Leaders in states grappling with homelessness are pushing to fund programs that move people off the streets and into housing. But states will have less money to spend this year as federal Covid-19 aid winds down and state budgets tighten.
The tenor of the funding debate is also shifting, as Republicans and some Democrats call for more accountability and, in some cases, a more punitive approach after years of record-breaking spending.
California Gov. Gavin Newsom (D) wants to give local governments $1 billion next fiscal year to address homelessness despite the state’s estimated $25 billion revenue shortfall. But he made it clear that he wants results.
“This homeless crisis is out of control,” Newsom said during his January budget speech. “People that criticize it are right. We need to see progress, and that means we have to have a higher level of accountability, and that’s what we’re going to do with this budget.”
The total number of unhoused people in the U.S. has fallen 10% since 2007, according to the latest estimates from the federal Department of Housing and Urban Development. But surges in Arizona, California, Oregon and Washington have driven a national uptick since 2016.
Homelessness is getting worse in some states despite unprecedented government intervention during the Covid-19 pandemic.
The federal government halted evictions for about a year. Congress in 2021 spent $46 billion on emergency rental assistance and $350 billion in flexible funds to state and local governments, which many used two pay for homeless services and affordable housing projects.
Rising rents and housing shortages are driving increases in homelessness, housing experts say.
In the Phoenix metro area, apartment rents have shot up 68% since 2017, according to the Maricopa Association of Governments, a membership group for Phoenix-area localities. The number of homeless people in the region rose by 61% over that period to over 9,000 last year, according to the association.
“If you want to predict, over a number of years, which state or which city is going to have homelessness go up the most, look at where rents are most expensive,” said Steve Berg, chief policy officer at the National Alliance to End Homelessness, a nonprofit based in Washington, D.C.
Local organizations nationwide are successfully housing people but cannot keep up with the flood of people entering homelessness, advocates say.
“The nature of our housing affordability crisis is such that people are falling into homelessness faster than our systems can rehouse them,” said Mari Castaldi, a senior legislative advocate for Housing California, a Sacramento-based group that advocates for affordable housing and ending homelessness.
Housing advocates say ending homelessness will take years of sustained funding for subsidized housing, support services and outreach.
They are pushing bills that would create ongoing state funding for programs that currently lurch from grant to grant, including one by California Rep. Luz Rivas (D) that would set performance targets for grant recipients, among other changes.
Getting ongoing funding approved could be challenging this year, however.
Many state and local governments are scaling back spending on housing and homelessness as they face revenue shortfalls, an uncertain economic outlook or both, said Flora Arabo, national senior director of state and local policy at Enterprise Community Partners, a national affordable housing nonprofit.
“We are seeing a little bit of spending fatigue,” she said. “Even at the federal level, there’s been this sort of sentiment that we’ve spent so much on affordable housing over the last two years, don’t come back and ask for more money.”
California lawmakers have spent almost $20 billion since fiscal 2021 to address homelessness, including federal relief dollars, according to the state’s Legislative Analyst’s Office. About $2.5 billion of that total was approved in prior years for distribution next fiscal year.
Lawmakers there are aiming to protect funding for housing and homelessness in the next budget but may not be able to do much beyond that, said Senate Housing Committee Chair Scott Wiener (D).
“I suspect we won’t see cuts, or if there are, they will be de minimis,” he said. “I don’t know if we’ll have a lot of new investment, given the scale of the budget.”
Oregon spent over $1 billion on housing and homelessness in 2021 and 2022, including federal Covid-19 aid, House Majority Leader Julie Fahey (D) said. Today’s budget environment is more challenging, and the state is “not going to have the resources to make the level of major investments that we’ve been able to over the last two years.”
Oregon Gov. Tina Kotek (D) last week signed two bills that will dedicate $200 million to rental assistance, expanding shelters, eviction prevention, and affordable housing. The package directs local leaders to work together to spend the money and meet targets for sheltering and housing people.
Fahey said the focus on outcomes “is an acknowledgement that the status quo is not working.”
“We really need cities and counties and other local organizations to work together in a different way to solve the problem,” Fahey said.
Some elected leaders are embracing more punitive policies. Newsom backed a 2022 law that makes it easier to force unhoused people with severe mental illness into treatment.
The Republican-controlled Arizona legislature has taken a hardline approach. Arizona Gov. Katie Hobbs (D) last week vetoed a GOP bill that would have banned people from setting up shelters on sidewalks and other public rights-of-way.
Arizona Senate Republicans recently passed a bill that would require cities to remove encampments from private property and charge campers with trespassing. Sen. Justine Wadsack (R), the bill’s sponsor, said during a February committee meeting that offering services isn’t enough because some people refuse to go to shelters.
Sen. Anthony Kern (R) defended Wadsack’s bill during the meeting. “These locations where the homeless will be moved have food, water, shelter security,” he said. “I think it is compassionate, honestly.”
The Arizona Senate passed a Democrat-backed proposal last month, with some Republican votes, to spend $150 million on eviction prevention, affordable housing, shelter programs and other homelessness services. It has yet to get a hearing in the House.