California Gov. Newsom set to release $1B for homelessness

SACRAMENTO, Calif. - California Gov. Gavin Newsom agreed to release $1 billion in state homelessness funding he testily put on pause earlier this month, but only if local governments agree to step up the aggressiveness of their plans going forward to reduce the number of unhoused people in the state.

The Democratic governor said his afternoon meeting Friday with about 100 mayors and local officials in person and virtually was productive, with leaders getting on the same page about what needs to be done and willing to step up on their goals.

"It was nice to hear their progress. And it was nice to hear their recognition that we have to get to another level," he said to reporters after the two-hour plus meeting. "What I want to see is what everybody wants to see: the streets of California cleaned up. We want to see encampments cleaned up, we want to see people housed."

Newsom, who coasted to reelection this month, is on the hook in his second term to show reductions in the growing number of unhoused individuals, some of whom camp out along city sidewalks and under highway underpasses, exasperating even the most politically liberal voters in the country’s most populous state.

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He stunned the state when he announced two weeks ago that he would withhold $1 billion in spending until cities and counties came up with more robust plans, calling submitted plans "simply unacceptable" as they would collectively reduce the state’s homeless population by just 2% over the next four years.

Mayors and county officials — many of whom are Democrats — as well as advocates for low-income housing pushed back against his effort to withhold funding, saying it was counterproductive to hold money needed for shelter beds, outreach workers and other services for unhoused people. They pleaded with the governor for more direction — as well as guaranteed, ongoing funding to build more ambitious plans.

On Friday, he reiterated the record amount of money his administration has spent on housing and homelessness, including a recent commitment by state lawmakers to spend $15.3 billion over the next three years. The money has kept tens of thousands of people housed, he said, but acknowledged people were not seeing results on the streets.

Newsom said he had no plans on turning his back on local governments, but that "finding new dedicated money as we enter into what could be a recession with the headwinds, one has to be sober about that — just as they’re sober about that with their budgets."

Sacramento Mayor Darrell Steinberg defended Newsom, saying after the meeting that he understood the governor’s need to provoke local governments into action. He praised Newsom for his leadership on the issue — from converting motels into homes to new mental health courts to treat homeless people with schizophrenia and other serious mental health conditions.

But not everyone understood the point of Friday’s meeting.

San Jose Mayor Sam Liccardo, who joined virtually, said there were too many people and little room for "forthright, constructive dialogue." He and other mayors were told several days ago that Newsom planned to release the money if they submitted new plans.

Broadly, the governor seemed to be on a different page than the state housing department, which worked with San Jose and other cities on their original plans, said Liccardo, also a Democrat.

"There seems to be countervailing notions about what is required," he said.

The California State Association of Counties was blunt in its criticism.

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"We can’t fix an ongoing crisis with one-time commitments. Progress requires clear state, county, and city roles aligned with sustainable, equitable funding. We need to get out of our own way and work together," said Graham Knaus, executive director of the association that represents the state’s 58 counties.

Addressing homelessness has for decades been left to local governments in California, but Newsom took office in 2019 vowing to own an issue he said he understood intimately as a former mayor of San Francisco, where tent encampments crowd sidewalks and people in clear mental health crisis are a common sight.

California had an estimated 161,000 unhoused people in 2020 with the number expected to be higher this year, the result of the state’s high cost of housing and historic under-building of homes. Advocates for the homeless say that they can’t keep up and that even as they find housing for some, many more lose their homes.

That possibility of a separate funding stream for homelessness became dimmer this week after state officials announced Wednesday that California will likely have a $25 billion budget deficit next year after a run of historic surpluses.

The state’s 13 largest cities, 58 counties and 44 groups of homeless service providers submitted 75 applications detailing their plans for spending $1 billion in what was the third round of disbursements.

An additional $1 billion is on the table, but Newsom won’t release that money unless those governments pledge "to be more aggressive across the board," said Erin Mellon, spokesperson for the governor’s office. Plans are due in two weeks.

Applicants also must agree to implement as many best practices as possible, including more efficient methods of getting people into housing and streamlining the building of more homes for poor and extremely poor households.

The Newsom administration is also cracking down on California cities and counties reluctant to build more housing, including affordable housing, with many saying they don’t want the congestion and neighborhood changes that come with more people.