California’s state and local government debt is roughly $1.6 trillion, which includes a proper accounting of the state’s unfunded liabilities. To put this in perspective, this works out to about $125,000 of debt per California household and exceeds the annual GDP of all but 13 countries.
California is in no position to increase its debt, and not just because of its past overborrowing. California is losing businesses and taxpayers to other states, and at rates that have accelerated since the onset of the COVID-19 pandemic. To put California’s losses in perspective, since February 2020—the last month before COVID-related shutdowns took hold—California lost roughly 366,000 jobs, while the US gained about 5.4 million jobs in the same period. Because of the loss of population and businesses and because of irresponsible budgeting, California now faces a $58 billion state budget deficit in the 2024–25 fiscal year, and deficits of about $30 billion after that.
Despite this reality, Gavin Newsom wants California voters to pass Proposition 1, a $6.38 billion dollar bond issue to build additional drug treatment facilities and permanent housing for the homeless and those with addiction and mental health issues. It is about time that California politicians realize addiction is a huge part of homelessness, which is a view that has been flat-out denied within progressive policymaking circles for years. But I see no reason to expect that passing Proposition 1 will be anything more than doubling down on California’s previous failures to sensibly deal with these issues.
One reason is that politicians and homeless advocates still cling to an unsuccessful vision of dealing with homelessness through “Housing First” policies, which provide permanent housing for the homeless with no expectation that those with substance-abuse issues take responsibility for their actions and become sober.
The flawed idea behind Housing First was that providing homeless individuals with permanent housing would lead them to get their lives together, based on the assumption that substance abuse and mental health issues were a consequence of homelessness, not a cause. But this has not proven to be the case. Beginning in 2016, California law has required that all state and local homeless policies follow Housing First principles. Before the new law took effect, chronic homelessness had been falling, from 65,000 in 2005 to 32,000 in 2015. But since Housing First became law, chronic homelessness in California has again risen to about 70,000, and the total number of homeless individuals has increased from about 115,000 in 2015 to about 181,000 today.
This increase in the number of homeless persons has coincided with enormous state spending on homelessness, including $20 billion in just the last five years—more than three times as much as the proposed bond issue. Despite the obvious failure of Housing First, this policy continues today. If Proposition 1 passes, no who is housed will be required to participate in treatment, and housing cannot be denied to someone who refuses treatment. One only needs to look at the cruel tragedy of wasted human lives, unfolding by the thousands every day in every major city in the state, to know that California has completely lost its way in dealing with these issues.
Another problem with the proposition is that politicians are not being honest with voters regarding the feasibility of creating new housing and treatment facilities. About $2.2 billion from the bond would be used to build 4,350 permanent housing units. This works out to over $500,000 per unit, which is outrageous and unrealistic at the same time. It is outrageous because building a small housing unit should in no way cost $500,000. And it is unrealistic because the price tag is likely to be twice as high as that, as comparable construction is now exceeding $1 million per unit. An important reason costs are so high is that builders must pay what is known as “prevailing wages” on these projects, which can be as much as twice as high as market wages. And these costs will continue to rise in the future.
Yet another problem is a lack of transparency and lack of local input. Despite the bond description’s filling 69 pages, there are no specifics for where treatment facilities will be built, or what will be built, and there will be no role for local governments in making these decisions. These projects will be permitted using ministerial review, meaning: what the state wants, the state gets.
There is also the fact that California’s state government does not have a stellar record when it comes to using the funding from bond issues. The $10 billion high-speed rail bond, which was passed in 2008, is now an obvious mistake, including that the state violated a key legal provision within the bond issue that required a pathway to funding before the project could go forward. Fifteen years later, there is no pathway and there almost certainly will never be one. Yet the state will continue to pour another $25 billion to $30 billion into building a rail line between Bakersfield and Merced, a 160-mile route with virtually no legitimate interest.
In the last 25 years, voters have approved eight bond issues totaling $27 billion in funding for water infrastructure intended to improve water reliability, cleanliness, safety, and protection from flooding. Yet in that time, none of these areas have improved. Over one million Californians do not have clean drinking water. There have been no significant changes to the state’s water storage and conveyance in the last 50 years. And flooding and debris flows from storms have become even bigger safety and economic issues, resulting in 22 deaths and $5 billion in damages last winter, and 24 deaths near Santa Barbara in 2018.
The state needs to significantly increase treatment facilities for those with mental illness and drug addiction. But Proposition 1 is not the way to do it. The state needs to require that the beneficiaries work toward the goal of becoming responsible for themselves, that building costs for these facilities are substantially reduced, and that local government has input into these decisions. There is adequate funding within the state’s $300 billion budget to deal with these issues. There is no need to push California further into debt.
