Before you buy what Prop. 1 supporters are selling, take a closer look at the true costs of the measure.
$9.3 Billion – or more – for bonds.
You'll see on your ballot that Prop. 1 would authorize $6.38 billion in bonds.
But that's not "free money." It has to be paid back, with interest.
The neutral Legislative Analyst (LAO) estimates the payback cost at $310 million per year for 30 years, for a total of $9.3 billion.
Earlier analyses by legislative staff pinned the potential total cost at $10.58 billion-$12.15 billion.
$310 Million per year – or more – from the state budget.
As noted above, the Legislative Analyst estimates an annual cost of $310 million per year. This reduces the amount available from each annual budget to pay for other needs and services.
Legislative staff warned of even higher annual costs, between $353 million-$415 million per year, depending on interest rates.
$140 Million more per year for administrative costs.
The official title and summary for Prop. 1 says the measure will "[s]hift roughly $140 million annually of existing tax revenue for mental health, drug and alcohol treatment from counties to the state."
To be clear, this is telling you that Prop. 1 doubles that state's share of administrative costs from the voter-approved Mental Health Services Act. Voters originally offered just 5% of the "millionaire's tax" revenues to the state for oversight. Now, the state's biggest healthcare bureaucracy will get 10%, roughly $280 million per year.
Every dime that is "shifted" from counties to the state was supposed to be dedicated to providing services for needy people at the local level.
Loss of $700 Million-$1 Billion per year for mental health programs.
By diverting 35% of current, local funding for Mental Health Services Act programs away to other purposes (state agency, housing), only one thing is certain about Prop. 1's impact: Sharp cuts will be necessary to current mental health programs.
The final LAO analysis of Prop. 1 does not attempt to put a dollar figure on this impact, but merely states that counties "would have less MHSA money for other mental health services." The LAO also says gingerly that "counties may need to use other county, state, or federal money to keep current service levels." In other words, there will be cuts unless counties pony up more money.
In July 2023, the LAO analyzed a substantially similar proposal in the legislature, which became part of Prop. 1 (SB 326). Then, the LAO said counties would have to reduce current spending on mental health programs by $719 million:
Whereas current expenditures that would be eligible under the [Behavioral Health Services and Supports] category currently make up around 60 percent of MHSA dollars, under the proposal, this category would be capped at 30 percent. Consequently, these expenditures would need to be reduced from $1.34 billion to $621 million.
The same analysis by the LAO estimates the new housing category would cost $626 million per year, most of that taken away from other, current services.
The LAO based their estimate on MHSA funding in FY 2021-22. However, later years saw somewhat higher revenues, so diverting 35% of MHSA funds could reach $1 billion per year. The figure of $1 billion has been used in media reports about Prop. 1.
In reality, MHSA funding varies year to year, because it is based on tax revenues from those earning more than $1 million per year. In fact, the LAO estimates annual revenues as between $2 billion and $3.5 billion, an extremely wide variation year to year. So no one can say what the specific impact of Prop. 1 would be, dollar-wise, in any one year.
But the LAO is saying here that some kinds of local programs could be cut by half (from 60 percent to 30 percent), with surely devastating consequences.
Basic Facts
Human Costs of Prop. 1's Cuts
Rebutting Prop. 1 Claims
