Seven years after voters approved a new tax to fund services for people with mental illness, California has slashed so much money from mental health departments that it now leads the nation in such cuts. Counties have laid off psychiatrists, reduced hospital bed space and shut down mental health clinics. And the $7.4 billion generated by the mental health tax? Much of it has gone to a cottage industry of consultants earning up to $200 an hour, as well as a host of new programs that in many cases are only loosely linked to prevention, treatment and recovery. The Bay Area News Group examined spending to date under the Mental Health Services Act of 2004, after reporting in May concerns expressed by the chairman and former chairwoman of a Santa Clara County watchdog group. They charged that local spending under the act has resulted in frivolous programs and enriched private contractors at the expense of people desperately in need of care.