Newsom’s flurry of California bill signings target mental health, housing

California Gov. Gavin Newsom is this week signing of bills aimed at altering the state’s mental health policies in a package that includes a $6.3 billion state bond measure.

Supporters have heralded the legislation, most of which Newsom plans to sign Thursday in a Los Angeles ceremony, as a long overdue response to a worsening crisis of homelessness, while detractors say it is an assault on civil liberties.

“California is undertaking a major overhaul of our mental health system,” Newsom of Assembly Bill 531, the bond proposal.

The Mental Health Services Act, the framework for distributing funds from the “millionaires’ tax” surcharge, would be renamed the Behavioral Health Services Act and funding distributions would be changed, including a provision to emphasize housing and the incorporation of substance abuse disorder as an eligible category for funding, according to the staff report for the companion bill, SB326.

The provisions of the companion bills would be put to voters as Proposition 1 in the March statewide primary election.

The Mental Health Services Act was approved by voters through a 2004 ballot measure. The tax has generated an estimated $26 billion for county mental health programs. Last year alone, the tax brought in $3 billion.

Its revenues funded $2 billion of bonds, including a California Health Facilities Financing Authority deal that won The Bond Buyer’s Deal of the Year award in 2020 for the inaugural sale off the No Place Like Home bond program. The NPLH ballot measure authorized $2 billion of bonds to provide funding to cities and counties to develop permanent supportive housing. The remaining authority was exhausted in 2022.

Supporters for Proposition 1, which includes the governor, have said it will help address the state’s deteriorating homelessness and addiction crises.

SB 326, to restructure the Mental Health Services Act, passed the Senate unanimously on Sept. 14, the last day of the session, after clearing the Assembly on a 68-7 vote two days earlier. The bond bill received 2 “no” votes in the Senate and eight in the Assembly.

“Now it will be up to voters to ratify the most significant changes to California’s mental health system in more than 50 years,” Newsom said when it passed.

The measure has been opposed by county health services, who say it will result in cuts to current mental health programs like outpatient care and crisis response.

An analysis from the Legislative Analyst’s Office estimates that Newsom’s overhaul of the state’s behavioral and mental health system is likely to take away nearly $720 million from services provided by county governments annually.

Newsom also this week announced $179.7 million in Homekey grants in its latest round to create 710 small homes in seven counties, for a total of 13,484 units created through the program, according to the governor’s office.

“The state’s homelessness crisis has been decades in the making,” Newsom said. “While there’s more work to be done, we are challenging the status quo with new, innovative solutions to get Californians off the streets and into housing.” 

This announcement builds upon a $736 million investment to address homelessness statewide through the acquisition and construction of interim and permanent homeless housing that resulted in the purchase of 1200 small homes.

The state and local partners have moved quickly to select site locations, request bids, sign contracts and pass trailer bill legislation to advance these projects by giving the California Department of General Services contracting and streamlining flexibility, according to the governor’s statement.

“Here in San Jose, we’re doing our part to end the era of encampments, but our bold action at the city-level would not be possible without support from the governor who is making a historic investment in what is, without a doubt, the largest, most inhumane crisis we face today. We are on-track and moving full-speed ahead.” Mayor Matt Mahan said in a statement.

“Gov. Newsom’s office has been working closely with the city and county of Sacramento to build a tiny home village on Stockton Boulevard that will be a model for the rest of the state,” Sacramento Mayor Darrell Steinberg said.

“Residents will be embedded in a community wellness campus specializing in substance abuse disorder treatment and mental health care,” Steinberg said. “This combination of housing and assertive treatment is the recipe for helping our unhoused neighbors and providing relief to our neighborhoods.”

Los Angeles Mayor Karen Bass issued a statement after Newsom signed Assembly Bill 785 authored by Assemblymember Miguel Santiago, D-Los Angeles, calling “it another positive step forward in our effort to urgently confront the homelessness crisis in Los Angeles.”

The legislation allows projects to be expedited by clearing slowdowns presented by the state’s environmental laws governing building.

“By streamlining the construction of affordable housing, low-barrier navigation centers, supportive housing and transitional housing, we will be able to bring more unhoused Angelenos inside, faster,” Bass said.

AB785 extends California Environmental Quality Act exemptions for the city and unincorporated areas of the County of Los Angeles until 2030 to streamline the construction of affordable housing, low-barrier navigation centers, supportive housing, and transitional housing for youth. The mayor said the bill will aid efforts to house more than 17,000 Angelenos, who are currently homeless.

Newsom also signed Santiago’s AB 1679, which authorizes Los Angeles County to impose a transaction and use tax that exceeds the 2% statutory limitation, and requires all revenue from the tax to be dedicated to addressing and preventing homelessness.

Other housing measures signed included: AB 1285, which specifies that city and county agencies tapping the Homeless Housing, Assistance and Prevention program prioritize placing people living in encampments into permanent housing; AB 1469 authorizing the Santa Clara Valley Water District to assist unsheltered people living along streams, in riparian corridors, or otherwise within the district’s jurisdiction, in consultation with a city or Santa Clara County, to provide solutions or improve outcomes for the unsheltered individuals; AB 1607 allowing the Los Angeles County Affordable Housing Solutions Agency to transfer a portion of revenue raised by a tax measure to the County of Los Angeles for programs that provide support and services to prevent and combat homelessness; and SB 91 to eliminate the January 1, 2025, sunset date on a provision of state law that exempts certain projects from CEQA that convert a motel, hotel, residential hotel, or hostel to supportive or transitional housing. SB 91 also extends CEQA streamlining provisions for “environmental leadership transit projects” located within Los Angeles  County that meet certain specified requirements.

Earlier this month, the first seven counties kicked off their CARE Courts program, an initiative Newsom championed to treat people with untreated schizophrenia and other severe mental illnesses that are often linked with substance abuse by putting them under

a court-ordered Care Plan for up to 24 months.