The Brief

Federal agents on Thursday searched the family home of O.C. Supervisor Andrew Do and his wife — O.C. Superior Court Assistant Presiding Judge Cheri Pham — as well as a home owned by their daughter Rhiannon Do and multiple properties connected to an LAist investigation into millions of tax dollars that have gone unaccounted for.

A spokesperson for the IRS Criminal Investigation division confirmed they were involved in the searches along with the FBI and U.S. Attorney’s Office.

The search warrants were executed for Rhiannon Do’s Tustin home; a North Tustin family home that real estate records show is owned by Cheri Pham and Supervisor Do; a Garden Grove home that public records show is owned by Peter Pham, the founder of Viet America Society (VAS); and a Fountain Valley home that government filings show is the business address for VAS — the nonprofit Orange County officials sued earlier this month for alleged fraud.

A neighbor told an LAist reporter on the scene that over a dozen black cars were parked on the street around the North Tustin house of Supervisor Do and Cheri Pham at the time of the raid.

A federal agent at the family home of O.C. Supervisor Andrew Do and his wife, O.C. Superior Court Assistant Presiding Judge Cheri Pham, on Aug. 22, 2024.

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A spokesperson for the FBI confirmed they served search warrants at the homes. “The affidavit in support of the search warrant is under seal and so we’re prohibited from commenting as to the nature of the case. No arrests planned,” Laura Eimiller said.

Rhiannon Do’s Tustin home was named in the fraud lawsuit filed last week by Orange County officials, calling on VAS to return millions in taxpayer dollars. The lawsuit alleges that a fraud scheme involving Rhiannon Do, other VAS leaders, Aloha Financial Investment and its president Thu Thao Thi Vu, who owns the Fountain Valley home raided Thursday.

Vu’s name also appears on the grant deed for Rhiannon Do’s home purchase, as someone who should receive a copy once it’s officially recorded. Financial records obtained by LAist show that a large portion of county funds sent to VAS were routed to Perfume River Restaurant in Westminster, which is owned by Vu’s company, Aloha Financial Investment. Two VAS leaders have also held leadership roles at Aloha, according to records LAist obtained.

Shoppers pass Perfume River Restaurant & Lounge, which appeared closed, inside of the Asian Garden shopping mall, also known as Phước Lộc Thọ, in Westminster in April 2024.

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The FBI confirmed that it was involved in the raid on the Perfume River Restaurant, located in the Asian Garden Mall in Westminster. An IRS spokesperson, however, said the agency did not join in that operation.

Rhiannon Do and Peter Pham are among those accused in the county’s lawsuit of a fraud scheme to divert funds intended to feed needy seniors and build a war memorial, to instead pay for million-dollar homes and improvements to the homes.

Requests for comment were not returned by Supervisor Do, Rhiannon Do or Peter Pham. Peter Pham told the Los Angeles Times on Thursday that the situation was a "misunderstanding" and that he "didn't do anything wrong."

An O.C. Superior Court spokesperson said Cheri Pham is unable to comment due to California judicial ethics rules barring judges from commenting on law enforcement actions or pending court cases.

On Friday, David Wiechert, an attorney who said he had been retained to represent Rhiannon Do, told LAist Rhiannon Do is a "very honest, law-abiding, hardworking young woman."

"It’s our intention to demonstrate to the government the error of their ways if they think she’s done something wrong,” he said.

The raid of Rhiannon Do’s home in Tustin

An LAist reporter saw at least six law enforcement officers outside Rhiannon Do’s home and around the front doorway Thursday morning. Around 11:20 a.m., an LAist reporter at the scene overheard a law enforcement agent say Rhiannon Do was inside the home. Law enforcement officers were inside at the time as well. A neighbor told LAist that he saw Rhiannon Do come in with the agents when they first entered the house earlier this morning.

Law enforcement at a house purchased by Rhiannon Do in Tustin.

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The IRS’ criminal division was involved in the raid on Rhiannon Do’s house. Most of the agents observed by LAist wore black shirts with "POLICE IRS-CI" printed on the back. An LAist reporter also overheard an agent telling a private investigator that they were with IRS' criminal investigation division.

A spokesperson for the Orange County District Attorney’s Office confirmed they were involved in the raids but declined to comment further.

Rhiannon Do purchased the home last year for $1.035 million, according to Zillow and real estate records reviewed by LAist.

Law enforcement near a Tustin house that Rhiannon Do, the daughter of O.C. Supervisor Andrew Do, purchased.

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LAist

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Larry Thomas, who lives next door to the house, told LAist around 9:45 a.m. that officers were standing guard outside. He said he was hearing what he described as “slamming and quite a bit of noise” from inside the house.

A photo obtained by LAist shows what appears to be an evidence marker in front of a small structure on the property. The white rectangular sign states “ROOM P.” An LAist reporter overheard an agent next to the home say, "Remember, you’re looking for documents.” An agent also noted finding a large amount of Christmas decorations.

Farzin Noohi, a private investigator, who said he was working with Rhiannon Do's lawyer, speaks to law enforcement in Tustin as the raid was underway.

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Shortly before 1:30 p.m., an agent exited the house with two large rectangular boxes and drove away.

Federal agents were at the Tustin home for nearly eight hours.

At one point, agents came out and put a file folder, three file boxes and a black trash bag, half full, into a car.

Shortly after 5 p.m. an LAist reporter saw five agents exit the home and leave in five separate vehicles.

Supervisor Do and Rhiannon Do have been in and out of the house in recent days, Thomas told LAist on Wednesday. Rhiannon in particular, he said, has been in and out of the house more in the last 48 hours than in the year-plus since buying it.

Earlier this week, Thomas told LAist that there have been no signs anyone ever moved into the home, in the year or so since Rhiannon Do bought it.

He said that in the first few months after the purchase, a significant amount of work appeared to be done on the house, including the sound of electric saws.

“You could hear, every day, hammers and saws and heavy equipment,” Thomas said.

The backstory

LAist revealed last December that the nonprofit, Viet America Society, had failed to account for what happened with millions of dollars in taxpayer money Do had provided the group.

Rhiannon Do in a YouTube video posted in August 2021 by the Steinberg Institute where she was an intern.

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In response to LAist’s questions in April about the funding her father directed to the nonprofit and the home purchase, Rhiannon Do did not answer if any county funds provided to her nonprofit were used to purchase the home. She denied that anything improper took place and said she worked hard for her home.

After the county gave the nonprofit months of opportunities this year to provide required proof, it ended up filing a lawsuit last week alleging a sweeping fraud scheme to divert money that was meant to feed vulnerable seniors during the pandemic. Among the county’s allegations are that funding was illegally diverted to buying multiple homes, including Rhiannon Do’s home in Tustin.

Supervisor Do has not responded to LAist’s requests for comment over the last nine months. He has denied any wrongdoing in interviews with other media. State law does not require the disclosure of his family tie to the nonprofit he funded with taxpayer money. The state Legislature is advancing a bill that would change that.

Responses to the searches

Santa Ana City Councilmember Thai Viet Phan, the first Vietnamese American elected to the council, called for the “immediate resignation” of Supervisor Do.

“While innocent until proven guilty, Supervisor Do has lost the trust of our community and should not retain power over a $9.3 billion budget,” Phan said.

Community organizations VietRISE and Harbor Institute for Immigrant & Economic Justice also called for the resignation of Supervisor Andrew Do.

“Residents continue to face skyrocketing rents, evictions, and homelessness, yet Supervisor Do used his position to divert taxpayer dollars towards million-dollar properties for his own family and friends,” the statement from both organizations said. “Supervisor Do has failed the residents of his own District, including the working-class immigrants and refugees of Little Saigon.”

State Sen. Dave Min issued a statement saying he was glad federal authorities were investigating allegations of public corruption in Orange County.

“For too long, Orange County has been seen as a place where corruption and abuse of the public trust are part of the political culture,” he said.

Min’s Rebuilding Public Trust Act, which was inspired by LAist’s reporting, is currently awaiting Gov. Gavin Newsom’s signature and would require elected officials to recuse themselves from votes that would award government contracts to their family members. He said he hoped the raids would be motivation for the governor to sign the legislation.

Orange County Supervisor Katrina Foley said she anticipates the raids will “uncover additional evidence that proves the brazen criminal conspiracy by these individuals who stole millions to enrich themselves instead of feeding hungry, disabled seniors.”

Meeting coming up next week

The O.C. Board of Supervisors is scheduled to meet Tuesday for their regularly scheduled meeting.

Among the items Supervisor Do and other supervisors are being asked to decide is whether to increase funding for real estate fraud prosecutions by the DA’s office.

The meeting starts at 9:30 a.m. on Aug. 27.

Here’s how you can follow along:

• Attend in person: The Board of Supervisors meets in the County Administration North, Board Hearing Room, First Floor, 400 W Civic Center Dr, Santa Ana.
• Listen to the meeting via phone: Call (866) 590-5055. Access code: 4138489
• Watch the live broadcast

To submit a comment, you can attend in person, dial in or submit a comment via email to response@ocgov.com.

Catch up on the investigation

In November 2023, LAist began investigating how millions in public taxpayer dollars were spent. In total, LAist has uncovered over $13 million in public money was approved to a little-known nonprofit that records state was led on and off by Rhiannon Do, the now 23-year-old daughter of Supervisor Do. Most of that money was directed to the group by Supervisor Do outside of the public’s view and never appeared on public meeting agendas. He did not publicly disclose his family ties.

Much of the known funding came from federal coronavirus relief money.

• Read the story that launched the investigation here.
• Since we started reporting, we’ve also uncovered the group was two years overdue in completing a required audit into whether the meal funds were spent appropriately.
• And we found the amount of taxpayer money directed to the nonprofit was much larger than initially known. It totals at least $13.5 million in county funding — tallied from government records obtained and published by LAist. 
• After our reporting, O.C. officials wrote demand letters to the nonprofit saying millions in funding were unaccounted for. They warned it could be forced to repay the funds.
• And, we found the nonprofit missed a deadline set by county officials to provide proof about how funding for meals were spent.
• On Aug. 2, LAist reported O.C. officials were demanding the refund of more than $3 million in public funds awarded by Do to VAS and another nonprofit, Hand to Hand.
• Six days later, LAist reported Orange County officials had expanded demands for refunds of millions in tax dollars from the nonprofits and threatened legal action.
• On Aug. 15, LAist reported O.C. officials sued VAS and its key officers and associated businesses, including Rhiannon Do. The lawsuit alleges that county money was illegally used to purchase five homes and was converted into cash through ATM transactions. 
• Then, on Aug. 19, LAist reported O.C. officials had announced a second lawsuit against Hand to Hand and its CEO to recover millions of taxpayer dollars that were directed by Supervisor Do.
  

Perhaps nobody embodies artificial intelligence mania quite like Jensen Huang, the chief executive of chip behemoth Nvidia, which has seen its value spike 300% in the last two years.

A frothy time for Huang, to be sure, which makes it all the more understandable why his first statement to investors on a recent earnings call was an attempt to deflate bubble fears.

"There's been a lot of talk about an AI bubble," he told shareholders. "From our vantage point, we see something very different."

Take in the AI bubble discourse and something becomes clear: Those who have the most to gain from artificial intelligence spending never slowing are proclaiming that critics who fret about an over-hyped investment frenzy have it all wrong.

"I don't think this is the beginning of a bust cycle," White House AI czar and venture capitalist David Sacks said on his podcast All-In. "I think that we're in a boom. We're in an investment super-cycle."

White House AI adviser David Sacks speaks onstage during The Bitcoin Conference at The Venetian Las Vegas in January.

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"The idea that we're going to have a demand problem five years from now, to me, seems quite absurd," said prominent Silicon Valley investor Ben Horowitz, adding: "if you look at demand and supply and what's going on and multiples against growth, it doesn't look like a bubble at all to me."

Appearing on CNBC, JPMorgan Chase executive Mary Callahan Erdoes said calling the amount of money rushing into AI right now a bubble is "a crazy concept," declaring that "we are on the precipice of a major, major revolution in a way that companies operate."

Yet a look under the hood of what's really going on right now in the AI industry is enough to deliver serious doubt, said Paul Kedrosky, a venture capitalist who is now a research fellow at MIT's Institute for the Digital Economy.

He said there is a startling amount of capital pouring into a "revolution" that remains mostly speculative.

"The technology is very useful, but the pace at which it is improving has more or less ground to a halt," Kedrosky said. "So the notion that the revolution continues with the same drum beat playing for the next five years is sadly mistaken."

The huge infusion of cash

The gusher of money is rushing in at a rate that is stunning to financial experts.

Take OpenAI, the ChatGPT maker that set off the AI race in late 2022. Its CEO Sam Altman has said the company is making $20 billion in revenue a year, and it plans to spend $1.4 trillion on data centers over the next eight years. That growth, of course, would rely on ever-ballooning sales from more and more people and businesses purchasing its AI services.

There is reason to be skeptical. A growing body of research indicates most firms are not seeing chatbots affect their bottom lines, and just 3% of people pay for AI, according to one analysis.

"These models are being hyped up, and we're investing more than we should," said Daron Acemoglu, an economist at MIT, who was awarded the 2024 Nobel Memorial Prize in Economic Sciences.

"I have no doubt that there will be AI technologies that will come out in the next ten years that will add real value and add to productivity, but much of what we hear from the industry now is exaggeration," he said.

Nonetheless, Amazon, Google, Meta and Microsoft are set to collectively sink around $400 billion on AI this year, mostly for funding data centers. Some of the companies are set to devote about 50% of their current cash flow to data center construction.

Or to put it another way: every iPhone user on earth would have to pay more than $250 to pay for that amount of spending. "That's not going to happen," Kedrosky said.

To avoid burning up too much of its cash on hand, big Silicon Valley companies, like Meta and Oracle, are tapping private equity and debt to finance the industry's data center building spree.

Paving the AI future with debt and other risky financing

One assessment, from Goldman Sachs analysts, found that hyperscaler companies — tech firms that have massive cloud and computing capacities — have taken on $121 billion in debt over the past year, a more than 300% uptick from the industry's typical debt load.

Analyst Gil Luria of the D.A. Davidson investment firm, who has been tracking Big Tech's data center boom, said some of the financial maneuvers Silicon Valley is making are structured to keep the appearance of debt off of balance sheets, using what's known as "special purpose vehicles."

An aerial view of a 33 megawatt data center with closed-loop cooling system in Vernon, California.

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The tech firm makes an investment in the data center, outside investors put up most of the cash, then the special purpose vehicle borrows money to buy the chips that are inside the data centers. The tech company gets the benefit of the increased computing capacity but it doesn't weigh down the company's balance sheet with debt.

For example, a special purpose vehicle was recently funded by Wall Street firm Blue Owl Capital and Meta for a data center in Louisiana.

The design of the deal is complicated but it goes something like this: Blue Owl took out a loan for $27 billion for the data center. That debt is backed up by Meta's payments for leasing the facility. Meta essentially has a mortgage on the data center. Meta owns 20% of the entity but gets all of the computing power the data center generates. Because of the financial structure of the deal, the $27 billion loan never shows up on Meta's balance sheet. If the AI bubble bursts and the data center goes dark, Meta will be on the hook to make a multi-billion-dollar payment to Blue Owl for the value of the data center.

Such financial arrangements, according to Luria, have something of a checkered past.

"The term special purpose vehicle came to consciousness about 25 years ago with a little company called Enron," said Luria, referring to the energy company that collapsed in 2001. "What's different now is companies are not hiding it. But having said that, it's not something we should be leaning on to build our future."

Enormous spending hinging on returns that could be a fantasy

Silicon Valley is taking on all this new debt with the assumption that massive new revenues from AI will cover the tab. But again, there is reason for doubt.

Morgan Stanley analysts estimate that Big Tech companies will dish out about $3 trillion on AI infrastructure through 2028, with their own cash flows covering only half of that.

"If the market for artificial intelligence were even to steady in its growth, pretty quickly we will have over-built capacity, and the debt will be worthless, and the financial institutions will lose money," Luria said.

Twenty-five years ago, the original dot-com bubble burst after, among other factors, debt financing built out fiber-optic cables for a future that had not yet arrived, said Luria, a lesson, it appears, tech companies are not worried about repeating.

"If we get to the point after spending hundreds of billions of dollars on data centers that we don't need a few years from now, then we're talking about another financial crisis," he said.

Circular deals raise even more concern

Another aspect of the over-heated AI landscape that is raising eyebrows is the circular nature of investments.

Take a recent $100 billion deal between Nvidia and OpenAI.

Nvidia will pump that amount into OpenAI to bankroll data centers. OpenAI will then fill those facilities with Nvidia's chips. Some analysts say this structure, where Nvidia is essentially subsidizing one of its biggest customers, artificially inflates actual demand for AI.

"The idea is I'm Nvidia and I want OpenAI to buy more of my chips, so I give them money to do it," Kedrosky said. "It's fairly common at a small scale, but it's unusual to see it in the tens and hundreds of billions of dollars," noting that the last time it was prevalent was during the dot-com bubble.

Open AI CEO Sam Altman speaks during Snowflake Summit 2025 at Moscone Center in June.

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Lesser-known companies are getting in on the action, too.

CoreWeave, once a crypto mining startup, pivoted to data center building to ride the AI boom. Major AI companies are turning to CoreWeave to train and run their AI models.

OpenAI has entered deals with CoreWeave worth tens of billions of dollars in which CoreWeave's chip capacity in data centers is rented out to OpenAI in exchange for stock in CoreWeave, and OpenAI, in turn, could use that stock to pay its CoreWeave renting fees.

Nvidia, meanwhile, which also owns part of CoreWeave, has a deal guaranteeing that Nvidia will gobble up any unused data center capacity through 2032.

"The danger," said the MIT economist Acemoglu,"is that these kinds of deals eventually reveal a house of cards."

Some high profile investors see bubble-popping on the horizon

Some influential investors are showing signs of bubble jitters.

Tech billionaire Peter Thiel sold off his entire stake in Nvidia worth around $100 million earlier this month. That came after SoftBank sold a nearly $6 billion stake in Nvidia.

And in recent weeks, AI bubble pessimists have rallied around Michael Burry, the hedge-fund investor who made hundreds of millions of dollars betting against the housing market in 2008. He was the subject of the 2015 film The Big Short. Since then, though, he's had a mixed reputation for market predictions, having warned about imminent collapses that never came to pass.

For what it's worth, Burry is now betting against Nvidia, accusing the AI industry of hiding behind a bunch of fancy accounting tricks. He's homed in the circular deals between companies.

"True end demand is ridiculously small. Almost all customers are funded by their dealers," Burry wrote on X. He later wrote: "OpenAI is the linchpin here. Can anyone name their auditor?"

As tech companies sink billions into data centers, some executives themselves are freely admitting there looks to be some over exuberance.

OpenAI CEO Sam Altman told reporters in August: "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes."

And Google chief executive Sundar Pichai told the BBC recently that "there are elements of irrationality" in the AI market right now.

Asked how Google would fare if the bubble burst, Pichai responded: "I think no company is going to be immune, including us."

Copyright 2025 NPR

A record number of people are expected to travel within the U.S. for Thanksgiving, be it plane, train or automobile.

Nearly 82 million are projected to travel at least 50 miles from Nov. 25 to Dec. 1, an increase of 1.6 million people compared to last year's holiday, according to an AAA report released on Monday.

Most of them will be hitting the road in a car, with about 73.2 million people expected to drive, AAA said. That's 1.8% more car travelers compared to the 2024 holiday period.

AAA projected 6 million people to travel by plane within the country for the holiday, a 2% increase from last year. Due to concerns over recent flight delays and cancellations, however, AAA also said that number could end up dropping slightly if travelers make last-minute arrangements to use other forms of transportation. Staffing shortages during the prolonged government shutdown earlier this month resulted in mass flight disruptions.

The FAA lifted its directive that called for an emergency reduction in flights, allowing airlines to return to operating normally. Aviation experts warned it could take some time before flights return to normal, but industry leaders appeared confident that airline operations would return to normal pre-shutdown levels in time for the Thanksgiving travel frenzy. Weather forecast to bookend the holiday in some parts of the country could cause flight disruptions and delays.

The Federal Aviation Administration (FAA) said Friday it expected the upcoming holiday rush to be the busiest Thanksgiving travel time for air travel in 15 years, with Tuesday being the busiest flying day.

Travel across other transport modes — bus, train and cruise — was forecast to increase 8.5% this year, with a likely uptick in last-minute bus and train bookings

"People are willing to brave the crowds and make last-minute adjustments to their plans to make lifelong memories, whether it's visiting extended family or meeting up with friends," Stacey Barber, vice president of AAA Travel said in a statement on Monday.

Here is what else to know:

Driving in the afternoon? Think again

Tuesday and Wednesday afternoon are expected to be the most congested times for drivers in major metro areas, according to INRIX, a transportation analytics firm.

If driving, the best times to hit the road for the holiday will be before noon on Tuesday and 11 a.m. on Wednesday to avoid backups, according to the firm. Thanksgiving Day will have minimal road traffic impacts.

When returning home after the holiday, travelers are advised to start driving before noon on any day except Monday. The Sunday after Thanksgiving will likely have heavy traffic most of the day and the best time to travel Monday will be after 8:00 p.m., INRIX said.

Weather could be messy, but should clear up for your trip back

During peak travel times, from Monday through Wednesday, rain extending from Southern Texas up to Minnesota will move across the country to the east, according to the National Weather Service (NWS).

"Monday into Tuesday will probably be a little problematic anywhere from Texas, eastern Oklahoma, into Arkansas and northwestern Louisiana," Bob Oravec, lead forecaster for the NWS, told NPR.

By Thanksgiving Day, things will be a little drier across the U.S. Temperatures will be colder than average for a majority of the country on Thanksgiving morning, with central parts of the U.S. seeing temperatures in the teens. On Black Friday, there will be warmer than average temperatures from the Great Plains to the West Coast, with places like Denver, Colo., seeing temperatures in the mid-50s, Oravec said.

Some of the worst weather will be across much of the central and eastern U.S. where there will be lake-effect snow showers coming off the Great Lakes, Oravec said.

For holiday travelers returning home on Friday and Saturday, the weather should be decent for a large portion of the country, he said. But a storm system is expected to develop over the weekend.

On Saturday and Sunday, the system could bring heavy snow across western Nebraska, South Dakota and North Dakota as well as parts of Minnesota into Wisconsin, according to Oravec. On Sunday, from Texas up into Missouri and Illinois, chances of rain are forecast to increase.

Copyright 2025 NPR

A new electric streetcar service connecting Garden Grove and Santa Ana is currently undergoing testing. If all goes as planned, the new service will be in operation starting next summer.

The nearly $650 million project — funded through a combination of state, federal and local funds — was originally set to begin service in 2021, but has been beset by rising costs and delays.

A train operator sits inside one of the OCTAs OC Streetcars for safety testing.

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Back on track

Darrell E. Johnson, Orange County Transportation Authority's CEO, told LAist that the service is 95% complete. The current testing phase could take anywhere between six and 12 months.

That means testing the train pulls out of the platform properly, control systems are operating properly, and that the train system interfaces with the street signal system along its route.

All aboard

Each car is over 90 feet long and has the capacity to carry up to 211 passengers.

“The fleet itself is eight vehicles. The service that we plan to run will take six of them every day.” Johnson said.

The new service will travel across some of densest areas of Orange County, ferrying an expected 5,000 passengers a day across the route's 10 stops.

The eastern side of the route starts at Santa Ana Regional Transportation Center, where over 50 Amtrak and Metrolink trains pass through daily.

The Civic Center for the county — which houses state, federal and county courthouses as well as Santa Ana City Hall — is in the middle of the route.

The service will end at the Harbor Boulevard — a heavily used bus route that sees more than 10,000 passengers a day.

The front view of an OC Streetcar on tracks.

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Transportation future

OCTA says it plans to charge the exact same amount as their bus system to ride the streetcar service — $2 one way or $5 for a day pass.

The service is slated to run every day from 6 a.m. to 11 p.m., with extended hours on weekends.

Officials are hoping for an Aug. 1 launch next year. And they don't anticipate stopping there.

“This is the beginning of something, whether we go north on Harbor Boulevard or South on Bristol Street or we continue westerly towards Artesia, Cerritos and LAX,” Johnson said. “That’s probably a decision that will be discussed in the next two to five years.”

Some of the red ink in California’s budget deficit is coming from unplanned spending in state prisons, according to a new report from the Legislative Analyst’s Office.

The California Department of Corrections and Rehabilitation is on track to exceed its budget by roughly $850 million over three years despite recent cuts that include four prison closures and some labor concessions that trimmed payroll expenses. The state budget included $17.5 billion for prisons this year.

The office attributed the corrections department’s shortfall to both preexisting and ongoing imbalances in its budget. The analyst’s annual fiscal outlook projected a nearly $18 billion deficit for the coming year, which follows spending cuts in the current budget.

The corrections department last year ran out of money to pay its bills. In May, it received a one-time allocation of $357 million from the general fund to cover needs including workers’ compensation, food for incarcerated people and overtime.

Democratic Sen. Scott Wiener of San Francisco in a June 17 letter to the Department of Finance said he was “shocked and disappointed that (the corrections department) overspent its budget by such a significant amount” while the state faced a $12 billion general fund shortfall that resulted in cuts to key health care and social service programs.

“These were dollars that could have been used to provide basic services to some of our most underserved communities,” wrote Wiener. “While this year’s budget included measures requiring departments to ‘tighten their belts’ and reduce state operating expenses by up to 7.95%, (the corrections department) did the opposite, and overspent by nearly three percent.”

Without having any new dedicated funding to align its actual costs with its budget, Wiener warned, deficits “will likely persist” and put additional pressure on the general fund in years to come.

That’s despite Gov. Gavin Newsom’s attempts to save the state money through prison closures. Newsom in May moved to close the state prison in Norco in Riverside County next year, the fifth prison closure under his tenure.

Newsom’s administration estimates it saves about $150 million a year for each prison closure, which lawmakers and advocates regard as the only way to significantly bring down corrections spending. A spokesperson for Newsom’s Finance Department declined to comment on the analyst’s projection. Newsom will release his next budget proposal in January.

“We are allowing wasteful prison spending to continue while Californians are being told to tighten their belts and brace for deep federal cuts to core programs,” said Brian Kaneda, deputy director for the statewide coalition Californians United for a Responsible Budget in a statement to CalMatters. “We are spending millions on prisons that could be safely closed. That is government waste, not public safety.”