Homeless services could face cuts in WA's 2023 legislative session

Advocates have outlined steps to ease the housing crisis — but it all depends on how legislators divvy the budget.

a group of people hold signs at a rally outside seattle city hall

On November 8, 2022, human-services workers gathered on the Seattle City Hall plaza to rally for increased city contract sizes that will, at a minimum, cover inflation. Advocates are lobbying the state legislature for a similar inflationary adjustment to contracts. (Grant Hindsley for Crosscut)

At least 25,452 people in Washington are living on the street or in emergency shelter and transitional housing, according to the Department of Commerce’s 2022 one-night “Point in Time” count. That’s likely an undercount of homelessness in the state.

With the crisis worsening, state legislators and Gov. Jay Inslee have made affordable housing and homelessness centerpieces of the 2023 legislative session. 

At its core, Washington’s homelessness crisis stems from a lack of housing people can afford. Even though the state minimum wage is one of the highest in the nation, there is essentially no housing on the private market a Washington minimum-wage earner can afford with a 40-hour work week. An analysis by the U.S. Government Accountability Office found that a $100 median rent increase was associated with a 9% increase in homelessness.  

Legislators have introduced dozens of proposed housing bills meant to do everything from increasing density in residential neighborhoods across the state to funding more subsidized affordable housing to limiting how much landlords can raise the rent each year. Inslee wants to pay for more affordable housing and homeless services with a $4 billion bond measure. 

While affordable housing is key, homelessness advocates say there are several other essential steps the Legislature must take this year to not only make progress on homelessness, but ensure the state doesn’t slide backward into a worse crisis. They include shoring up funding for services, improving worker wages and fixing holes in the safety net.

Avoiding cuts to homelessness services

Homeless advocates and service providers are worried that there’s not enough money to pay for the work.

Washington’s service providers rely heavily on money from the state’s Consolidated Homeless Grant to pay for the street outreach, shelter, transitional housing and other programs that make up the homelessness response system. The Consolidated Homeless Grant employs the fees that Washington residents pay when filing the documents associated with getting a mortgage and refinancing their home, among others.

As mortgage interest rates increased this past year, home sales and refinancings decreased, leading to less document-recording revenue for the state homelessness grant. Exactly how big a shortfall it ends up being depends on how quickly the real estate market recovers (or if it worsens). The most recent numbers from the Department of Commerce show the recording fee generated about $45 million less than anticipated for homelessness and housing in fiscal year 2022. Advocates are asking the Legislature to backfill that gap.

“We’re in a situation where we could see massive cuts to homelessness services across the state,” said Michele Thomas, policy director at the Washington Low Income Housing Alliance. “Regardless of which side of the political fence you land on, nobody thinks it’s a good idea to cut services.”

In his proposed budget, Gov. Inslee included $40 million to backfill the document recording fee. Noha Mahgoub, the governor’s housing and homelessness policy adviser, said they did their best to project how big a shortfall it might be with the data they had last fall. Mahgoub said her office recognizes that the shortfall could continue to grow and hopes the Legislature can get as close as possible to providing enough money in the budget to make up for it.

Rep. Nicole Macri, D-Seattle, a member of the House Appropriations Committee, also works for the Downtown Emergency Service Center, one of Seattle’s largest homeless service providers. She said this is a priority issue for her this session. “We need to address the backfill. If we have shortfalls, it becomes really complicated to figure out who bears the brunt [in terms of cuts]. I would rather not contemplate that and figure out how to address the shortfall.”

Higher worker wages

Another issue advocates are hoping the Legislature addresses in its budget are higher wages for workers in homelessness services. The sector has seen a growing crisis within its ranks as low wages and extremely stressful work have led to high turnover and difficulty hiring replacements.

To a large extent, nonprofit service providers are limited in how much they can raise wages by the size of their government contracts.

In recognition of the workforce challenges, the Legislature used $55 million in federal COVID-19 relief funds last year to pay for two rounds of $2,000 stipends for homelessness service workers. Now there’s a push to increase contract sizes for those workers to provide a long-term raise and help providers offset inflation’s impact on the costs of doing business.

In his budget proposal, Inslee would allocate $6.3 million to increase the size of all homelessness provider contracts by 5%.

“We know to retain these folks is really important and we need to combat burnout,” said Mahgoub from the governor’s office. “We need more staff so folks can actually take care of themselves as we ask them to take care of the most vulnerable people. That 5% is us trying to signal ‘We see you, we appreciate you and [we] want to compensate for that.’”

The Legislature will take the next step when its budgets are proposed. 

Strengthening the safety net

Washington has a number of safety net programs that help people exit homelessness or prevent low-income residents from falling into homelessness.

The Housing and Essential Needs (HEN) program helps extremely low-income residents in Washington pay for things like rent and utilities, move-in costs and basic life needs such as hygiene supplies and transportation costs. This program is available for people unable to work for at least 90 days due to physical and mental incapacity.

Right now, the state guarantees recipients get HEN benefits for only 90 days. Sen. Claire Wilson, D-Auburn, is sponsoring Senate Bill 5413 to extend HEN benefits to last for 12 months and ensure the clock starts ticking on that benefit period when a person experiencing homelessness actually starts moving into housing, not when they’re first approved by the state. Rep. Emily Alvarado, D-Seattle, is sponsoring the companion House Bill 1260.

“Who’s going to sign a 6- or 12-month lease to someone with three months of benefit left?” asked Alison Eisinger, executive director of the Seattle King County Coalition on Homelessness. “HEN is not perfect. But it works. It helps people get into housing and access to other benefits they need. We’re kidding ourselves if we think there’s a solution to homelessness that doesn’t involve strengthening access to these programs.”

To that end, Eisinger hopes to see the Legislature dedicate more money to the HEN program in its budget. She says many thousands more low-income residents are eligible for HEN than the program has money to help. The governor has proposed increasing HEN’s budget by $15 million.

Similar to HEN, many low-income residents unable to work in Washington rely on a temporary benefit called Aged, Blind or Disabled Cash Assistance Program (ABD). It’s available to low-income residents experiencing a disability or who are over age 65 and eligible for federal Supplemental Security Income (SSI). ABD is meant to help people in the short term because SSI typically takes three to five months to qualify for and often longer.

ABD provides up to $417 a month in cash assistance for individuals and $528 for married couples. Under current law, ABD recipients must pay the state back for the cash assistance once they start receiving federal SSI benefits.

“They have to pay back a few thousand dollars and people are devastated when they find out,” said Sara Robbins, Seattle King County Coalition on Homelessness’s policy manager. “That’s money that’s supposed to go to rent. Or paying people back that were helping them through their period of disability.”

In addition to HEN, Sen. Wilson’s and Rep. Alvarado’s bills would also eliminate the requirement that ABD recipients pay cash back to the state.

Paying for more housing

“No amount of homeless services will end the crisis of homelessness without housing,” said Eisinger of the Coalition on Homelessness. “We always have to be working on both sets of issues at once.”

Washington’s Housing Trust Fund is the key source of state money that helps pay for the construction of subsidized affordable housing. Last year the Legislature invested $290 million in the Housing Trust Fund, some of which came from one-time federal COVID-19 grants. It was the first time since before the Great Recession that the fund had passed the $200 million mark.

This year, the governor’s proposed budget would put $200 million in the Trust Fund. Advocates want to see the Legislature double that number.

In addition to paying for housing construction through the capital budget, Gov. Inslee wants to increase the state’s bonding capacity to fund $4 billion in construction and homeless services. The Legislature will need to approve the idea, but if they do, Washington voters will have the final say on November's ballot.

If the bond measure passes, the money would help pay for construction of an additional 5,300 units of affordable housing over the next two years, beyond the 2,200 units that Inslee’s proposed 2023-2025 budget would fund. Over the subsequent six years, the bonds would help pay for construction of another 19,000 units.

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