When the Money Dries Up: Nevada County’s Homelessness Strategy Is Built on a Fiscal Cliff
At some point, the money will dry up. Not because the need disappears, and not because people stop caring, but because systems built on temporary funding, weak incentives, and permanent obligations eventually reach a breaking point. When they do, the consequences are rarely gradual or humane.
This is not a theoretical concern. The warning signs are already visible, including here in Nevada County. Recent public workshops and reporting, including The Union’s coverage of the Nevada County Board of Supervisors’ annual goal-setting workshop, show these structural risks playing out in real time at the local level.
A System Fueled by Temporary Money
Since 2019, California has deployed roughly $30 billion in homelessness-related funding through a mix of state and federal programs. This surge of money dramatically reshaped local government behavior. Counties expanded programs, acquired properties, converted hotels, added staff, and built entire administrative structures around homelessness, behavioral health, and housing services.
Nevada County followed this same pattern. Over the past several years, the county has significantly expanded staffing, facilities, and operational capacity tied to homelessness and housing. These expansions coincided with a period of extraordinary funding availability, much of it explicitly temporary, competitive, or scheduled to sunset.
At the same time, core county revenues have not kept pace. Property tax growth has moderated. Sales tax and transient occupancy tax are cyclical and sensitive to broader economic conditions. Yet the county’s overall fiscal trajectory has continued upward, driven largely by expanding personnel costs and program commitments.
This is the central risk: temporary money is being used to justify permanent obligations.
Structural Dependency Disguised as Compassion
Housing and homelessness programs are now deeply embedded in county operations. With nearly 1,000 full-time county employees, the growing share of the workforce is directly or indirectly associated with homelessness, behavioral health, housing services, contract administration, compliance, and nonprofit partnerships.
Once that staffing footprint exists, it becomes self-reinforcing. Jobs must be preserved. Programs must continue to justify staff. Budgets must be protected to avoid contraction. Funding streams must be maintained, not because homelessness has been solved, but because the system built to manage it cannot easily shrink.
At that point, homelessness ceases to be only a social challenge. It becomes a financial dependency.
This is not an accusation of bad faith. It is a description of incentive design. People behave rationally within the systems they are given. When funding rewards scale, activity, and documented need — rather than durable outcomes — expansion becomes the safest institutional choice.
A System Built on Counts, Not Outcomes
The fundamental flaw in California’s homelessness response is not indifference or cruelty. It is how success is defined and rewarded.
Most homelessness funding is allocated based on documented need, not demonstrated long-term resolution. Programs are rewarded for counting, documenting, housing, managing, and servicing unhoused individuals; not for permanently reducing homelessness over time.
This distinction matters.
When funding is tied to headcounts, success becomes fiscally dangerous. A meaningful reduction in homelessness can weaken future grant applications and budget justifications. Higher documented need, by contrast, strengthens them. That dynamic does not require corruption to function. It is simply how the rules are written.
Recent public statements by county officials, including remarks reported during the supervisors’ workshop, acknowledging that Point-in-Time counts are closely tied to funding merely make explicit what has long been implicit: the system is designed to measure scale, not resolution.
Expansion Without an Exit Strategy
Recent county discussions reveal another warning sign: expansion without a defined endpoint.
Plans to increase shelter and housing capacity, restructure housing divisions into standalone departments, pursue shovel-ready projects, and continue adding staff all assume continued funding availability. Yet those same discussions acknowledge that major funding sources are temporary, being reduced, or expected to sunset within a few years.
This is classic institutional lock-in.
Programs expand during funding surges but are rarely designed to scale down. No one wants to define success in a way that leads to smaller departments, fewer contracts, or reduced budgets. As a result, governments proceed as if funding will somehow continue, even when they openly acknowledge it will not.
This is not strategic planning. It is wishful budgeting.
Staffing Growth as Long-Term Fiscal Exposure
The risk becomes especially acute when staffing is added during periods of temporary funding. Salaries, pensions, and retiree health benefits do not disappear when grants expire. They become embedded in the county’s baseline budget, creating long-term obligations that must be met regardless of future revenue conditions.
Nevada County’s decision to add 24.5 full-time positions in the 2025–26 fiscal year and to openly discuss further staffing growth in 2026–27 raises legitimate concerns about timing, restraint, and fiscal exposure.
Budget seasons are when temporary responses harden into permanent commitments. Choosing expansion during a moment of known funding uncertainty is not a neutral act. It shapes the county’s fiscal posture for years to come.
Housing Stability Is Not Fiscal Sustainability
It is important to say clearly: moving people from the streets into housing is a real and meaningful achievement. Stability matters. Housing saves lives.
But housing stability for individuals does not automatically translate into fiscal sustainability for governments.
Many individuals placed into permanent housing remain dependent on public assistance, including long-term rental subsidies. That may be appropriate for some populations. But when permanent housing is treated as the endpoint rather than a bridge, counties assume ongoing operating costs without clear expectations for employment, independence, or exit from assistance.
The result is a system that stabilizes individuals but does not reduce long-term public dependency and does not meaningfully shrink over time.
Urban Bias and the Rural Burden
The funding structure itself worsens the problem.
Large urban jurisdictions receive direct allocations, while counties are expected to manage homelessness across vast unincorporated and rural areas with fewer resources on a per-person basis. Urban areas receive both city funding and county-level funding. Rural counties receive only their share, despite higher service delivery costs and fewer economies of scale.
Rather than correcting this imbalance, the system encourages jurisdictions to compete for shrinking pools of money by documenting need more aggressively. The outcome is administrative inflation, not resolution.
The Unequal Consequences of Fiscal Collapse
When homelessness funding contracts as state and federal budgets inevitably do, the consequences will not be evenly shared. Permanent staffing costs, including salaries, pensions, and retiree health benefits, will continue to be paid regardless of funding conditions. Those obligations are protected by contract and law.
The pressure will instead fall on core county services: public safety, road maintenance, emergency response, parks, libraries, and discretionary community services that residents rely on every day. These are the areas historically reduced when budgets tighten, not the administrative structures built during funding surges.
This creates a troubling imbalance. The individuals and departments making expansion decisions are largely insulated from the financial consequences of those decisions, while the broader community absorbs the risk through reduced services or higher long-term costs. That misalignment does not require bad intent to produce bad outcomes, it is simply the predictable result of building permanent obligations on temporary funding.
Governance, Not Blame
This is not a critique of individual county staff or supervisors. It is a critique of the homelessness framework that places local governments in an untenable position.
Boards are asked to oversee programs whose success could undermine their funding. They are warned that restraint risks backlash. And they are encouraged to focus on service provision rather than measurable outcomes.
Acknowledging this framework is not cruelty. It is realism.
The Questions That Must Be Asked
Instead of asking how much more money can be spent, Nevada County should be asking harder questions:
What outcomes justify continued expansion?
What does success look like in five or ten years?
How many people permanently exit homelessness each year?
What is the fiscal plan if funding declines by 30, 40, or 50 percent?
How are programs designed to responsibly shrink if they work?
Until those questions are answered honestly, homelessness policy will remain well-intentioned, heavily funded, and structurally incapable of solving the problem it was created to address.
The Cliff Is Visible
Funding reductions are already underway. Public patience is thinning. Budgets are tightening. And the gap between spending and measurable outcomes continues to widen.
This is not an argument for abandonment. It is an argument for governance.
Systems built on perpetual crisis eventually collapse. Systems that align funding with resolution endure. Nevada County still has time to choose which model it wants, but only if it has the conversation the workshop itself did not yet fully engage.
