Proposition 2

AB 1827 (Chapter 41 , Statutes of 2018). Committee on Budget. No Place Like Home Act of 2018.

Yes/No Statement

A YES vote on this measure means: The state could use existing county mental health funds to pay for housing for those with mental illness who are homeless.

A NO vote on this measure means: The state’s ability to use existing county mental health funds to pay for housing for those with mental illness who are homeless would depend on future court decisions.

Summary of Legislative Analyst’s Estimate of Net State and Local Government Fiscal Impact

Allows the state to use up to $140 million per year of county mental health funds to repay up to $2 billion in bonds. These bonds would fund housing for those with mental illness who are homeless.

Ballot Label

Fiscal Impact: Allows the state to use up to $140 million per year of county mental health funds to repay up to $2 billion in bonds. These bonds would fund housing for those with mental illness who are homeless.

Background

Counties Provide Mental Health Services. Counties are primarily responsible for providing mental health care for persons who lack private coverage. Counties provide psychiatric treatment, counseling, hospitalization, and other mental health services. Some counties also arrange other types of help for those with mental illness—such as housing, substance abuse treatment, and employment services.

Mental Health Services Act. In 2004, California voters approved Proposition 63, also known as the Mental Health Services Act. The act provides funding for various county mental health services by increasing the income tax paid by those with income above $1 million. This income tax increase raises $1.5 billion to $2.5 billion per year.

No Place Like Home Program. In 2016, the Legislature created the No Place Like Home program to build and rehabilitate housing for those with mental illness who are homeless or at-risk of becoming homeless. The state plans to pay for this housing by borrowing up to $2 billion. The state would borrow this money by selling bonds, which would be repaid with interest over about 30 years using revenues from the Mental Health Services Act. This means less funding would be available for other county mental health services. No more than $140 million of Mental Health Services Act funds could be used for No Place Like Home in any year. The bond payments would be around $120 million in a typical year.

Court Approval Needed for No Place Like Home. Before these bonds can be sold, the state must ask the courts to approve the state’s plan to pay for No Place Like Home. The courts must decide two main issues:

Whether using Mental Health Services Act dollars to pay for No Place Like Home goes along with what the voters wanted when they approved the Mental Health Services Act.
Whether voters need to approve the No Place Like Home bonds. (The State Constitution requires voters to approve certain kinds of state borrowing.)

This court decision is pending.

Proposal

The measure allows the state to carry out No Place Like Home. In particular, the measure:

Approves the Use of Mental Health Services Act Funds for No Place Like Home. The measure says that Mental Health Services Act funds can be used for No Place Like Home. No more than $140 million of Mental Health Services Act funds could be used for No Place Like Home in any year.
Authorizes $2 Billion in Borrowing. The measure allows the state to sell up to $2 billion in bonds to pay for No Place Like Home. The bonds would be repaid over many years with Mental Health Services Act funds.

With this measure, the state would no longer need court approval on the issues discussed above to carry out No Place Like Home.

Fiscal Effects

Fiscal Effect Depends on the Court Decision. The fiscal effect of the measure depends on whether or not the courts would have approved the state’s plan to pay for No Place Like Home. If the courts would have approved the state’s plan, the measure would have little effect. This is because the state would have gone forward with No Place Like Home in any case. If the courts would have rejected the state’s plan, the state would not have been able to move forward with No Place Like Home. This measure would allow the state to do so.