If voters approve Tuesday, Gov. Gavin Newsom’s ballot measure to overhaul the state’s mental health system and sell bonds to fund more than 10,000 treatment beds across California could cost the state up to $14 billion.

Opponents of Proposition 1 are debating the price

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Is too high.

“What California needs to do is take a step back and figure out how to spend this money effectively,” said Karen Vicari, director of public policy for the California nonprofit Mental Health America. “We’re just wasting money. We’re just throwing money at a problem without understanding the root causes and how we can really solve homelessness.”

The measure, which will take place statewide on March 5, asks for voter approval to sell $6.4 billion in government bonds to support more treatment facilities. Bonds, which are purchased by investors, act as loans that the government pays back with interest.

The California Department of Finance estimates that the Behavioral Health Infrastructure Bond within Proposition 1 will cost a total of $14 billion.

Anthony York, a spokesman for the Yes on 1 campaign, pointed out that the measure would not raise taxes on Californians. Instead, Proposition 1 provides accountability for how existing tax dollars are spent, he said.

“Prop. 1 will provide care to thousands of people struggling with mental health issues and currently living on our streets and sidewalks without raising taxes,” York said in a statement. “This is exactly the kind of smart investment the state should be prioritizing to get people out of the camps and into treatment.”

How much will proposal 1 cost?

That depends on who you ask.

The official voter guide, compiled by California’s secretary of state, quotes an estimate of $310 million per year over 30 years, based on an analysis by the Legislative Analyst’s Office. The LAO analysis did not include an estimate of total costs over the life of the bond, which will be determined in part based on when the bonds are sold and interest rates at that time.

The Ministry of State Finances came up with its own estimate.

Finance estimates that

On average, the state pays $2 for every dollar borrowed over the life of a bond, said HD Palmer, a department spokesman.

“If the Behavioral Health Bond is approved, we estimate it would result in total debt service of $14 billion over the life of the bond, with an average annual amortization cost of $238 million per year,” Palmer said in an email.

The difference between the estimates can be attributed to varying interest rates, maturities and timelines for issuing the bonds.

Who will pay for it?

Regardless of where the final costs end up, the money will be paid from the state’s general fund, the account used to pay for most public services.

Ross Brown, chief budget and policy analyst at the LAO, said the state is servicing about $5 billion in debt annually, including payments for general obligation bonds and lease income bonds, from the general fund.

As a percentage of the state’s total general budget, he said:

Debt service payments are less than 3%

of the state’s total general budget, he said.

“It’s actually the lowest it’s been in decades,” Brown said.

The disadvantage of using bonds, Brown said, is that the state cannot retire the bonds after they are sold and must commit to making payments over a long period of time.

of time

even if state revenues decline. The positive thing is that the sale of bonds allows the state to make important investments without having all the money available upfront.

There is less cash available this year as budget deficit estimates range from Newsom’s projection of a $37.9 billion deficit to LAO forecasts of a $73 billion budget gap by 2024. Finding hundreds of millions of dollars to pay for the bond , without raising taxes, will require the state to divert other programs from the general fund.

Now that California is in the midst of a budget crisis, lawmakers and interest groups are also looking to get in place

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bond measures on the November ballot to fund a variety of programs, such as fighting climate change and increasing housing.

How will the money be used?

A yes vote on Proposition 1 would authorize the $6.4 billion bond to build facilities for 10,000 treatment beds.

According to an LAO analysis of the measure, $4.4 billion from the bond sale would go to a state program that builds more mental health and drug or alcohol treatment places, and within that bucket a total of $1.5 billion is needed for the local government and the Native Americans. tribes. Another $2 billion would fund a state program that converts motels, hotels and other vacant buildings into housing for the homeless, with half of that funding earmarked for veterans.

Proposal 1 would also overhaul the Mental Health Services Act, which voters approved in 2004. The law imposes a 1% tax on incomes above $1 million to fund the expansion of mental health treatment options in California. The law funds 30% of the state’s mental health system.

If approved, Proposition 1 would change the state’s mental health care system to better serve Californians with substance use disorders, regardless of whether they suffer from a mental illness. Proposal 1 does not change the tax, but seeks to reconfigure how the law’s money can be spent.

The state would receive a larger share of tax dollars from the law, from a maximum of 5% under current law to a maximum of 10%, meaning a smaller 90% share would go to the counties. Provinces would also have to spend more money from the law on housing and personalized support services, which the LAO defines as employment support and education. Less money from the law would be available for other services, including treatment and outreach.

The measure would also increase state oversight of provincial behavioral health spending.

Vicari said she worries the changes would mean less help available to Californians in the early stages of need if more money is diverted to higher levels of care.

“There are a lot of community organizations that provide really effective services that don’t have the ability to bill Medi-Cal, and they will be the first to lose their funding from the counties,” Vicari said.

At a campaign event for Proposition 1 in San Diego on Thursday, Newsom described the measure as an opportunity to right past wrongs.

Led by the then Governor. California’s Ronald Reagan began closing state psychiatric hospitals in the 1960s without adding adequate housing and mental health care at the local level. Newsom repeatedly points to that policy decision as the cause of the state’s mental health and homelessness crisis.

“On March 5, we have the opportunity to fulfill that original vision and right the wrong and get something done that is big, bold and scalable,” Newsom said. “That’s the opportunity.”