Newsom paused $1 billion in homeless funds for cities, then restarted it. Did anything change?

Gov. Gavin Newsom stunned local officials across California last month when he revealed he would withhold $1 billion in state funds they were relying on to maintain critically needed shelters and services for the homeless.

The announcement, made less than a week before Election Day, came with a stiff message about what he regarded as a lack of aggressive planning by cities and counties to confront one of the state’s most pressing issues. Newsom said that Californians demanded “accountability and results” for the state’s homeless crisis.

In essence, he said he wanted them to go back to the drawing board.

But less than a month later, the money was again on its way to local agencies, with little, if any, substantive changes to the plans and goals set by cities and counties.

In a tweet on Thursday, Newsom wrote that after “honest and robust” conversations with local leaders, “progress” had been made.

“As of today, 73 of 75 applicants have committed to higher goals on ending street homelessness,” he wrote.

But what exactly are those “higher goals” and what does Newsom consider “progress?” The answers are murky.

Local goals set for reducing California homelessness

Newsom convened a one-day meeting with local officials on Nov. 18 to air grievances on both sides in hopes of setting more aggressive targets.

Cities, counties and partnering agencies were required this year to set measurable goals for reducing their homeless populations and outline action plans to get there. According to Newsom’s administration, the plans submitted to the state only forecast a 2% net decrease in street homelessness between 2020 to 2024.

In Sacramento, officials set a goal to hold the growth of its unsheltered homeless population to 71% — a figure distorted by the data chosen to measure progress and the significant increase in homelessness wrought by the pandemic.

Newsom called the plans as a whole “unacceptable” and said he was dumbfounded by Sacramento’s target.

Since then, however, the state’s Business, Consumer Services and Housing Agency, which is in charge of the grant program, has not received any new or “higher” goals from localities, including Sacramento.

Instead, the state has merely collected signed “commitments” from local agencies stating that they will “agree to adjust” their goals and implement a handful of best practices outlined by the state, such as streamlining affordable housing development, strengthening relationships with local public housing authorities and creating regional agreements to better coordinate approaches.

Based on those commitments, the state is now in the process of releasing the funds, though it could take between 30-60 days to land in the hands of local officials, according to Russ Heimerich, an agency spokesperson.

Meanwhile, local agencies are working to finalize grant applications for the next round of state funding, due at the end of March 2023. The state has offered technical assistance to help officials set new goals for that round, as well as adjust their goals for the prior round that sparked the controversy.

Lisa Bates, CEO of the nonprofit Sacramento Steps Forward, said she was glad to see the state moving forward with the funding and hopeful about future collaboration with the state.

“I think all communities understand the urgent need to address this problem as quickly and effectively as we can,” Bates said. “I appreciate the state recognition of that and thinking through how it can be helpful and supportive.”

Unlike the 71% target, which only encompassed the explosion of street homelessness already seen in Sacramento over the past two years, Bates said the city’s new grant application will paint a more accurate picture of the city’s goals — reducing the total number of unhoused people on its streets by at least 15%.

Newsom’s about-face garners reactions

Newsom’s ultimatum came off to some as more of a performative splash, admonishing local leaders and making them sign a paper for money that they counted on and assumed would not be held up for long.

“The next best thing to solving a problem is to look like you’re trying to solve it,” said Dan Schnur, a political science professor at USC. “If they do come back with more ambitious goals, that’s a big win for him. And if not, now they’ve signed a form, so he can get mad at them again down the line.”

San Jose Mayor Sam Liccardo said the governor’s ploy is unlikely to change much in his city, where officials have set a goal of reducing unsheltered homelessness by 4% by 2024.

“The reality is our goal setting and our strategic planning relies on experience and data to drive scarce dollars to the greatest impact,” he said. “That doesn’t change with political wins.”

Sacramento Mayor Darrell Steinberg, however, is more optimistic.

The city and county of Sacramento on Thursday unveiled a new agreement that outlines each agency’s responsibilities for addressing homelessness. Although the deal was already in the works before the state funding saga, Steinberg said it’s an example of how state and local officials can work together to remedy the current fragmented system to addressing California’s homeless crisis.

“I’m always looking at controversy as an opportunity,” Steinberg said. “If it leads to greater systemic change and better results, then it will have been worth it.”