California deems addiction treatment, housing as mental health, seeks $4.7B bond; Newsom signs bills

California Gov. Gavin Newsom signed a package of two bills in Los Angeles, aimed at reducing the state’s homelessness crisis.

The first, the Behavioral Health Services Act, which expands replaces the Mental Health Services Act and expands mental health services overall to include substance abuse treatment and housing, and the second, which puts forward a ballot measure for voters to approve a $4.7 billion bond for funding said services and housing expansion.

Among the items funded by the 30 year, $4.7 billion bond, if approved by voters, will be 11,150 new behavioral health beds, 26,700 outpatient treatment slots, and $1 billion for veterans’ housing. Facilities built using these funds could be built by right, meaning they could be rapidly constructed instead of held up by lawsuits. At interest rates of 3.63%, the bond would cost $7.8 billion to repay over its lifetime. If interest rates increase to 5%, the California Senate appropriations committee estimates the bill would rise to $9.1 billion. As of the time of publication, Bloomberg has 30 year bonds at 4.38% yield, or interest paid to investors — a number that has increased by .41 percentage points in the last month alone. Should yields continue to rise and reach past 5% by time the bond is potentially approved and is issued, the bond would cost over the $9.1 billion amount over its lifetime.

“These reforms, and this new investment in behavioral health housing, will help California make good on promises made decades ago. We see the signs of our broken system every day – too many Californians suffering from mental health needs or substance use disorders and unable to get support or care they need,” Newsom said in a public statement. “This will prioritize getting people off the streets, out of tents and into treatment.”

While the bills enjoyed broad bipartisan support, rural counties remained concerned about the changes in spending requirements to include substance abuse treatment and housing as mandated mental health spending.

“Counties have a significant and growing obligation to fund [behavioral health] services under the Medi-Cal entitlement and use MHSA funds to support that obligation. This proposal leaves counties with fewer resources to do so, including less funding available to use as Medi-Cal match to draw down additional federal dollars,” a California Senate analysis noted. “New prescriptive state requirements direct how counties must spend BHSA funds and restrict a county’s ability to design programs best suited to serving local communities.”

Additional support came from California’s business community, which has often been at odds with the state government.

“California employers, especially retailers, public-facing leisure and hospitality businesses, and health care, are at the front lines, and many struggle daily to stay open and provide a safe and welcoming business environment for their workers and customers,” said California Chamber of Commerce CEO Jennifer Barrera in a public statement. ‘This ambitious response provides the necessary resources to enable a more effective response by service providers and get help to those most in need.”

According to a recent poll from the Public Policy Institute of California, 87% of California voters say there is a mental health crisis. Voters are set to decide whether or not to fund the Behavioral Health Services Act in the March 2024 primary ballot.