In a significant move to address the state’s escalating homelessness crisis and reform mental and behavioral health programs, the California Assembly voted on Tuesday to place a proposal before voters next March. This proposal, authored by Democratic state Sen. Susan Eggman, has passed the state Assembly and now awaits a final vote in the Senate before it can be added to the ballot.
Back in 2004, voters in California approved a special tax on millionaires, aiming to support mental health programs. However, the funding from this tax, which has proven to be one of the state’s most unpredictable revenue sources, has largely been allocated to county governments with broad discretion on its utilization.
Governor Gavin Newsom, a Democrat, has advocated for changes that would impose restrictions on how local governments can spend these funds, with a particular emphasis on bolstering mental health and addressing issues related to drug and alcohol use. Under his proposed plan, two-thirds of the revenue generated from the millionaire’s tax would be channeled toward services for individuals experiencing chronic homelessness, severe mental health conditions, and harmful substance use. Additionally, counties would be mandated to follow standardized methods for tracking and reporting expenditure.
“The intersection of behavioral health disorders and homelessness is playing out every day on our streets, in our schools, in the smallest of rural communities, in our largest cities,” stated Democratic Assemblymember Jim Wood, underscoring the urgency of addressing these interconnected challenges.
Governor Newsom has also sought voter approval to secure $6.3 billion for the creation of 10,000 new mental health treatment beds, an increase from the initial proposal of $4.6 billion. This adjustment followed a request from a coalition of mayors who urged increased funding to combat the homelessness crisis.
California currently grapples with a homeless population exceeding 171,000 individuals, representing approximately 30% of the nation’s homeless. Over the past few years, the state has allocated over $20 billion toward addressing this issue, with mixed results.
Initially, the proposal to modify the millionaire’s tax was met with strong opposition from county officials and service providers who feared a loss of local decision-making power and potential competition between programs aimed at children and those intended for homeless individuals.
In response to these concerns, the bill was amended in August to address these apprehensions, setting aside funding for children’s services and providing local governments with more control. The state committee responsible for overseeing the funds would remain independent from the governor and expand its membership.
Republican lawmakers also voiced their support for the bill, highlighting the importance of facilitating access to substance abuse treatment.
The legislative process will also require a vote on a bill to secure the funding, authored by Democratic Assemblymember Jacqui Irwin, before the end of this year’s session on Thursday. Should both bills receive approval, they would appear as a single item on the March ballot.
Advocates for the tax reform, including Sacramento Mayor Darrel Steinberg, the original proponent of the millionaire’s tax, and the Steinberg Institute, a nonprofit organization focused on mental health and substance use policy, have underscored the urgency and necessity of these changes. They argue that the current system has failed to establish standard metrics and adequately track, evaluate, and improve outcomes, especially in the context of homelessness, incarceration, and hospitalization.
However, critics of the reform efforts remain skeptical, asserting that the new mandates would result in a loss of over $1 billion for existing programs, such as mental health outpatient services, crisis intervention, recovery, and peer support services. County officials articulated these concerns in a letter to Governor Newsom over the weekend.
The legislation is one of nearly 1,000 bills under consideration during the final two weeks of the Legislative session.
