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California poised to narrowly pass $12.7 billion bond on homeless issues

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(The Center Square) – California appears to be on track to narrowly pass Proposition 1, a statewide ballot measure to borrow $6.3 billion and redirect county mental health spending to homeless housing and mental health and substance abuse services.

Though Prop. 1 had the support of 53% of voters going into the night of Super Tuesday, by Wednesday evening support had dropped to just 50.3%. The measure requires a majority of voters to pass.

With lower than expected Democratic turnout and higher than expected Republican turnout — due to enthusiasm for voting in the state’s closed Republican primary for president, and ballot harvesting and mail-in training efforts by the Republican party — Prop. 1 faces an unusually conservative California electorate, creating a major headwind for its passage.

Prop. 1 is a centerpiece of California Gov. Gavin Newsom’s homelessness and mental health policy agenda, and its narrow passage is representative of voters’ growing concerns over the governor’s ability to meaningfully address the state’s homelessness crisis.

Prop. 1 would issue a $6.4 billion bond for expanding mental health and substance abuse treatment facilities — including the eventual construction of 11,150 new behavioral health beds and 26,700 outpatient treatment slots — and building supportive housing for the homeless, including $1 billion for veterans. It also requires counties to redirect 30% of the mental health services funding they receive from the 2005 Mental Health Services Act, which raised taxes $2 to 3.5 billion per year on high-income Californians to directly fund mental health services, towards housing interventions supporting individuals with behavioral health conditions.

Because counties are the largest provider of mental health services in the state outside of the jail and prison system, requiring they shift 30% of their funding towards housing could result in less available services for existing recipients.

While the state estimates interest on the bond would cost $2.9 billion over 30 years, that’s assuming an interest rate of 1.51%, or less than half of the state’s November 2023 issuance at 3.3%. At a 3.3% interest rate, the bond would cost $12.7 billion, not the advertised $9.3 billion.

California currently faces a $73 billion budget deficit for the 2024-2025 fiscal year, leading many to question whether pouring more money into housing and services with little to show for it would continue to be worth the cost.

Support for the measure has waned since its introduction, roughly in parallel with developments in the state’s budget woes. While 68% of likely voters supported the measure in December, only 59% did by February. That dropped further to just 50% by the most recent Berkeley Institute of Governmental Studies poll.

In December, the state-run, non-partisan Legislative Analyst’s office announced the state would face a $68 billion budget deficit. By January, the estimate had increased to $73 billion as tax revenues continued to fall below projections.

Prop. 1 also faced major opposition from civil rights and mental health advocacy groups.

California’s ACLU organizations were united in urging voters to vote no, stating Prop. 1 would “reduce already-strapped community-based and culturally responsive mental health services” and “fund forced treatment and institutionalization,” thereby “violate [Californians’] civil rights.”