Gov. Gavin Newsom released his January budget proposal for 2025-2026 earlier this month, marking the start of California’s annual budget process. The proposal also previewed an ambitious effort to reorganize the state’s housing agencies into one entity.
Budget Outlook and Advocacy
The administration’s proposal estimates a modest surplus of $363 million, which is an improvement compared to last year’s deficit. However, the proposal did not include new funding for any of the state’s core affordable housing or homelessness programs.
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 scale meaningful investments to address the full spectrum of housing needs.
It will be crucial to focus advocacy efforts on additional resources for housing. Without additional funding, almost 45,000 affordable homes could be stalled in the state’s pipeline. Furthermore, according to federal data released last December, California’s homeless population remains the largest in the nation, thus emphasizing the urgency for housing investments to be scaled to meet the need. Every dollar committed to critical homelessness, affordable housing, and homeownership programs and services would move California closer to addressing its dire affordability crisis.
Focus on the Affordable Housing and Sustainable Communities Program (AHSC)
In this proposal, the Newsom administration also expressed a desire to consider early reauthorization of California’s Cap-and-Trade Program, though the current program does not expire until 2030. This suggests an eagerness to begin conversations to renegotiate this program.
This is particularly important for affordable housing partners because the Greenhouse Gas Reduction Fund (GGRF), which is funded through Cap-and-Trade, provides annual funding for the Affordable Housing and Sustainable Communities Program (AHSC). If Cap-and-Trade is renegotiated, it is likely that GGRF will also be up for negotiation.
Currently, AHSC receives a 20 percent appropriation from GGRF, and it will be critical to advocate for this steady stream of funding to be maintained. As the Governor and the California Legislature begin conversations around early reauthorization, it will be important for affordable housing advocates to elevate AHSC in these conversations. To learn more about AHSC’s impact across California, read this report by Enterprise and California Housing Partnership.
A New Proposed Housing and Homelessness Agency
The proposal also previewed an ambitious effort to reorganize the state’s housing agencies into one entity, the California Housing and Homelessness Agency, with the goal of the administration to create a more coordinated, integrated, and efficient housing and homelessness financing system.
We see this as a timely and important opportunity to strengthen California’s ability to plan, produce, and preserve affordable housing and provide strategic alignment with the state’s homelessness initiatives. More information about this effort will be released in the coming months.
What Comes Next
This is only the beginning of what will be a months-long budget negotiation with the Legislature, thus it is essential to continue advocating for a California State Budget that reflects housing as a priority. A revised budget will be released in May and a final budget approved by the end of June.
Enterprise is committed to continuing to work with our broad multi-sector coalition of affordable housing, homelessness, and housing justice advocates, and with the Governor and Legislature to scale up housing investments in this year’s budget and secure much-needed resources for Californians.
