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The mayors of California’s biggest cities had a “robust” discussion with Gov. Gavin Newsom on Monday, highlighting their opposition to his plan on how to spend $750 million to combat the state’s homelessness crisis.

California’s homelessness count increased 16% last year while unsheltered populations declined in much of the rest of the country. The state’s housing shortage and high cost of living are seen as major factors in the disparity.

In his State of the State speech last month, Newsom appeared to criticize how local governments are handling the crisis. He said “spending decisions have been relatively unrestricted and locally driven,” calling for a new approach because: “The results speak for themselves.”

Newsom Proposes Regional Administration of Homeless Funds

This year, instead of dividing the $750 million among the state’s local governments, Newsom wants to divide it based on 10 geographic regions of the state. Still-to-be-named “regional administrators” would decide how to spend this money.

The latest version of Newsom’s proposal, updated on Friday, would let a local government or a group of local governments act as a regional administrator. But in places like the San Francisco Bay Area, that could mean one city or group of cities would decide how to spend the money for multiple local governments throughout the region.

Following a private meeting with Newsom, mayors representing a coalition of California’s 13 largest cities said they still oppose the plan. San Jose Mayor Sam Licarrdo said the group had a “robust conversation” about the issue with Newsom, who told the group his comments during the State of the State address “was not a criticism of how cities are engaging with this problem.”

Mayors Say They ‘Delivered a Clear Message’

Oakland Mayor Libby Schaaf said the mayors “delivered a clear message, an unequivocal message, that cities deserve this investment and must lead the solutions to this vexing problem.”

“We are on the ground, we are accountable to our communities. We move fast and we are courageous. That’s what mayors are,” she said.

Homelessness services has historically been a local issue. But the problem has gotten so bad in recent years the state has spent more than $1 billion to boost local programs.

In 2018, the Legislature spent $450 million to local governments and continuums of care, a federally-defined group of service providers in a particular area. Monday, the mayors announced they had spent 91% of that money, more than a year ahead of the state deadline.

Cities Awaiting $650 Million Already Approved

Last year, the Legislature approved $650 million in homelessness spending, but mayors say they haven’t received most of that money yet. State law did not allow the money to be spent until the federal homeless count was completed, a process that ended in December.

“Don’t just say you passed something. The money doesn’t roll until we get it in the bank,” Los Angeles Mayor Eric Garcetti said.

Sacramento Mayor Darrell Steinberg said he is “absolutely confident we are going to work it out.”

“What (Newsom) is really saying is he wants more bang for the buck on every dollar that is spent. He wants more accountability,” Steinberg said.

So far, California has been spending this money from its bountiful budget surpluses — one-time money the state is not guaranteed to have in future years. Newsom has said he wants to find more money the state can spend on homelessness every year, but he hasn’t said where that money would come from.

Support Voiced for Ongoing Homeless Funding Proposal

Monday, nine of the mayors of California’s 13 largest cities endorsed a proposal that would generate $500 million a year for homelessness programs by raising taxes on some homeowners.

The bill, authored by Democratic Assemblyman David Chiu, would eliminate the mortgage interest deduction on vacation homes. It would also lower the amount of mortgage interest people could claim for their primary homes on their state taxes. Mortgage interest would be deductible on home loans of up to $750,000 instead of the current cap of $1 million.

Homeowners are already capped at $750,000 on their federal taxes, a change adopted by the Republican-controlled Congress in 2017.

“This bill to me is a pretty good statement of what should be California’s priorities and values,” Sacramento Mayor Darrel Steinberg said.

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