California Gov. Gavin Newsom released a revised budget proposal last week, kicking off final negotiations with the Legislature. The May Revision addresses the state's $12 billion budget shortfall by making cuts, shifting funds, and tapping into reserves.
While the May Revision emphasizes the effort to reorganize the state’s housing functions into one entity, the California Housing and Homelessness Agency, the revised proposal did not include new funding for any of the state’s affordable housing or homelessness programs.
Meeting the State’s Housing Needs
Without new significant funding, the state risks undermining its investments to date and would hinder its progress toward creating a California where housing is available and affordable to all. Research from Enterprise found that nearly 45,000 affordable homes across the state will stall without the necessary funding.
The Legislature and the Governor must now come to an agreement on a final balanced budget, and advocacy during the next several weeks is critical to ensuring that affordable housing and homelessness programs receive much-needed funding.
Our statewide coalition of affordable housing, homelessness, and housing justice organizations released a statement in response to the absence of new funding, urging the Governor to restore investments in programs that address urgent housing needs, which had already experienced major cuts in previous budgets.
Enterprise will continue to work with our partners in the community and in Sacramento to identify solutions that address the state’s fiscal challenges while prioritizing funding for affordable housing and homelessness programs, which are needed significantly across the state.
May Revision Omits Key Housing Funding, AHSC Support
The Governor’s May Revision did not include affordable housing and homelessness funding, remaining unchanged from the Governor’s January Proposal. Although the Governor voiced support for a 2026 Affordable Housing State Bond, which the Legislature is advancing in this session, the final bond amount is uncertain.
This bond is not on the ballot until November 2026, and the funds would not be available until 2027 at the earliest. Committed funding from the General Fund is still needed for this year and next year to fund and build the state’s affordable housing pipeline and address Californians' dire needs.
Furthermore, the Governor’s proposal for reauthorizing the state’s Cap and Trade Program did not include a commitment to maintain the continuous 20% appropriation of Greenhouse Gas Reduction Funds (GGRF) for the Affordable Housing and Sustainable Communities Program (AHSC).
Advocacy from the affordable housing community is crucial as these negotiations on GGRF continue as part of the budget process. AHSC is an integral program for meeting California's climate, equity, and affordable housing goals, and it is critical that its allocation is maintained.
To learn more about AHSC’s impact across California, read this report by Enterprise and the California Housing Partnership. To find ways to engage, use our call-to-action toolkit.
Governor Advances Plan to Restructure Housing Agencies
Lastly, the May Revision included more information on the Governor’s Reorganization Plan (GRP) to divide the current Business, Consumer Services, and Housing (BCSH) Agency into two new agencies: the California Housing and Homelessness Agency (CHHA) and the Business and Consumer Services Agency.
As a new cabinet-level agency, CHHA will exclusively address housing and homelessness to “integrate housing programs, streamline policies, and simplify the administration of state affordable housing programs.” If approved and implemented effectively, the restructuring should reduce the time needed to develop affordable housing by six to 12 months. It will also generate upward of $500 million in cost savings annually. See recent reports from the California Housing Partnership and the Terner Center for Housing Innovation for more specifics on the impact.
The restructuring will also position the state to be more effective when more resources are available for affordable housing. A key component of the restructuring is the creation of the new Housing Development and Finance Committee (HDFC), which will focus solely on financing affordable housing and creating the true “One Stop Shop” envisioned by the Legislature when AB 519 was enacted last session. The Governor’s revised budget includes $4.2 million in funding to implement the reorganization plan.
What’s Next in the Budgetary Process
The May Revision marks the beginning of the final phases of budget negotiations between the Governor and the Legislature. It should reflect housing as a top priority. The Legislature must pass a finalized budget by June 15, and the Governor must sign the final agreement by June 30.
We look forward to working closely with the Governor's Office, the Legislature, and our broad multi-sector coalition of affordable housing, homelessness, and housing justice advocates to urge the restoration of investments in affordable housing and the adoption of a balanced state budget that responds to California’s urgent housing needs.
