Three stories this week, one pattern: public money and public land moving to insiders through systems with almost no oversight.

First — a Los Angeles nonprofit took in $118 million in public funds to house homeless people. Prosecutors say $12 million of it went to a nightclub, luxury travel, and vintage cars. But the detail that doesn't make the headline: some of the people the system reported as "housed" were fabricated. Fake welcome letters, forged sign-in sheets, ghost clients created so a fraudster could bill for housing people who were never there. And the nonprofit at the center is now named in two separate LA political corruption cases — one involving a sitting city councilman on trial for 12 felony counts.

Second — California's high-speed rail authority is already $93 billion over its original budget with zero track laid. This week its own inspector general found consultants billed for a nightclub, a cigar lounge, gym trips, and a $40 rideshare for a one-mile trip in downtown Sacramento. The firm that submitted the nightclub bill also employs the CEO's fiancée. When the IG told the agency to require justification for each trip, the agency said it didn't think it should have to. You're funding this project through California's cap-and-trade program — every time you buy gas.

Third — 73% of Californians oppose AI data centers in their communities. This week we look at how those data centers are getting built anyway: through cash-strapped county fairgrounds, 100-year land leases, a six-month-old company whose own subsidiaries aren't registered anywhere, and a state official whose daughter works for the company making the pitch. We also connect a thread no outlet has reported: the rail authority's own revenue recovery plan involves leasing its public land corridor to AI data centers — the exact same play, running through two different arms of California government at the same time.

We also talk about why fear of AI is legitimate, Murray Rothbard's argument from The Progressive Era that when big companies ask to be regulated it's usually to lock out competition, and what True Detective Season 2 got right about California ten years before any of this happened.

California Underground is independent California accountability media. No corporate backing, no advertisers, no team. Just the documents.

For deeper reading on how California got here: The Gilded State

www.thegildedstate.comcaunderground.substack.com

Voter ID has passed in 36 states. California could be next — and the measure on this ballot is trailing in the polls even though the same policy wins by a landslide almost everywhere else in the country. Orange County GOP Chairman Will O'Neill joins Phil and Camille to make the case for Prop 39 (voter ID and citizenship verification) and Prop 5, a recall reform written by the one state legislator who's actually lived through a successful recall himself.

We get into what Prop 39 would actually require at the polls and by mail, who's funding the campaign behind it, and why it's polling worse in California than nationally. Then we turn to Prop 5 — the mechanism problem it's solving, the irony of its authorship, and the structural objection Republicans have to how it would work in practice.

No vote recommendations here — just the documents, the money, and the mechanism, so you can decide for yourself.

Read more from Phil in The Gilded State, his book on California's political dysfunction.

www.thegildedstate.com

LA County set aside $10 million specifically for fire victims. A revised board motion, passed months later with little public notice, cut that fund in half — the same year the county filed a lawsuit publicly branding itself as fire survivors' defender.

This episode also covers the one Napa winery that's been paid back after a 2025 fire that destroyed dozens of others' harvests — co-founded by the governor.

California's second attempt at a law nearly identical to one already tied up in federal court.

And a San Francisco political party that voted down a billionaire tax, in the same year campaign finance filings show one of that tax's loudest opponents is among the party's biggest

donors.

Documented facts. Primary sources. No spin — just the receipts.

Phil's book "The Gilded State" is out now and available on Amazon both in Kindle and paperback.

In 2012, California voters approved Proposition 30 — officially titled "Temporary Taxes to Fund Education." The new tax brackets were written to expire in 2018. Voters extended them in 2016. This November, Proposition 3 asks whether to remove the expiration entirely.

Phil and Camille go through what those fourteen years actually produced. Funding did rise: per-student spending increased 14% after inflation, and California climbed from the high 20s to 16th nationally. But two years after Prop 30 passed, the Legislature enacted AB 1469, a CalSTRS rescue plan that pushed school districts' pension contributions sharply upward. By 2025-26 the total contribution rate reached 37.7% of covered payroll — close to 38 cents on every dollar of teacher pay. The Public Policy Institute of California found that rising pension costs absorbed roughly a quarter of the entire pre-pandemic education spending increase.

Then there's the revenue that never materialized. A study published in the American Economic Journal: Economic Policy, built on confidential California Franchise Tax Board records, found that 45% of the expected windfall from the 2012 tax eroded within a year and 61% within two. The surprising part is why: migration explained less than 10% of it. High earners largely stayed in California and reported less income. A separate Stanford team using the same dataset found migration effects near zero, which means the two studies broadly agree on the tax-flight question and disagree about something else entirely.

The episode also covers Proposition 43, the measure whose author is publicly urging a no vote. Assemblymember Buffy Wicks wrote ACA 22, watched it pass 68-2 and 35-1, and has said she doesn't support the policy — it was the compromise that cleared two broader anti-tax measures off the ballot before the June deadline. Understanding it requires going back to a 2017 California Supreme Court ruling about a marijuana dispensary in Upland, and forward to Los Angeles Measure ULA, the mansion tax that has raised about a third of its projection while UCLA and RAND researchers found it reduced housing production by at least 1,910 units per year.

Closing out: the second phase of Orange County's forensic audit into pandemic-era contracts, including the county health director who reprimanded a subordinate for raising conflict-of-interest concerns about Andrew Do, on the reasoning that Do was a lawyer and would know if there was a conflict.

Primary sources throughout — LAO analyses, the peer-reviewed studies, the court opinion, and the audit itself.

Written breakdowns with the documents attached: caunderground.substack.com

Phil's book on California's political economy: www.thegildedstate.com

Instagram and TikTok: @californiaundergroundX: @ca_underground

A California Assemblyman named his own nonprofit "Nonprofit of the Year" — three weeks before it received a $6 million line item in the state budget he helped pass. In this episode, we pull that exact page of the budget and show what else is on it: a group tied to last year's Los Angeles riots that helped write the law shielding organizations like itself from public scrutiny, and a grant program with a documented history of funding one of the country's most controversial advocacy organizations.

We also break down why a UC Berkeley economist says "tax the rich" won't fix California's affordability crisis on its own, and what a new poll reveals about California Democrats' complicated relationship with their own party's brand.

Sources and further reading:California Globe: https://californiaglobe.com/fl/report-california-assemblyman-steers-6-million-to-his-own-nonprofit/Assembly Budget Committee Floor Report (2026-27): https://abgt.assembly.ca.gov/system/files/2026-06/floor-report-of-the-2026-27-budget-june-11-2026.pdfBerkeley News: https://news.berkeley.edu/2026/08/19/california-has-an-affordability-crisis-the-fix-may-be-politically-uncomfortable/UC Berkeley BESI, "California's Unaffordability Problem": https://besi.berkeley.edu/publication/californias-unaffordability-problem/Common Dreams: https://www.commondreams.org/news/california-progressives-vs-mainstream-democrats

More California accountability journalism at

The Gilded State: www.thegildedstate.com

Los Angeles pays a qualifying mayoral candidate six dollars in public money for every one dollar an individual donates — and in the current mayor's race, challenger Nithya Raman has drawn more of that taxpayer match than Karen Bass.

Phil and Camille break down how the public matching-funds program actually works, why the "isn't it a First Amendment violation to fund a candidate I oppose?" objection reached the Supreme Court twice and lost both times, and why California has banned public campaign financing everywhere except a handful of charter cities.

Then: the California Energy Commission has used a 2003 law that sat dormant for two decades to rewrite which replacement tires can be sold in the state — and the "70% of tires banned" figure is being used to argue two opposite things at once. There's also a second, completely unrelated tire crackdown most coverage misses.

Finally, the California High-Speed Rail Authority is on course to run out of money by December 2027, according to its own inspector general — while the project's own CEO says the state's regulatory process is what's strangling the railroad he's trying to build.

No team. Just receipts.

Read more from Phil at The Gilded State: www.thegildedstate.comFull sourcing and show notes: caunderground.substack.com

California's billionaire tax is on the ballot this fall — and almost nobody fighting over it is who you'd expect. The state's own nonpartisan analyst won't back the $100 billion revenue number the sponsors are citing. A 1979 law from the same tax revolt that gave California Prop 13 has been rewritten as a legal kill switch aimed squarely at this measure. And the single largest donor bankrolling the opposition moved his residency out of state months before the tax could ever touch him — then spent $82 million fighting it anyway.

This week, Phil and Camille pull the actual ballot language, the Legislative Analyst's fiscal review, and campaign finance filings to lay out what Propositions 40, 41, and 42 actually do, and who's really lined up on each side.

For more on the systems behind California's politics, Phil's book The Gilded State is available now.

If this show is useful to you, following and leaving a review helps more people find it.

🔗 The Gilded State: www.thegildedstate.com🔗 Full sourcing and documents: https://caunderground.substack.com/📸 Instagram: @californiaunderground🐦 X: @ca_underground

In 2024, Governor Newsom hired a new CEO to run California's high-speed rail and said the state would "begin to lay track, design and build stations, and buy trains." Two years later: the trainset procurement line in the state's own 2026 Business Plan is blank. No trains have been bought. We pull the paperwork.

We also get into California's Democratic Party convention — where the party endorsed the billionaire tax on the November ballot after Newsom turned down a smaller deal that would have made the whole fight disappear, and where the same convention split labor unions against each other. And we break down what actually got a sitting Assembly Minority Leader removed by his own party this week — starting with 54 bar tabs at a dive bar that isn't in his district.

No team. Just receipts.

Follow California Underground and leave a review if this show helps you cut through the noise on California politics.

Phil is also writing a book on California's political class, The Gilded State — more at www.thegildedstate.com

Gavin Newsom said his administration's diaper deal with Baby2Baby — a nonprofit tied to his wife's own foundation — was competitively bid. California's own contract database says it wasn't.

This week: the receipts on the $6.2 million diaper contract, Newsom's affair resurfaces, Sheng Thao crime story continues to expand, and why the Attorney General's rewritten ballot title for the voter ID initiative has people on both sides raising eyebrows. Plus a quick note on the new essay resurfacing one of Newsom's oldest City Hall scandals.

Phil is joined this week by guest co-host Randy Wang (KABC Radio).

Read more from Phil in his upcoming book, The Gilded State: thegildedstate.com

Gavin Newsom says he'll campaign for any Democratic nominee heading into 2028 — but his team went quiet when asked if that includes candidates from a self-described "Marxist-Leninist-Maoist" caucus. This week: what Newsom actually said, what he wouldn't answer, and what it means for his national ambitions.

Also on the show: Katie Porter was a frontrunner for governor a year ago. She just finished fifth with 4.4% of the vote — and says she's done with politics.

California Underground airs every Tuesday at 8PM PST on YouTube.

🔔 Subscribe and hit the bell so you don't miss next week's show.

California Underground covers the California stories the rest of the media ignores— following the audits, the contracts, the budgets, and the officials responsiblefor outcomes that aren't matching the promises. No team. Just receipts.

📬 Subscribe on Substack: https://caunderground.substack.com/📺 Subscribe on YouTube for new videos every week📸 Instagram: @californiaunderground🎵 TikTok: @californiaunderground🐦 X: @ca_underground

📌 Sources:

• Washington Examiner — "Newsom defends backing socialist candidates, calling party divides 'healthy'": https://www.washingtonexaminer.com/news/campaigns/congressional/4644566/gavin-newsom-backing-socialist-candidates-party-divides-healthy/
• Washington Examiner — "Katie Porter 'done' with politics and focusing on Instagram book content": https://www.washingtonexaminer.com/news/campaigns/state/4653306/katie-porter-quits-politics-book-instagram/
• Yahoo News — "Katie Porter says she's done with politics after failed governor bid": https://www.yahoo.com/news/politics/articles/katie-porter-says-she-done-040528602.html
• FOX 11 Los Angeles — "LAHSA delays release of 2026 homeless count results": https://www.foxla.com/news/lahsa-delays-release-2026-homeless-count-results