Los Angeles County’s recently approved Measure A is a great example of how California measures success according to dollars spent, rather than results produced.
Measure A imposes a half-cent sales tax increase to fund homeless programs, replacing a 2017 ballot measure that implemented a quarter-cent tax increase for homeless funding. Before the 2017 ballot measure, LA County’s homeless population was about 46,000. It has since nearly doubled to 75,000.
Clearly the programs we are funding are not producing the desired results.
The philosophy undergirding Measure A and similar policies is that our inability to solve social problems is entirely due to insufficient government spending. But if the problem was only that we are not spending enough, we should still expect to see positive results—homelessness going down, even if marginally. Instead, homelessness has exploded in LA County, indicating that the problem is the policies we are funding, not the budget.
The logic behind these measures ignores the basic economic fact that when the government spends tax dollars, it diverts capital from alternative uses. When it increases spending on failed policies, it therefore threatens to draw resources away from more effective programs that do not receive government money. In this way, our tax-and-spend approach to problem-solving exacerbates the very problems they claim to be solving, as evident from the dramatic rise in homelessness.
When we view spending itself as the solution to social problems, we allow policymakers, bureaucrats, and contractors to scapegoat their failures on a lack of sufficient funding, and we counterproductively subsidize those failures with budget increases. This creates little incentive for the people controlling the purse strings to root out waste, but it creates a strong incentive to clamor for more funding regardless of how it will be spent.
The Los Angeles Homeless Services Authority (LAHSA) is a prime example of this problem. In 2016, before the quarter-cent sale tax increase was approved, LAHSA had a budget of roughly $75 million. In fiscal year 2024-2025, its projected budget is an astonishing $875 million. For such an increase in investment, we might expect a positive return—however marginal—rather than a near-doubling of the homeless population. Their policies are obviously not working, but what incentive is there to change course when failure brings more than a ten-fold increase in revenue?
No matter how virtuous policymakers and service providers are, incentives still matter, which has concerning implications on another Measure A provision. A portion of the new funds will be allocated to cities according to their homeless counts. This means making the largest allocations to cities pursuing the least effective strategies, giving city leaders a financial disincentive against genuinely solving homelessness.
By rewarding grants to cities based on their homeless population, this ballot measure effectively subsidizes failure—the worse a city performs, the more money it receives. Cities that successfully reduce homelessness will be punished with budget cuts, and those resources will by design be diverted to less effective programs. What kind of clown world must we live in to think this constitutes sensible policy?
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It is wholly irrational to subsidize failure and expect people to succeed, but that is precisely the kind of thinking that Measure A represents. In this context, devoting even more money to homelessness solutions is like drinking whiskey to sober up.
If we genuinely want to solve homelessness, we need to meticulously track the outcomes of its cities and service providers—a neglected practice throughout the state—and then prioritize funding for whichever entities are generating the best outcomes, not the greatest failures.
We might suggest alternative approaches to addressing homelessness, such as a greater focus on treating substance abuse, but the larger point is that before making decisions on what programs to bankroll, we must change how we make funding decisions to begin with. LA County and California as a whole need to stop spending more until they learn to spend better.
Christopher Calton is the research fellow in housing and homelessness with the Independent Institute in Oakland, California.