Newsom’s plan to transform California’s mental health system

If approved by voters Tuesday, Gov. Gavin Newsom’s ballot measure would overhaul the state’s mental health services system and sell bonds to finance more than 10,000 treatment beds across California. It could cost the state up to $14 billion.

Opponents of Proposition 1 argue that the price is too high.

“What California needs to do is take a step back and think about how this money can be used effectively,” said Karen Vicari, director of public policy for California nonprofit Mental Health America. That’s true.” “We’re just wasting money. We’re just throwing money at a problem without understanding the root causes or how to truly solve homelessness.”

The measure, included on the March 5 statewide primary ballot, seeks voter approval to sell $6.4 billion in state bonds to support more treatment facilities. Bonds purchased by investors serve as loans that the state repays with interest.

The California Department of Treasury estimates the total cost of behavioral health infrastructure bonds included in Proposition 1 will be $14 billion.

Anthony York, a spokesperson for the Yes on 1 campaign, said the measure would not increase taxes on Californians. Instead, he said, Proposition 1 would provide accountability for how existing tax dollars are spent.

“Proposition 1 would provide care without raising taxes to the thousands of people suffering from mental health issues who are currently living on the streets and sidewalks,” York said in a statement. “This is really a smart investment that the country should prioritize, getting people out of encampments and into treatment.”

How much does proposal 1 cost?

It depends on who you ask.

The official voter guide compiled by the California Secretary of State cites an estimate of $310 million annually over 30 years from an analysis by the Legislative Analysis Service. LAO’s analysis does not include an estimate of the total cost over the life of the bond, which is determined in part based on when the bond is sold and current interest rates.

The state Treasury Department provided its own estimates. Over the life of the bond, the state will pay an average of $2 for every $1 borrowed, said department spokesperson H.D. Palmer.

“We estimate that if approved, the behavioral health bond would result in total debt service payments of $14 billion over the life of the bond, with an average annual debt service cost of $238 million,” Palmer said in an email. “There is,” he said.

Differences between estimates can be attributed to differences in interest rates, maturity periods, and bond issuance schedules.

Who will pay for it?

Regardless of where the final cost goes, the money will come from the state’s general fund, which is used to pay for most public services.

Ross Brown, LAO’s chief fiscal and policy analyst, said the state pays about $5 billion a year out of its general fund in debt service payments, including payments on general obligation bonds and lease revenue bonds. Debt service, he said, is less than 3% of the state’s total general fund budget.

“It’s actually the lowest it’s been in decades,” Brown said.

Brown said the downside to using bonds is that the state cannot scale back the bond issuance after the sale and must commit to repayments over a long period of time, even if the state’s revenue declines. On the plus side, selling bonds allows states to make important investments without having to come up with all the cash upfront.

Cash is in short supply this year, with budget deficit estimates ranging from Newsom’s prediction of a $37.9 billion shortfall to LAO’s prediction of a $73 billion fiscal hole in 2024. Finding hundreds of millions of dollars to pay down the national debt without raising taxes would require states to cut other programs from the general fund.

California is in the midst of a fiscal crisis, and lawmakers and interest groups also want to put other bond measures on the November ballot to fund a variety of programs, including climate action and housing growth. ing.

How will the money be used?

A “yes” vote on Proposition 1 would approve a $6.4 billion bond to build a facility with 10,000 treatment beds.

An LAO analysis of the measure found that $4.4 billion from the bond sales would go to state programs that increase the number of mental health and drug and alcohol treatment locations, and would help local governments and Native American A total of $1.5 billion will be needed for this purpose. tribe. An additional $2 billion would fund a national program to convert motels, hotels and other vacant buildings into housing for the homeless, with half of the money earmarked for veterans.

Proposition 1 would also amend the Mental Health Services Act, which was approved by voters in 2004. The law would impose a 1% tax on income over $1 million to fund expanded mental health treatment options in California. The law funds 30 percent of the state’s mental health system.

If approved, Proposition 1 would change the state’s mental health system to better serve Californians with substance use disorders, regardless of whether they suffer from a mental health condition. Proposition 1 does not change taxes, but it does seek to reconfigure how the money from this law is spent.

The law would increase the state’s share of tax revenue to a maximum of 10%, up from 5% under current law, and reduce the county’s share to 90%. Counties would also be required to spend more money from the law on housing and individual support services, which the LAO describes as employment assistance and education. Funds provided by this legislation would not be available for other services such as treatment and support.

The measure would also increase state oversight of county spending on behavioral health.

Vicari said he is concerned that the changes will reduce the early help Californians have when they need it, as more funding is directed to higher levels of care.

“Many of the community-based organizations that provide really effective services don’t have the ability to bill Medi-Cal, and they will be the first to lose funding from the county,” Vicari said. Ta.

At a Proposition 1 campaign event in San Diego on Thursday, Newsom described the measure as an opportunity to right the wrongs of the past.

In the 1960s, under the leadership of then-Governor Ronald Reagan, California began closing state psychiatric hospitals without adding adequate housing and mental health services at the local level. Newsom has repeatedly blamed his policy decisions for the state’s mental health and homelessness crises.

“On March 5, we have an opportunity to realize our original vision, right a wrong, and accomplish something big, bold, and massive,” Newsom said. “That’s your chance.”