Gavin Newsom outlines plan to increase spending on housing and mental health

BY: RACHEL BLUTH | 06/20/2023 05:32 PM EDT

SACRAMENTO, Calif. — Gov. Gavin Newsom wants to put a $4.68 billion bond measure on the ballot to help ease the state’s homeless crisis with more housing and mental health treatment.

Newsom detailed plans for the bond Tuesday along with proposed changes to Proposition 63, a 2004 voter initiative that channels money to county governments from a tax on high earners to provide mental health services in the state.

The proposals come as the state’s homeless population has ballooned to an estimated 171,000, the highest in the nation, according to a new report.

“We are facing a confluence of crises: mental health, opioids, housing, and homelessness – and this transformative effort will ensure California is tackling these head-on in a comprehensive and inclusive way,” Newsom said in a statement.

Why it matters: The proposal represents a massive redistribution of mental health funds towards housing, an acknowledgement that the state’s homelessness and mental health crises must be treated together.

Key context: The Mental Health Services Act, or Prop 63, was approved by voters in 2004. The tax on people who earn more than $1 million per year generates about $4 billion per year to counties to provide mental health services to residents.

This is the latest development in a multi-year effort to put more money toward addressing homelessness and change the way the state approaches mental health.

The bond money will go towards paying for 10,000 additional spots in treatment facilities for people recently discharged from institutions. Some of the funds would be set aside for veterans.

MHSA reform: The second half of the proposal reforms how money from the Mental Health Services Act– now called the Behavioral Health Services Act– is spent.

A major part of the proposal is to allow the money to be used for substance abuse disorders. In the past, people had to have another diagnosis in addition to their addiction in order to qualify for MHSA dollars.

About 3 percent will be siphoned off the top– almost $105 million– to help the state boost the behavioral health workforce.

Most of the money — 92 percent — will go to counties to spend in proscribed ways, including help to connect people with housing, counseling and other interventions. The state is directing counties to focus on people living in encampments and on the street.

A third of the money will now go to housing interventions, like rental assistance or other services to keep people from becoming homeless.

A third will go specifically to behavioral health services, with half for early interventions.

The de-emphasis on prevention, which used to take up 19 percent of counties’ MHSA budget, has been a point of contention throughout the process. There’s still an emphasis on prevention and early intervention said the measure’s original author, Sacramento Mayor Darrel Steinberg.

“It must be spent on early intervention but evidence-based strategies,” Steinberg said. “Not just whatever each county choose to spend it on.”

What’s next: The legislation spelling out these proposals are moving through the Legislature, and Newsom hopes to sign the bills by the end of the session in September. If they do, the bond measure and other reforms will go to voters on March 5, 2024.