What you need to know about California’s Proposition 1

At Gov. Gavin Newsom’s insistence, proposed measures that were eligible to appear on the March 5 ballot were pushed to November so that just one, the one he’s backing, would have the ballot all to itself. However, it doesn’t benefit from close attention.

Proposition 1 would authorize $6.38 billion in general obligation bonds for the construction of mental health treatment facilities, as well as paying for housing for California’s burgeoning homeless population.

According to the nonpartisan Legislative Analyst, Proposition 1 has two major components related to mental health services, behavioral health services and homelessness. First, it would change the Mental Health Services Act that was passed by voters in 2004, altering how the money collected from the so-called “millionaire’s tax” can be used. Second, it seeks voter approval of a $6.38 billion bond to build (1) more places for mental health care and drug or alcohol treatment and (2) more housing for people experiencing homelessness.

The coalitions in support and opposition of Prop. 1 do not break down into the traditional conservative/progressive dichotomy. Although one would think that mental health advocates would be supportive, that is not universally true.

Gov. Newsom has invested a great deal of his political capital into Prop. 1. He pressured the Legislature not to put any other measure on the ballot.

Although the governor touts Prop. 1 as a “transformational” solution to mental health care and homelessness, it is anything but. The $6.38 billion will pay for only 6,800 beds in treatment facilities and fewer than 4,500 units of housing for the homeless, including homeless veterans, according to the nonpartisan Legislative Analyst’s Office. There are more than 170,000 individuals experiencing homelessness in California.

Here’s where the politics gets interesting. CalVoices, California’s oldest mental health advocacy agency, opposes Prop. 1 because it threatens existing mental health services. It requires the diversion of tax revenue away from county mental health programs and into state programs and housing instead. Counties will have to scramble for funds to continue current programs for mental health.

Overlooked in the debate over whether Prop. 1 will deliver the results it promises is the threshold issue of whether general obligation bond financing is even appropriate. It is not. Proposition 1 violates all the basic principles of sound bond financing, including the constitutional requirement that the money raised would be for a “single work or project.” Even worse is the lack of specificity as to where the money will be spent. Unlike a school bond where voters are given an inkling of how their dollars will be spent, Prop. 1 is contingent on legislative action.

Voters need to be aware of all bond proposals for several reasons. First, with interest, bonds typically cost way more than the amount approved at the ballot box. Second, there is an entire industry that thrives on bonds, including bond counsel, underwriters and wealthy individuals looking for tax-exempt investments. Third, even though state general obligation bonds do not come with a tax increase, they stress the general fund.

Finally, Prop. 1 appears to be nothing more than a political drill to give the governor cover for his unpopular handling of California’s homelessness crisis. But as he seeks a higher profile on the national political stage, this cover may prove to be little more than a fig leaf. Especially when one considers that, as mayor of San Francisco, Newsom promised in 2004 to find housing for all of the city’s chronically homeless residents within 10 years. How did that turn out?

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

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