California has so much money for these programs it can’t spend it fast enough

Even as he announced plans to spend $222 billion in next year’s budget, Gov. Gavin Newsom noted billions of dollars for kindergarten, housing and mental health programs allocated in past years that still haven’t been spent.

He’s threatening to take millions of unspent mental health dollars back from counties, and proposing new uses for untouched kindergarten funding. He also acknowledged housing money approved last year has been slow to get out the door.

He pointed to more than half a billion dollars in unspent money intended for mental health services generated by a tax on people who make more than $1 million in a year. Counties need to spend at least $161 million of that money on mental health prevention and treatment services over the next several months or the state will take it back, Newsom said.

“We still have people sitting on a lot of reserves,” Newsom said. “They need to spend it, or we’re going to revert those dollars back to the state and reinvest it. We’re going to get more aggressive.”

Schools have also been slow to spend $400 million in early education spending approved in 2018 and 2019. Of that money, $300 million to expand full-day kindergarten programs remains unspent.

Schools haven’t been able to use all the money because there isn’t as high of a demand for full-day kindergarten programs as the Legislature anticipated, said Assemblyman Kevin McCarty, D-Sacramento.

“Even if we dumped all the money in the world, we couldn’t spend it,” Newsom said. “There’s still an unprecedented number of dollars that are rolling over, and that just reinforces the fact that we don’t want to go slow here, we just want to do this right.”

Instead, Newsom is asking lawmakers to let schools use that money for preschool facilities, which McCarty says are greatly needed. To realize Newsom and Democratic lawmakers’ goal of expanding preschool to more California kids, the state needs more classrooms designed for small children, including tiny sinks and little toilets, McCarty said.

Newsom also highlighted $1.75 billion he and lawmakers approved to spur housing construction in the 2019-20 budget that still hasn’t been awarded.

“Not one dollar went out in the calendar year,” Newsom said. “For those that feel like the status quo is untenable, you’re right, and the good news is the money now will start flowing.”

The state will dole out $250 million approved to help cities and counties plan for more housing this month and next month, Newsom said. Most of the $500 million for grants to build infrastructure to support more housing, such as expanding sewer systems, electricity hookups, roads and sidewalks, will be available in April.

Applications for half a billion dollars in grants to build new homes are being reviewed and will be approved this year. The state will start distributing another half billion slated for developer loans this month, Newsom said.

Newsom noted during a Grass Valley event on homelessness Monday that $650 million approved for homeless aid last year is also being distributed this month.

The Bee Capitol Bureau’s Hannah Wiley contributed to this report.

This story was originally published January 14, 2020 at 5:00 AM with the headline "California has so much money for these programs it can’t spend it fast enough."