What Proposition 1 Could Mean For San Diego County

By Lisa Halverstadt, the Voice of San Diego

February 20, 2024

Gov. Gavin Newsom and a broad coalition that includes prominent San Diego Democrats are rallying behind a March ballot measure to change how a tax on people who make more than $1 million per year can be used.

The goal is to overhaul a major source of funding for behavioral health services and deliver thousands of new beds for people in need.

Supporters argue Proposition 1 will push counties across the state to update and bolster their behavioral health responses to match surging homelessness and addiction crises.

Some Republicans and advocates, meanwhile, contend that Proposition 1 will imperil existing programs and lessen local control if it passes.

Both arguments are true.

Here’s a guide to Proposition 1 – and what it could mean for San Diego County.

First, some background: California voters in 2004 approved the Mental Health Services Act, a 1 percent tax on annual incomes of more than $1 million to fund mental health programs. This tax has historically supplied about a third of the funding that counties including San Diego receive for these programs.

This year, San Diego County budgeted $274.9 million in MHSA dollars to help fund an array of programs – from outpatient mental-health treatment and facilities for people in crisis to an ad campaign focused on suicide prevention and lessening stigma surrounding mental-health issues.

Many advocates supporting Proposition 1 have argued for years counties aren’t focusing enough MHSA spending to serve people struggling most intensely with serious mental illnesses and addiction, especially chronically homeless people.

Enter Proposition 1: Newsom and state lawmakers want to put more pressure on counties to invest in new beds, housing and services for people living on the streets with drug dependency and mental health problems.

In a bid to focus more on homeless Californians, Proposition 1 would require counties to spend 30 percent of millionaire-tax dollars on housing options for people with serious behavioral health conditions. Another 35 percent would back wrap-around programs known as full-service partnerships designed for people with complex needs. The proposition would also allow tax funds to pay for addiction treatment that counties can spend this money on now.

While the 2004 act dictated how millionaire tax funds can be used, this year’s ballot measure would give counties less discretion than they have now and translate into a smaller pot of money to support some clinical care, prevention programs and pilot innovation projects. The state would keep more money if Proposition 1 passes, siphoning off 10 percent of funds versus the 5 percent it’s historically taken off the top before sending checks to counties.

In short: The state will still collect a 1 percent tax on annual incomes over $1 million, but the state is taking more control of it and then borrowing money against it.

The bond: Proposition 1 would supply more funding for behavioral health beds and housing via a nearly $6.4 billion bond. Basically, the state is going to take part of the money raised from the tax every year and borrow against it.

About 70 percent of bond proceeds would ultimately deliver an estimated 6,800 new behavioral health beds statewide plus thousands more outpatient treatment slots. (This includes beds in locked facilities, which has spurred some pushback.) The remaining 30 percent would deliver up to 4,350 housing units for homeless Californians, people at risk of homelessness and others grappling with behavioral health conditions. More than half of those units would be set aside for veterans.

Paying it off won’t be cheap. The state Legislative Analyst’s Office found annual debt payments will total about $310 million a year over the next three decades.

That’s partly why the state wants to control more of the money it collects from the tax – to pay off the loan it’s taking. The measure also calls for the state to use its increased allotment to boost the behavioral health workforce and fund prevention programs, initiatives that now fall more under county purviews.

What’s at stake in San Diego: There are likely both opportunities and challenges ahead for the county if Proposition 1 passes.

When a majority of San Diego County supervisors and the San Diego City Council voted to endorse Proposition 1, they touted increased cash for beds and services.

Yet it’s unclear exactly how much new money will flow to San Diego County.

Luke Bergmann, the county’s behavioral health services director, said new money could provide a shot in the arm to county plans to try to deliver hundreds of new board-and-care beds for behavioral health patients, which typically come with assistance with medication and meals, and additional residential care for patients who have both physical and behavioral health challenges.

But Bergmann said details matter – and the county doesn’t have them yet.

“We sort of feel like the only reasonable posture is a wait-and-see posture,” Bergmann said.

The reshuffling of priorities under Proposition 1 also means some programs and services that now rely on MHSA funds could be on the chopping block if the county and providers can’t find other cash to support them.

For example, the county will have less state money to back programs focused on preventing behavioral health crises. Officials are also bracing for reduced cash for services such as crisis stabilization, inpatient psychiatric care and outpatient treatment they now also fund with matching federal dollars. This tactic allows counties to sustain and bolster services that qualify for Medi-Cal insurance reimbursement so losing MHSA dollars it now pairs with this source could hurt.

“What I’m concerned about overall is that there is a significant diminishment in the availability of (tax dollars) to support our ongoing bread and butter, core clinical service continuum,” Bergmann said.

Proposition 1 proponents have argued that tough calls are needed to meet the intent of the 20-year-old millionaire tax and address an acute crisis.

Sacramento Mayor Darrell Steinberg, a former state lawmaker who authored the 2004 measure, is among those with this perspective.

“While it has funded many good programs over 20 years, it has gotten away from the original purpose,” Steinberg recently told The Associated Press. “Nothing is more important than alleviating the unacceptable suffering of people living and dying on our streets.”

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