Governor Newsom Goes on Tour – Makes Several Key Announcements About Housing

Instead of a traditional State of the State presentation, Governor Newsom went on tour in March to present his budget plan for Fiscal Year 2023-24, with several important announcements about housing and homelessness. The tour included a stop on March 16th in Sacramento to announce proposals that focus on reducing homelessness and a stop in San Diego on March 19, where the Governor focused on Mental Health Care Reform.

The Governor made several announcements at his first stop, including a new target for a 15% reduction in homelessness by 2025. In addition, he announced the release of $1 billion in Homeless Housing, Assistance, and Prevention (HHAP) funding now that he is satisfied that jurisdictions throughout the State have set acceptable goals for reducing homelessness in their communities. At the same time, the Governor announced funding for 1,200 new small homes for the homeless in four California jurisdictions:

Los Angeles: 500 units
Sacramento: 350 units
San Jose: 200 units
San Diego County: 150 units

The Governor has taken several steps to address the needs of homeless residents with mental illness, including establishing the new CARE Courts and implementing CalAIM, which is intended to transform and strengthen Medi-Cal to provide residents with coordinated services and connections to housing. The Governor increased his commitment, announcing a plan to go to the voters in 2024 to raise between $3 and $5 billion in funding for new residential treatment centers for people with mental illness, with a focus on homeless individuals who have fallen through the cracks of the State’s system. It is estimated that the new mental health beds could serve 10,000 people each year. The measure must be approved by the Legislature.

His announcement also included a proposal to redirect Mental Health Services Act (MHSA) funding to set aside at least $1 billion annually for behavioral health housing and services, including treatment for people with drug addictions. Some of the funding would be directed to the needs of the State’s veterans. The MHSA, which is funded by a 1% income tax on personal income of over $1 million, was approved by the voters in 2024.

The Governor also announced that he has asked the Biden Administration to allow the state to use federal Medicaid dollars to pay for rent, something that is now currently allowed. This new program would be called “transitional rent” and would provide up to six months of rental assistance or temporary housing to Medi-Cal recipients who are homeless or at risk of homelessness. Both Arizona and Oregon have received approvals to implement a similar program. If approved, this program could begin in 2025 and would cost an estimated $117 million annually.