By Kara Bischopink
SACRAMENTO, Calif. — Gov. Gavin Newsom’s revised 2025-26 budget proposal, released May 14, directs $6.1 billion toward behavioral health and substance use care, marking a significant investment in the state’s mental health infrastructure. But advocates say the budget fails to fund critical criminal justice reforms, particularly those required to implement Proposition 36.
According to the Steinberg Institute, Newsom’s budget includes an additional $130 million for the Behavioral Health Transformation Plan and the Behavioral Health Services Act. The Institute called the funding an opportunity to expand access to quality mental health and substance use treatment for Californians, but also said the proposal does little to address the growing treatment needs within the state’s justice system.
Proposition 36, passed by voters in November, allows individuals charged with certain drug-related felonies to seek treatment instead of incarceration. But the Steinberg Institute said the revised budget includes no funding to expand the treatment infrastructure needed to carry out that promise. Without additional investment, “care will inevitably be delayed or denied,” the Institute said, increasing the risk of recidivism and worsening public health and safety outcomes.
In releasing the budget, Newsom cited a projected $16 billion shortfall due to trade disruptions, market volatility and declines in international tourism. He also warned of additional risks stemming from potential federal budget cuts.
Still, the Steinberg Institute and allied organizations urged lawmakers not to lose momentum on mental health reform. The Institute’s Vision 2030 Initiative is focused on reducing hospitalization, homelessness and incarceration among Californians with behavioral health needs.
The budget does protect funding for the 988 suicide and mental health crisis line, backed by AB 988, which established a telecommunications fee to fund the service independently of the state’s general fund. An additional $17.5 million will go toward 988 call centers this year, ensuring that Californians in crisis can speak with trained counselors without relying on unstable funding sources.
Advocates expressed concern that the budget includes no funding to support the treatment obligations created by Proposition 36, which they say risks making the law a symbolic gesture rather than a meaningful policy shift. They noted the state’s substance use treatment system is already overstretched, with long wait times for residential care. Without new funding, many eligible individuals will not be able to access services.
In response, the Steinberg Institute and a coalition of behavioral health and public safety groups are pushing for legislative action. They are urging lawmakers to invest $105 million in treatment capacity and calling for support for Senate Bill 319, the Public Safety Transparency Act, which would require data collection to evaluate Proposition 36 outcomes.
Homelessness remains another point of concern. California saw a record 187,000 unhoused people in 2024, accounting for a quarter of the nation’s homeless population. While voters passed Proposition 1 to fund housing and services, Newsom’s revised budget eliminates $1 billion in annual funding previously allocated to local governments for homelessness response. Advocates fear this rollback could undermine recent progress.
Despite these setbacks, Newsom’s budget maintains the $130 million commitment to the Behavioral Health Transformation Plan. The Steinberg Institute supports the investment but emphasized that sustained leadership and targeted action are needed to deliver on the state’s mental health reform goals.
In a letter to legislative budget chairs earlier this month, a coalition of organizations urged the Legislature to provide funding to expand treatment services for those charged under Proposition 36. They also called for infrastructure and workforce investments to meet rising demand and recommended that evaluations for treatment be conducted by licensed clinicians using standardized, evidence-based tools.
The coalition emphasized that without these steps, the promise of Proposition 36 will go unfulfilled and California will lose a vital opportunity to align behavioral health and criminal justice reform.
