealth tax last year, the California Chamber of Commerce said in a letter to him that the tax would likely contribute to “California’s business and resident exodus.” It did not pass. The Chamber used identical language in 2022 when successfully opposing various tax increases to fund a single-payer state health care program.

Despite complaints about high taxes, expensive housing and burdensome regulations — grousing that has been going on for decades — the state remains the national leader both for tech startups and for its share of big companies.

“I agree California is a more onerous place to do business,” said David Neumark, a UC Irvine economics professor who has studied relocations. “But it’s not like we’re some basket case.”

When leaving looks like staying

Some companies that recently made high-profile headquarters exits from the state have also either added more California employees or kept the lion’s share of workers here. Any remaining employees in California will continue to pay the state’s personal income tax.

Take Oracle, for example. The tech company announced in 2020 that it was moving its headquarters to Austin from Redwood City, leading to headlines like “Oracle Moves Headquarters to Texas, Joining Valley Exodus” and worries over “California’s higher operational costs and hefty taxes,” not to mention “steeper cost of living,” according to a couple of articles about the news. And yet Oracle as of this past spring still had almost triple the office workers in California than it has in Texas, 6,900 vs. 2,500, Bloomberg reported. A company spokesperson did not return a request for comment. But Redwood City’s data showed the company was still its biggest employer as of 2023. Though Oracle eliminated about 3,000 jobs in Redwood City over the past decade, it retains about 3,757 workers there, or more than 7% of the city’s workforce. 

Oracle continues to pay taxes in California, though because tax records are confidential, it’s hard to know exactly how much. That includes not just sales taxes but corporate income taxes too; moving a headquarters does not necessarily mean a company escapes those.  

“Corporations’ tax has very little to do with where their headquarters or employees are located,” said Brian Uhler, deputy legislative analyst with the state. “For a multinational business, they earn profit in California and outside California. California attributes profits to the state based on what share of a company’s national sales occur here.”

The state taxes corporations based on their sales, property and investments. So if a company earns revenue from sales or transactions in California, the company will pay taxes here regardless of where its headquarters is based. Companies also have to pay employment taxes for their workers based here. And certain types of companies, such as banks and other financial institutions, pay higher or additional taxes.

Another tech company that continues to contribute tax revenue to the state: Hewlett-Packard Enterprise, which announced it was relocating its headquarters to Texas in 2020. Even so, company spokesperson Adam Bauer said last month that the company has about 3,700 employees in Texas and about 3,600 in California. And on the company’s website, there were recently more job openings in California (45) than in Texas (34), including a few sales positions, a Northwest account executive and a “supplier relationship owner” for Nvidia, which is based in California. 

A third company that “left” California without really leaving is Tesla, which has actually grown in the state since its departure. The electric car maker moved its headquarters from Silicon Valley to Austin in 2021. CEO Elon Musk told shareholders that the company’s factory in Fremont was “jammed” and that housing costs in the state were high, making it tough for workers to live near the facility. Musk had also clashed with local health officials about COVID-related shutdowns. The New York Times framed the relocation as a “Blow to California.”

But three years later it doesn’t seem like a particularly severe blow. In 2022, the year after the move, the company “grew to 47,000 employees” in California, it said in a blog post, and ”our production footprint continued to increase.” Then, the next year, Tesla announced it would put its engineering and AI headquarters in Palo Alto, reportedly expecting to locate 1,400 employees in Hewlett-Packard’s former headquarters there. 

California’s Tesla experience makes it hard not to wonder how impactful two other recently announced Musk-related relocations will be. In July, the billionaire said he was moving the headquarters of social media company X and rocket builder SpaceX to Texas from California. Musk cited a law recently signed by Gov. Gavin Newsom that bans the state’s school districts from requiring parents to be notified of a change in their child’s gender identification. Musk has a transgender daughter and has been publicly critical of transgender people’s rights to choose preferred pronouns. He called the law “the final straw” on top of  “many others that preceded it, attacking both families and companies.” 

It’s not clear how many California X and SpaceX employees will actually end up in Texas. A source told the Washington Post that the 120 employees at X headquarters in San Francisco will move to Musk-linked offices in San Jose and Palo Alto, but since then the company has reportedly said in legal filings that it will move X’s headquarters to Bastrop, Texas. LAist quoted experts saying that moving SpaceX to Starbase, Texas, will be complicated and time-consuming since the company’s headquarters in Hawthorne is a huge aerospace facility. X and SpaceX did not respond to requests for additional information.

Similarly, Chevron spokesperson Randy Stuart said the company has not yet decided which of its positions in San Ramon will relocate to Texas. The relocation is not effective until Jan. 1 and the company expects it will take five years to migrate most corporate functions to Texas. Some 2,000 Chevron employees work in California versus 7,000 in Texas but that includes people outside of headquarters working on Chevron’s operations in this state, including crude oil fields, technical facilities and two refineries, which range from the San Joaquin Valley to Richmond to El Segundo. 

Growth can be hard to notice

While big departures like Musk’s get a lot of attention, expansions and new businesses within California tend not to.

In a recent Instagram post, Gov. Gavin Newsom tried to combat what he labeled “misinformation” about California’s economy by touting in-state expansions by well-known companies such as Visa, Ford Motor, Nintendo and Disneyland. He added that “the world’s leading AI companies are expanding right here in California.”

The governor may have a point about those expansions. There weren’t very many headlines — if any — about Visa recently opening a big new office in San Francisco; Ford’s plans to roll out a new electric-vehicle development center in Long Beach early next year; Nintendo’s intention to open a store in San Francisco next year; and Disneyland’s multibillion-dollar expansion over the next decade that promises jobs and community benefits for the city of Anaheim. 

Statewide, about 291,000 new business entities have registered in California this year, according to the secretary of state’s office, compared with 215,000 a decade ago. And that number does not include sole proprietorships, which do not register with the state.

Egan, San Francisco’s chief economist, noted that new AI companies are taking office space in San Francisco, helping the city’s slow recovery from the pandemic-induced boom in remote work. PitchBook, which keeps track of capital markets, recently ranked San Francisco the top city in the world for startups. New York and Beijing were second and third. And a report from PitchBook and the National Venture Capital Association showed that the Bay Area and Los Angeles combined had a total of 746 venture capital deals in the fourth quarter of 2023, compared with 402 deals in New York, the runner-up.

In addition, for the first time since 2014, California as of June has the highest number of Fortune 500 companies, 57, while Texas and New York have 52 each. Newcomers to Fortune magazine’s annual ranking of the world’s biggest companies based on their revenue included California-based companies DoorDash, Workday, Prologis and Clorox. 

Sarah Bohn, labor economist at the Public Policy Institute of California, said the headquarters moves “warrant attention, at a minimum. These moves make headlines, and that’s an important force for how people are feeling about doing business in California.”

Bohn said she is currently doing research to quantify the effects of corporate departures, but that it’s important to remember that there are always businesses moving out of, starting up in, or dying in the state. 

Neumark, the UC Irvine professor, is working with Bohn on that research. He also co-authored a couple of research papers that examined the issue in 2004 and 2007, so he knows the concern about businesses leaving the state is not new. Neumark saw the same worries back then, during the Arnold Schwarzenegger era. There was a lot of talk about companies moving out of California and some “crazy political stuff,” he said. That included the actor-turned-governor showing up at a Las Vegas business with a van marked “Arnold’s Moving Co.” to symbolically help that company move back to California.

Neumark and his fellow researchers found in 2007 that California did not lose a significant number of workers due to business relocations, only about 11,000 jobs a year out of more than 18 million jobs from 1992 to 2004. In the same period, total employment in the state rose by around 106,000 jobs per year, driven by the creation and expansion of new businesses, according to data presented in the paper. The researchers found no evidence of a mass business exodus, saying that the net losses in the number of businesses that left and jobs lost as a result were negligible: 0.05% of businesses in California moved to other states during each of the two worst years, 1993 and 1994; and 0.1% of jobs were lost to relocation during each of the two worst years, 1997 and 1998. He mentioned that a substantial portion of California’s economy is service-oriented, “and restaurants and hospitals don’t move to other states.” 

Complaints from departing corporations

There is no denying that some business executives are fed up with the state. 

After Chevron’s exit last month, the president of moderate business group Bay Area Council, Jim Wunderman, said in a written statement: “It’s an embarrassment for California that we’ve lost so many global companies because of misguided policies that make it incredibly difficult to do business here.”

In an interview with CalMatters, Wunderman said it’s time for a “reckoning.” He said lawmakers and officials need to rethink policies that make it hard to build housing, or drive up the cost of energy. “I understand we’re going through an energy transition. Do we have to do it in a way that we exacerbate economic problems in the state?”

He pointed to a bill, recently signed into law by the governor, that aims to curtail traffic and air pollution from warehouses. “We’re constantly regulating things to make it more difficult for businesses. (The warehouse bill) particularly affects the Inland Empire, whose economy is built around that industry.” By possibly reducing the number of job opportunities at warehouses, Winderman said the new law could hurt the very people it’s trying to protect.

California’s flat corporate income tax rate of 8.84% of a company’s net income is the sixth highest in the country, according to the right-leaning think tank Tax Foundation. Conservative legislators also criticized a recent decision by the governor and Legislature to suspend certain business tax deductions and limit tax credits for three years to close the budget deficit, saying such suspensions have become too common. 

On the other hand, the state’s corporate tax rate has actually declined over the past few decades, with state lawmakers slashing it from 9.6% to 9.3% in 1987, then to its current rate in 1997. The California Budget & Policy Center, a left-leaning think tank, said in a 2022 analysis of state data that corporate tax breaks have lessened the tax burden on California businesses over the years.

Ahmad Thomas, CEO of Silicon Valley Leadership Group, which advocates for big tech companies, said, “The challenge we have is the cost of doing business and operating in California continues to increase. How do we mitigate that?”

Thomas said California’s “competitive advantage continues to be chipped away at year after year by competition” that is global. He mentioned that there needs to be “more innovative solutions… around our cost structure connected to our tax policy,” as well as more affordable housing. 

He wants industry and policymakers to work together to drive down the cost of living here, while trying to minimize additional taxes to businesses.

Still, business leaders get something in exchange for grappling with those challenges: access to capital, a skilled workforce, world-class universities and more.

“Full stop, I believe there is no better place to locate, grow and scale a company than in California,” Thomas said. 

And not all state policies and laws drive business away. They help create them.

Bohn of the Public Policy Institute of California said the state continues to have policy levers, such as tax credits, that it can use to target businesses it wants to keep in the state.

partial homecoming that California legislation and policies on clean vehicles helped spur the company’s rise to electric-vehicle dominance. It is the most valuable automaker in the world and responsible for the bulk of Musk’s wealth, which reportedly will soon stretch beyond $1 trillion. Tesla’s success wouldn’t have happened without California, where the company has received at least $3.2 billion in direct and indirect subsidies from the state, with the bulk of those being tax credits for zero-emissions vehicles, according to estimates from Newsom’s office reported by the San Francisco Chronicle. 

At the press conference, Musk stood stiffly by as Newsom bragged about the state’s pivotal role. But then the billionaire also made an admission that might startle those who think California businesses are beset by red tape and entitled workers: Tesla’s Fremont factory is the most productive automotive plant in North America. 

“It will probably be about 600,000 or more cars this year,” Musk said. “California is a tremendous manufacturer as well as a place of engineering innovation.”

That’s a point, Newsom added, “which is, again, often so lost.”

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LYON, FRANCE — An American accused of sexually assaulting a Pennsylvania college student in 2013 and later sending her a Facebook message that said, “So I raped you,” has been detained in France after a three-year search.

A prosecutor in Metz, France, confirmed Tuesday that Ian Thomas Cleary, 31, of Saratoga, California, had been taken into custody last month and will be held pending extradition proceedings.

Cleary had been the subject of an international search since authorities in Pennsylvania issued a 2021 felony warrant in the case weeks after an Associated Press story detailed the reluctance of local prosecutors to pursue campus sex crimes.

The arrest warrant accuses Cleary of stalking an 18-year-old Gettysburg College student at a party, sneaking into her dorm and sexually assaulting her while she texted friends for help. He was a 20-year-old Gettysburg student at the time, but did not return to campus.

According to a French judicial official, Cleary was detained on the street in Metz on April 24 as part of a police check. He told a magistrate that he had “arrived in France two or three years ago” from Albania and had only recently come to Metz, but did not have housing there, the official said. A French lawyer appointed to represent him did not immediately return a phone message seeking comment Tuesday.

Cleary, according to his online posts, had previously spent time in France and also has ties to California and Maryland. His father is a tech executive in Silicon Valley, while his mother has lived in Baltimore. Neither he nor his parents have returned repeated phone and email messages left by the AP, including calls to his parents on Tuesday.

The Gettysburg accuser, Shannon Keeler, had a rape exam done the same day she was assaulted in 2013. She gathered witnesses and evidence and spent years urging officials to file charges. She went to authorities again in 2021 after discovering the Facebook messages that seemed to come from Cleary’s account.

“So I raped you,” the sender had written in a string of messages.

“I’ll never do it to anyone ever again.”

“I need to hear your voice.”

“I’ll pray for you.”

According to the June 2021 warrant, police verified that the Facebook account used to send the messages belonged to Ian Cleary. Adams County District Attorney Brian Sinnett, who filed it, did not immediately return a call Tuesday.

The AP does not typically name people who say they are sexual assault victims without their permission, which Keeler has granted. Her lawyer, reached Tuesday, had no immediate comment on Cleary’s detention.

After leaving Gettysburg, Cleary earned undergraduate and graduate degrees from Santa Clara University, near his family home in California, worked for Tesla, then moved to France for several years, according to his website, which describes his self-published medieval fiction.

Keeler, originally from Moorestown, New Jersey, stayed on to graduate from Gettysburg and help lead the women’s lacrosse team to a national title.

By 2023, two years after the warrant was filed, Keeler and her lawyers wondered how he was avoiding capture in the age of digital tracking. The U.S. Marshals Service thought he was likely overseas and on the move, even as he was the subject of an Interpol alert called a red notice.

Across the U.S., very few campus rapes are prosecuted, both because victims fear going to police and prosecutors hesitate to bring cases that can be hard to win, the AP investigation found.
Keeler, when the warrant was issued, said she was grateful, but knew it only happened “because I went public with my story, which no survivor should have to do in order to obtain justice.”

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A new report from the California State Auditor’s Office found that a state council created to oversee the implementation of homelessness programs has not consistently tracked spending or the outcomes of those programs.

That dearth of information means the state lacks pertinent data and that policymakers “are likely to struggle to understand homelessness programs’ ongoing costs and achieved outcomes,” the audit says.

“The state must do more to assess the cost-effectiveness of its homelessness programs,” California State Auditor Grant Parks said in a letter sent to Gov. Gavin Newsom and state lawmakers Tuesday accompanying the audit.

California has spent $20 billion over the past five years dedicated to the state’s homelessness crisis, including funneling money toward supporting shelters and subsidizing rent. Still, homelessness grew 6% in 2023 from the year prior, to more than 180,000 people, according to federal “point in time” data. Since 2013, homelessness has grown in California by 53%.

The California Interagency Council on Homelessness — created in 2016 to oversee the state’s implementation of programs dedicated to the worsening crisis — has not ensured the accuracy of the information in a state data system and has not evaluated homelessness programs’ success, according to the state auditor.

The audit recommends that the state Legislature require that the council report spending plans and outcomes of state funded homelessness programs annually and to make that information public. It recommends a type of “scorecard” to track the success of programs.

The council consists of state officials including Health and Human Services Secretary Dr. Mark Ghaly and California Department of Corrections and Rehabilitation Secretary Jeff Macomber.

The governor’s office referred questions about the audit to the California Business, Consumer Services and Housing Agency, which cited a law Newsom signed in 2021 that requires entities receiving state homeless funds to collect data. Since the law took effect last year, the California Interagency Council on Homelessness has made “significant progress,” spokesperson Russ Heimerich said in an email.

“The State Auditor’s findings highlight the significant progress made in recent years to address homelessness at the state level, including the completion of a statewide assessment of homelessness programs. But it also underscores a need to continue to hold local governments accountable, who are primarily responsible for implementing these programs and collecting data on outcomes that the state can use to evaluate program effectiveness,” he wrote on behalf of the California Interagency Council on Homelessness.

The response echoes frustrations among state and local leaders over which level of government is responsible for solving California’s homeless problem. In 2022, Newsom got tough on mayors when he rejected every local homeless action plan in the state, deeming them not ambitious enough.

Out of five state programs analyzed, auditors found that two were likely cost effective: Project Homekey — Newsom’s COVID driven project to convert hotels into housing — and the CalWORKs Housing Support Program, which offers financial assistance and other services to low income residents. The others analyzed, including a state rental assistance program, could not be reviewed because “the state has not collected sufficient data on the outcomes of these programs,” according to auditors.

“Collecting and reporting all state homelessness programs’ financial data allows for more complete and timely information about the state’s overall spending on homelessness. It also makes possible greater coordination of homelessness programs’ funding and may enable cost‑effectiveness comparisons,” the audit stated.

Based on the data available, the audit also revealed that most people involved in state programs are placed into interim housing such as shelters and do not end up in permanent housing.

A bipartisan group of lawmakers including state Sen. Dave Cortese (D-San Jose) and Assemblyman Josh Hoover (R-Folsom) requested that the Joint Legislative Audit Committee authorize a state audit of the efficacy of state homeless funding last year as California’s unhoused population — the nation’s largest — has continued to grow despite record state funding invested to combat it.

“The biggest conclusion that the auditors came back with is there’s just inadequate transparency and data and information available,” Cortese told reporters in Sacramento on Tuesday.

Cortese said the audit will act as a blueprint for the Legislature to consider stricter reporting on homelessness spending in the future and said it should not deter the state from funding homelessness responses.

“I think our constituents want us to continue to invest, and I think our constituents are going to want us to continue to audit the effectiveness of our efforts,” he said. “I don’t think it’s a time to stop.”

State Republicans chastised the Newsom administration for the lack of data and said it’s proof that Democrat-backed strategies are not working as the state grapples with a multibillion-dollar budget deficit.

“California is facing a concerning paradox: despite an exorbitant amount of dollars spent, the state’s homeless population is not slowing down,” Sen. Roger Niello (R-Roseville) said in a statement. “These audit results are a wake-up call for a shift toward solutions that prioritize self-sufficiency and cost effectiveness.”

Assemblymember Gregg Hart (D-Santa Barbara), chair of the Joint Legislative Audit Committee, said Tuesday he plans to conduct an oversight hearing to “further investigate” the audit results.

Tuesday’s audit comes just weeks after voters approved Proposition 1, Newsom’s $6.4-billion bond measure that aims to address one aspect of homelessness by building more treatment facilities for people who have problems with drug addiction or mental illness.

Another part of the audit examined spending by the cities of San José and San Diego, which have both struggled to help unhoused residents. The audit found that neither of those cities have “evaluated the effectiveness” of their programs despite millions in funding to respond to homelessness.

“San José and San Diego identified hundreds of millions of dollars in spending of federal, state, and local funding in recent years to respond to the homelessness crisis. However, neither city could definitively identify all its revenues and expenditures related to its homelessness efforts because neither has an established mechanism, such as a spending plan, to track and report its spending,” the audit states. “The absence of such a mechanism limits the transparency and accountability of the cities’ uses of funding to address homelessness.”

Cortese — whose Silicon Valley district has long been home to some of the nation’s largest homelessness encampments, a stark juxtaposition against the backdrop of stunning wealth — said the findings regarding the two major cities could be a harbinger for future data discoveries.

“If those two cities are experiencing issues or if there’s symptoms of challenges that we need to correct, that probably exists in many, many other cities in the state of California,” he said.

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