Newsom pitches using mental health tax to fund homeless housing

Leveraging a 19-year-old tax for homeless housing could alleviate the impact on California’s streets, the Governor argues.

California Governor Gavin Newsom has unveiled a $4.68 billion plan to build housing for people with mental illness and addiction, using new bond funding and some existing revenue from the state’s mental health services tax.

The plan, which would require two-thirds of lawmakers to vote for it, would provide funding for 10,000 new residential treatment beds aimed at people with severe mental illness who are homeless or falling through the cracks in the state’s overburdened system. The proposal includes “campus-style” facilities, smaller “cottage”-like settings, and individual homes, according to Newsom’s office.


The backstory: The Mental Health Services Act, which was passed in 2004, levies a 1 percent tax on income over $1 million to fund mental health services. Newsom’s plan would allow counties to spend 30 percent of the funding they receive from the tax on housing for people with mental illness or addiction.

  • The changes would also earmark some of the money for early treatment of severe mental illness among young people. State leaders have tried to use the funding for housing in the past, but have been stymied in court.
  • The tax generates about $4 billion annually, and dedicating a portion of that to housing would ensure the tax helps people visibly struggling with mental illness and addiction in tent encampments that line city streets, said Sacramento Mayor Darrell Steinberg, who wrote the original Mental Health Services Act when he served in the Legislature.

What they’re saying: Severe mental illness and addiction makes people much more likely to be incarcerated or become homeless, something that needs to be reflected in the law that allocates that tax revenue, California Health and Human Services Secretary Dr. Mark Ghaly said.

  • The plan could help address a key criticism of Newsom’s previous efforts to improve mental health care by adding more treatment beds. Last year, the governor and lawmakers enacted a new system called Care Court that aims to make it easier to get people into treatment for mental illness, although even advocates of the system have argued there aren’t enough treatment slots available to encompass all the people who need them.
  • “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.
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