Santa Cruz city leaders look to sales tax measure to fund homeless services as state grant set to run out
Quick Take
The Homelessness Response Action Plan has been the City of Santa Cruz’s working policy document on homelessness since March 2022, and has guided its approach to connecting people on the street with services, shelter and permanent housing. However, the plan was largely shaped around a $14 million state grant that will run out next July, leaving funding for one of the region’s more successful homelessness strategies in question just as its momentum is beginning to build.
After years of escalating concerns around the homelessness crisis in Santa Cruz County, and a grand jury claim earlier this year that the area had the highest rate of homelessness per capita in California, the region received positive news last month: Homelessness had decreased by more than 20% countywide between 2022 and 2023.
In the city of Santa Cruz, where well over half of the county’s houseless population is concentrated, the number dropped by about 30%.
“We believe this is due in large part to the implementation of the city’s Homelessness Response Action Plan,” deputy city manager Lisa Murphy said last Wednesday during a virtual town hall event focused on the city’s homelessness response.
The action plan has been the city’s working policy document around homelessness since March 2022, and has guided its approach to connecting people on the street with services, shelter and permanent housing. The action plan set policy around encampment cleanup and outreach, hiring street teams to connect with individuals and understand their needs, and offer shelter space to those who want it.
However, the plan was largely shaped around a $14 million state grant that will run out next July, leaving funding for one of the region’s more successful homelessness strategies — a strategy that includes the 135-space armory shelter — in question just as its momentum is beginning to build.
In a bureaucratic system in which state dollars typically funnel to county governments for distribution among its smaller jurisdictions, the $14 million state grant that went straight to the City of Santa Cruz was an anomaly; Murphy said it is “not something we’d ever expect to happen again.” So the city, working with the county, might need to get creative.
“One of the biggest challenges is having a regular, consistent ongoing revenue stream” for homelessness services, Larry Imwalle, the city’s homelessness response manager, told Lookout. State grants, if the city can qualify for them, often extend only one or two years, and smaller cities are often overlooked for consistent state funding.
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Imwalle said should the city find more funding for its homelessness strategy by the end of the fiscal year next June, he sees emergency shelter and case management as the local programs most in need.
“Permanent supportive housing is really the end goal, but it takes a long time to bring that online,” Imwalle said. “Trying to move people from the streets to shelters makes sense and is a good investment. It becomes an opportunity to stabilize people.”
City Councilmember Shebreh Kalantari-Johnson said the city is continuing to talk with state legislators about financial support, as well as finding ways to partner with the county. But for a consistent revenue stream, she said early conversations have begun around putting a possible sales tax increase on a ballot in 2024. The city’s sales tax currently sits at 9.25%.
Imwalle confirmed this. Although the discussions remain in their infancy, Imwalle said any sales tax measure would not specifically be for homelessness programs; rather, homelessness programs would share the pie with other city programs, such as parks and public infrastructure. Yet, even a slice of revenue from a sales tax increase would offer a consistent and dedicated funding stream for homelessness that the city has never had.
This potential sales tax measure is entirely distinct from the housing tax measure idea introduced by Mayor Fred Keeley earlier this year as part of a campaign vow. During his mayoral campaign last fall, Keeley said the tax measure would fund both affordable housing and homelessness programs; however, the homelessness piece to Keeley’s tax measure took a clear backseat during public meetings the city held on the measure in May. A citizen group has since taken the wheel in developing the measure, and the shape of it is still undetermined.
At its current pace, the affordable housing tax measure likely would not appear on the ballot until November 2024. If the city’s sales tax increase idea reaches a ballot, it’s unclear whether it would be during the March primary, a special summer election, or the November general election. The state is preparing its own homeless-adjacent ballot measure for the March primary — a $6.4 billion bond to build 10,000 psychiatric units for those experiencing both homelessness and mental illness.
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