The Brief

Gov. Gavin Newsom has amassed more than $14.2 million in a campaign war chest for his hallmark mental health initiative, which will appear on the March 5 primary ballot, a sum that eclipses the resources of the measure’s opponents.

He’s drawing from longtime allies in health care, unions and tribes to fund the campaign for Proposition 1, which would issue $6.4 billion in bonds to pay for housing and treatment facilities while also redistributing money raised for mental health services through a tax on high earners.

In contrast, the Californians Against Proposition 1 campaign raised a mere $1,000, according to campaign finance records. Newsom’s opponents mostly are small mental health providers and current users of the mental health system that fear losing resources if voters pass the measure.

To the opponents, this David vs. Goliath matchup represents a fight to save community services, like crisis response teams and peer counseling.

Paul Simmons, director of Californians Against Prop. 1, said opponents include groups “that are actually going to be affected” should the measure pass.

“We are generally the consumer,” Simmons said. “A lot of us are white collar professionals, a lot of us are on the verge of homelessness. We’re a broad range, but we’re not the people that are going to give $20,000 or a million dollars.”

But the powerful Yes On 1 campaign, including Newsom, counters that opponents are propping up a broken system that doesn’t reach those with the most critical needs.

“Prop. 1 has a broad and diverse coalition…because it will finally fix our broken mental health care system and move people permanently off the streets, out of tents and into treatment,” the Yes On 1 campaign told CalMatters in a statement. “That’s why first responders, mental health professionals, doctors, nurses, veteran groups and more support the measure, unlike the opposition which is funded by extremists who want to maintain the status quo.”

Newsom and supporters tout the proposition as a potential solution to the state’s dual opioid and homelessness crises. According to their estimates the bond would build 4,350 housing units, with roughly half set aside for veterans, as well as 6,800 mental health and addiction disorder treatment slots.

Researchers estimate California has a shortage of roughly 8,000 in-patient adult treatment beds. More than 171,000 Californians live on the streets, 6% of whom are veterans.

Newsom, who has championed mental health reform more than any other governor in recent history, says the state has invested a total of $28 billion in the system during his tenure.

Sen. Susan Eggman, a Democrat from Stockton and former social worker, authored part of the legislation that created Prop. 1. She said the measure will provide the final funding and infrastructure to complete California’s mental health transformation.

“We have tried to patch all of those holes, recreated the system, and this is the final piece,” Eggman said during a January campaign event. “Californians really want to do something about the crisis they see every day on their streets and be able to feel proud about where they live and how we treat the least of us.”

Hospitals, unions and tribes give to Newsom's Prop. 1

Some of California’s largest health care companies put money on the line in support of Newsom’s ballot measure. Sutter Health cut a check for $1.15 million, Kaiser Permanente donated $1 million and the California Hospital Association, representing hospitals across the state, contributed another $1 million.

Carmela Coyle, president of the California Hospital Association, said emergency departments are currently the one of the only options for people suffering a behavioral health crisis. Frequently patients languish in emergency rooms for days and even weeks waiting for mental health treatment beds to open.

“Proposition 1 will provide the resources necessary to build a better system for the millions of Californians with behavioral health needs,” Coyle said.

Prop. 1 comes on the heels of several other seismic changes to the state’s mental health system. These changes include the launch of Newsom’s CARE Court system for people with serious mental illness and dramatic eligibility changes for conservatorship that are expected to result in more people being placed in involuntary treatment. CARE Court established a process for family members, clinicians and law enforcement to petition a court to compel people with untreated serious mental illness into a treatment program.

Many of the big ticket donors are long-time Newsom supporters. The Federated Indians of Graton Rancheria contributed the single largest donation at $1.5 million, making the tribe, which operates the Graton Casino in southern Sonoma County, one of the largest campaign contributors across all of the state races this election cycle. It has cut big checks for Newsom before, including contributing $750,000 to help him defeat the 2021 campaign to recall him.

The State Building and Constructions Trade Council is another million-dollar contributor. Chris Hannan, president of the group, said the investment is worth it. “Trades members are well-skilled and positioned to help the state build out the mental health facilities as well as the housing,” he said.

In other words, this proposition means jobs for union members.

The final contributor donating at least seven figures is another regular Newsom supporter. The state prison guard union, the California Correctional Peace Officers Association, donated $1 million for Prop. 1. Glen Stailey, president of the association, said his members have a lot at stake.

“Correctional officers experience firsthand the failures of our mental health system every single day,” he said in a written statement to CalMatters. “With this investment, [we] are demonstrating our serious commitment to addressing the crisis.”

The association has contributed to all four of Newsom’s campaign committees in the last decade. The union represents 26,000 workers and it recently negotiated a contract with raises and bonuses that are expected to cost the state about $1 billion over three years.

Prop. 1 opponents' election plan

Newsom’s opponents don’t have much money, but they gained a boost in recent weeks from groups that represent dedicated voters. The League of Women Voters of California and the Howard Jarvis Taxpayers Association recommended their members vote no on Prop. 1.

In its opposition statement, the League of Women Voters of California critiqued the way the measure was “rushed through the Legislature” with last-minute amendments and without substantial debate. That process excluded marginalized communities and Californians who could be affected by the measure, Executive Director Stephanie Doute said in a statement to CalMatters.

The league also highlighted that Newsom’s plan to reallocate money from the so-called millionaire’s tax will diminish the services counties currently provide and restrict local control. Newsom wants to spend 30% of the tax revenue — about $1 billion a year — on housing.

“The League of Women Voters of California does not support robbing Peter to pay Paul,” Doute said. “California has a desperate need for counties to both continue their current (mental health) work…and to expand it to housing interventions and substance use disorder treatment. Prop. 1 does not provide adequate funding for California’s needed mental health care system.”

It’s unclear exactly how much money specific programs stand to lose if voters pass the measure, but an analysis by the nonpartisan Legislative Analyst’s Office suggests cuts could be significant. Los Angeles County’s behavioral health department estimates that the proportion of the money it currently receives from the millionaire’s tax for outpatient services will likely be slashed from 32% to 18%.

Other opponents include Mental Health America of California, CalVoices and Disability Rights California. They argue the measure will vastly increase involuntary treatment among people with serious mental illness and addiction disorders. They also say community mental health services like outpatient care and peer counseling will be cut as a result of redirecting money toward housing.

“You don’t fix the system by creating more harm for the people for whom the system is supposed to be beneficial,” said Simmons, the opposition campaign director.

The campaign is using its tiny pocketbook of donations to pay for travel to speak to local community organizations and editorial boards, Simmons said, and is encouraged by the results.

“That tells me that we have the better argument,” Simmons said.

But mental health advocates aren’t unified on the ballot measure. The “yes” campaign is also supported by NAMI California, the largest mental health advocacy organization in the state, representing thousands of people with serious mental illness and their families.

“Let's make sure that families are just as part of that voice in ensuring that the systems that are changing are being family driven and consumer driven and that is why NAMI across the state supports Prop. 1,” executive director Jessica Cruz said during a campaign event.

In September, Gov. Gavin Newsom unveiled what is likely one of the last large climate announcements of his tenure: California will move forward with linking its decade-old carbon market with a newly formed market in Washington state, aiming to merge it with the market California already shares with Quebec.

Newsom said California was “choosing certainty, partnership, and clean energy” amid a stream of federal climate policy rollbacks.

But the announcement didn’t distract environmental advocates from the sting of a challenging year back home for the so-called “cap-and-invest” program. As Newsom leaves his post, many policy and climate experts say the adjustments to the program put California’s climate goals further out of reach. The program provides billions of dollars in funding for climate and other programs.

Yet with little talk of climate policy in the governor's race, Californians are largely left guessing about how Steve Hilton or Xavier Becerra would handle the program or California’s broader climate ambitions. The Becerra campaign did not respond to multiple emailed requests for comment. Hilton told CalMatters he would move to suspend the carbon market — which he called “a disaster of a program” — entirely.

Twenty years ago, lawmakers made California the first state to mandate broad cuts in greenhouse gas emissions with AB 32, the landmark carbon emissions reduction law, which authorized the subsequent creation of a market. The law requires the program to be as cost-effective as possible while maximizing benefits to the state’s economy.

Whoever wins in November can appoint a handful of new members to the California Air Resources Board, which has to finish writing the linkage rules and will propose the budget that leans on carbon market revenue. The next governor will also help decide how aggressively California leads on climate, after a year of mixed signals about where the program is headed.

“It's really set up the politics of these issues to get worse and not better over time, and that is the problem that is being tossed like a live grenade into the lap of the next governor,” said Danny Cullenward, an economist who sits on an advisory committee focused on the carbon market.

A question of climate leadership

In May, a process to reauthorize the keystone climate program ended with a controversial agreement that the Legislative Analyst’s Office projects will roughly halve annual auction revenue, offering about $2 billion less in funding for priority environmental programs while opening a separate pool of free permits for polluters that pledge to invest in decarbonization, valued at as much as $4 billion.

Oil companies fought the initial cap-and-invest reauthorization proposal, arguing it would encourage companies to leave the state or further increase fuel prices. The California Air Resources Board, which manages the program, said the increased allowances it eventually approved were meant to balance affordability and economic uncertainty alongside emissions targets. In an email, a board spokesperson said the new incentives would not have any impact on the market’s auction revenue. (The Western States Petroleum Association, which represents refiners in the state, declined an interview for this story.)

The concern comes as California prepares to elect its next governor and nears its own 2030 target to reduce greenhouse gas emissions 40% below 1990 levels, on its way to zeroing out emissions by 2045.

“This is not a question anymore of whether or not we'll reach the target. This is a guarantee that we won't,” said Katie Valenzuela, a consultant for Communities for a Better Environment who previously co-chaired an environmental justice committee that advised regulators on the state’s program.

State officials have long framed cap-and-invest as a backstop, keeping the state on track for its climate targets by ratcheting down the emissions limit even if other programs fall short. Advocates worry the changes will have a chilling effect rather than signal the market’s long-term strength, just as California loses ground to federal rollbacks.

“It is going to become very difficult for us to say we are a climate leader when we are visibly missing our targets,” Cullenward said.

Others remain more optimistic. Cap-and-invest is one tool in California’s toolbox, even if this year dulled it. Meredith Fowlie, an economist at the University of California, Berkeley, said the program is not optimal but has done the basics of its job: sending a price signal to drive down emissions while raising revenues for important programs.

Linking with Washington’s market will strengthen California’s program overall, air board Chair Lauren Sanchez wrote to Newsom in September. In addition to creating a larger market with more credits available to industries in both states, the link is expected to raise carbon credit prices in California, where recent auctions have yielded prices at state minimums. A connected market could also lower prices in Washington, making the state’s more stringent program less lucrative. Low prices reduce the program’s revenues and starve polluting industries’ incentive to invest in lowering emissions.

Regulators have not yet established a rulemaking timeline for the linkage process, a spokesperson for the board told CalMatters, but the board expects the joint market to begin operating next year.

Chloe Ames, policy adviser at NextGen Policy, an organization founded by former gubernatorial candidate Tom Steyer, called linkage a strong step forward. The group is disappointed by the other changes made to cap-and-invest this year, she said, and will keep urging the legislature to adjust the industry incentives and California’s next governor to take climate seriously.

“It's been more challenging for us to say that we're a climate leader, and that's why we need to step up,” Ames said. “In this work, what are you going to do other than to be hopeful?”

Kicking the can

Since the market began, revenue has funded a wide range of priorities, including job training, clean energy and affordable housing. Managing those investments, alongside costs to Californians and emissions cuts, has been a balancing act — one the next governor will inherit, Fowlie said. “Some of those objectives are potentially in tension,” she said. “A sole focus on designing the program to meet our greenhouse gas reductions misses this really important larger picture that this program is about more than that.”

The legislature approved the program’s reauthorization and the state’s air regulators lay out its rules, but a governor has influence over how that process plays out and can exert his own priorities, Cullenward said.

Beyond the carbon market, governors have wider latitude: Newsom has used his executive authority on wildfires, water shortages and clean energy.

In the governor’s race, neither candidate has centered climate in his campaign. In their one debate, both candidates steered a question about climate change’s impacts toward affordability concerns, offering little detail on the actual climate policies they favor.

“I think it's fair to say that climate probably isn't the top priority of either one,” said Barry Vesser, the chief operating officer at the Climate Center, a California environmental group that opposed this year’s changes to the carbon market.

Becerra’s campaign website emphasizes affordability in climate policy. He has faced criticism for defending Chevron and for accepting large oil and gas donations. As attorney general, though, he defended the state’s carbon program in court, arguing that “carbon pollution knows no borders” and promising that California would fight the first Trump administration’s rollbacks.

Hilton has rallied against California’s Democratic establishment, and he told CalMatters he would aim to de-bloat the bureaucracy guiding the state’s climate policies. He likened the market’s recent programmatic changes to “rearranging deck chairs on the Titanic.” Hilton, who considers himself an environmentalist, has argued for redirecting resources from current climate programs and wildfire mitigation toward management of the state’s natural lands. He also wants to rework renewable incentives to create “a level playing field” for technologies like rooftop solar, hydropower and geothermal energy. His strategy, he claims, will reduce economic burdens for Californians while exceeding the state’s climate targets.

The relative lack of attention to climate policy is a missed opportunity, according to Valenzuela and Vesser. They see a chance for the next governor to more directly and publicly connect climate programs to affordability, a key concern for likely voters and an issue on which Becerra and Hilton agree.

Ultimately, the race’s rhetoric has advocates like Valenzuela “freaked out.” She points to a “huge chasm” between present reality and the policies that would put California on the right track. The state has little time left for the aggressive action its climate ambitions require, she and other advocates say, and it’s time to start dealing in reality.

“There's not many more governors left we can kick the can to before that bill comes due,” Cullenward said.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.