About-Face: Why Newsom Relented, Released $1 Billion Despite Lackluster Local Homeless Plans

By MANUELA TOBIAS, CalMatters

Two weeks after withholding $1 billion in homelessness funding over lackluster local plans, Gov. Gavin Newsom announced Friday that most cities and counties would get the funds as early as next week anyway — as long as in the next round, they commit to more aggressive plans to reduce street homelessness.

But it’s been a whiplash-inducing couple of weeks, triggered by a funding process that frustrated both the governor and the locals. Newsom dissed local applicants for seeming too complacent about a dire California problem, while the applicants retorted that the Newsom administration sent conflicting signals — and that in any case, state lawmakers had inadvertently given them a financial motive to lowball their goals. 

More than 100 local mayors and county officials gathered virtually and in-person in a sleek downtown Sacramento government building Friday afternoon to broadly discuss how to better tackle the state’s most pernicious crisis.

“It was nice to hear their progress, and it was nice to hear their recognition that we have to get to another level,” Newsom told reporters following the over two hour-long private meeting.

It was a quick reversal some local leaders and advocates saw as a political stunt: The episode gave everyone a chance to air their grievances, but landed on no specific targets, while briefly risking the continuity of services for people experiencing homelessness.

“If you asked me what emerged from the meeting, I don’t know. I did not hear any specific policy changes,” said Sam Liccardo, mayor of San Jose. But, he added, “Nobody’s going to criticize the state or the governor at a time when it’s critical to get resources to bring people out of the cold. Lives depend on this.”

Other local leaders said they welcomed the prodding.

“Sometimes, you have to provoke,” said Darrel Steinberg, mayor of Sacramento. “And then gather around a table like we did today, and actually talk about what it’s going to take to provide a further jolt to this problem.”

The governor sent shockwaves through the state two weeks ago, just days before Election Day, when he summarily rejected every local homeless action plan. On the line: nearly $1 billion in homelessness funding. The plans, altogether, promised to reduce visible street homelessness by 2% between 2020 and 2024, or 2,000 fewer people statewide — which Newsom had called “simply unacceptable.”

His move triggered chaos among many of the 13 largest cities, 58 counties and 44 homeless service providers who went through the process. Many of them thought they had been approved after workshopping the plans with Newsom’s own homelessness agency, only to learn of their rejection en masse.

But local governments didn’t have much of an incentive to shoot for the stars in their plans, either, because of the way the governor and Legislature wrote the grant. In the name of accountability, they tied nearly a fifth of the $1 billion to local governments meeting their own unsheltered targets. With more people falling into homelessness than they can catch, many felt ambition might set them up for failure.

That criticism came up during the meeting, Newsom told reporters, holding up yellow pages ripped from a notepad.

“We worked with 120 members of the Legislature to put this forward,” he chuckled. “And now we’re working with 75 jurisdictions on these plans… In fact, literally right here, the recommendations: ‘What specifically do you want to change in terms of these metrics and plans?’ And that’s exactly what this conversation was about going forward.”

As soon as applicants sign a pledge to submit more ambitious unsheltered targets and try harder in their plans for the next $1 billion grant — the final round of flexible local homelessness funding approved in the 2021 budget —  the state will start cutting checks for this round, according to Jason Elliott, Newsom’s deputy chief of staff. Those new plans are due Nov. 29. A handful of local governments will have to work with the state to adjust their current plans before seeing the funding, although Elliott declined to name which ones.

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