No Way to End California’s Homelessness Crisis – Pacific Research Institute

In late January, a survey conducted by Data for Progress, a progressive activist group, found that an overwhelming majority of Californians favor increasing taxes on corporations to fund “a range of efforts to help” alleviate the homelessness crisis in California.

But California is already home to one of the highest state corporate income tax rates and one of the least competitive business climates in the country, according to the Tax Foundation. Not only would imposing additional burdens make the state even more unfriendly to business than it already is, more revenues will not solve the crisis.

There are more than 150,000 homeless people in California, enough to fill the Rose Bowl and Dodger Stadium, combined. It’s an appalling statistic, up by nearly 40,000 since its 2014 low point, and is the highest homeless count we saw while researching our new book “No Way Home: The Crisis of Homelessness and How to Fix It with Intelligence and Humanity.”

While breathtaking, that number doesn’t fully illustrate the problem in California. This, however, might help: Though the state makes up 12% of the U.S. population, 27% of all homeless persons live in California. Further, while homelessness is rising in California and a few major metropolitan areas such as New York City and Seattle, it is declining most everywhere else. Clearly, California is doing something wrong.

Rising homelessness is a humanitarian concern. It also produces public nuisances, such as the homeless blocking sidewalks, building entrances, and other public spaces. Mounting homelessness is also a threat to public safety and health due to swelling crime rates, open drug use, and the spread of illnesses, including medieval diseases that had been virtually eradicated in the modern world.

To their credit, officials all across the state recognize the problem. But they’ve tried to solve the puzzle by throwing taxpayer money at it. Over the last three years, California has spent at least $13 billion on homelessness programs, while hundreds of millions more have been indirectly spent as hospitals and law enforcement are devoting more of their time and resources interacting with the homeless.

The results of the Data for Progress poll taken two months ago – nearly seven in 10 Californians strongly (40%) or somewhat support (29%) hiking taxes on “wealthy corporations” to “address the state’s homelessness crisis” – will only encourage them to spend more.

Unfortunately, the current approach is, at best, suspect. A February report from the state auditor says California “continues to struggle to coordinate its efforts to address homelessness,” its “approach … is disjointed,” and the Homeless Coordinating and Financing Council, set up in 2017, “cannot coordinate existing state and federal funding because it lacks expenditure data from state agencies.”

More of the same isn’t the answer.

A new approach is needed. To cut through the state bureaucracy, California should rely on private efforts to minimize homelessness. Private organizations are typically better equipped than the government to make real differences in the lives of the homeless because they tailor programs to meet the specific needs of individual homeless and can adapt where government cannot.

There are many successful examples that California could learn from. For example, Shelters to Shutters, a Virginia nonprofit, forms partnerships between private businesses and nonprofits that connect people experiencing situational homelessness with housing and job placement. In Nashville, the organization has collaborated with apartment management companies to place the homeless in entry-level jobs while also providing them with housing in the communities in which they work.

Another private nonprofit, Crossroads Welcome Center in Knoxville, Tennessee, leverages the safe place it provides the homeless during the day to connect them with services that can address their needs. The center offers bag storage, transportation, email and internet access, and a sitting room that keeps people off the streets.

California should reallocate the billions it’s spending to simply manage the problem toward supporting innovative nonprofits that have the demonstrated ability to sustainably address the causes of homelessness, be they economic, substance abuse, or mental illness.

Implementing more effective homeless programs is necessary, but not sufficient. Thanks to the state’s burdensome taxes and regulations, living in California is simply unaffordable. Further, recent court rulings are making it increasingly difficult for cities and localities to help the homeless. Comprehensive reforms that address these problems will reinforce the benefits created by more efficient homeless programs and significantly improve life on California’s streets.

Surveys continually show that Californians are fed up with out-of-control homelessness. And rightly so. Raising taxes and increasing spending is nothing more than a continuation of the state’s current failed policies. Instead, California should give deregulation and private sector know-how a chance.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute. Wayne Winegarden, Ph.D. is a Sr. Fellow in Business and Economics at the Pacific Research Institute. They are the authors, with Joseph Tartakovksy and Christopher Rufo, of “No Way Home: The Crisis of Homelessness and How to Fix It with Intelligence and Humanity” (Encounter Books, 2021)

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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