California Gov. Gavin Newsom released the May Budget Revise on May 14, kick-starting final budget negotiations with the Legislature. While the May Revise no longer projects a deficit for California through 2028, the Governor's proposal does not include any new funding for affordable housing or homelessness programs.
Our statewide affordable housing budget coalition has been advocating for $3.3 billion in affordable housing and homelessness funding since early January.
The final budget should reflect affordable housing as a top priority, given that housing affordability remains one of the greatest challenges facing the state and a leading concern among California residents. Research from Enterprise Community Partners found that nearly 40,000 affordable homes will face construction delays without significant new state funding, leaving tens of thousands of low-income Californians without stable housing.
Our statewide coalition of affordable housing, homelessness, and housing justice organizations released a statement urging the Governor to invest in programs that address the state's urgent housing needs — programs that have faced repeated cuts in recent budgets and are in critical need of funding.
The Legislature's Perspective
In the lead-up to the May Revise, the Senate released its budget proposal last month, including $3 billion in total investments for affordable housing, homeownership, and homelessness:
- $1 billion for affordable housing production programs, such as the Multifamily Housing Program and State Low Income Housing Tax Credit (LIHTC)
- $1 billion for homeownership programs, such as CalHome and California Dream for All
- $1 billion for Round 7 of the Homelessness Housing, Assistance, and Prevention (HHAP) Program
The Assembly budget proposal also identified HHAP and State LIHTC as priorities, along with a proposed state affordable housing bond on the November ballot.
The Legislature must pass a final budget by June 15, and the Governor must sign it by June 30.
Where Is the Money?
The release of the May Revise also ramps up negotiations for other state resources that will be negotiated alongside the budget. The state affordable housing bond saw movement in the Legislature on the same day that the May Revise was released, with Assembly Bill 736 (Wicks) and Senate Bill 417 (Cabaldon) passing out of their respective Appropriations Committee and into the Assembly and Senate floors. The Governor and Legislature will negotiate the final bond amount and program allocations over the next few weeks.
It also remains to be seen how the Legislature will respond to the California Air Resources Board's (CARB) proposed regulatory amendments to cap and invest (formerly cap and trade), and what actions may be taken through the state budget. The proposed amendments would increase allowances to polluting industries and utility companies, reducing Greenhouse Gas Reduction Fund revenue by $2 billion annually. This would eliminate annual funding for critical programs addressing housing affordability, transit access, and air quality — including $800 million per year for the Affordable Housing Sustainable Communities program.
The Governor and Legislature must now reach agreement on a final balanced budget, and advocacy over the next several weeks will be critical to securing much-needed funding for affordable housing and homelessness programs. Please see our Call to Action for ways to engage.
We look forward to working closely with the Governor's Office, the Legislature, and our broad, multi-sector coalition to urge restoration of affordable housing investments and adoption of a balanced state budget that meets California's urgent housing needs.
