California lawmakers are scrambling to find ways to fix high levels of homelessness and cut funding for the housing program. Gavin Newsom proposed in its revised budget.
The spending plan he presented earlier this month would address an estimated $45 billion shortfall by not adding funding to a major state program to address homelessness.
Cuts were also made to a handful of affordable housing programs, just as Newsom is pushing local governments to plan more housing for Californians with the lowest incomes.
Lawmakers want to reverse some of these cuts and find a way to continue funding local homelessness grants. Senate President Pro Tem Mike McGuireD-Healdsburg said his office will have more to say on these issues in the coming days.
The Legislature must pass a budget by June 15, and negotiations with the governor on contentious issues could drag on until the start of the 2024-2025 budget year on July 1.
“I really want to make sure we don’t backslide on California’s No. 1 issue and the support that’s needed,” Assemblyman Chris Ward, D-San Diego, said during a May 16 meeting of the Assembly Budget Subcommittee on State Administration.
Lawmakers want to keep the funding
Newsom’s revised budget would provide $260 million in additional money for the Homeless Housing, Assistance, and Prevention program, or HHAP, which provides flexible grant dollars to local governments and organizations.
Local providers will still receive the $1 billion allocated for the fifth round of funding in the 2023-2024 budget. The state is still in the process of disbursing dollars for that round.
But the governor’s revised budget does not include money for future grants.
When asked about the future of HHAP during a recent news conference, Newsom put the issue back to lawmakers.
Assembly State Administration Subcommittee Chairman Sharon Quirk-Silva, D-Fullerton, called the cuts to housing and homelessness “devastating” during the May 16 meeting.
“It’s one thing to invest billions of dollars,” Quirk-Silva said. “It’s another thing entirely to pull the rug out and say, sorry, we really can’t do these things with this budget.”
It is currently unclear how lawmakers will restore cuts and balance the budget.
Qurik-Silva told The Sacramento Bee that she and other lawmakers are trying to prioritize housing programs. HHAP, a regional planning grant program and an initiative to help developers build low-income rental housing, all top the list.
The governor’s January budget diverted $300 million from the Regional Early Action Planning Grants program to replenish the general fund. That initiative provides money to help local governments plan housing in their communities.
Newsom’s revised budget cut another $75 million from the multifamily housing program, which provides loans to developers who build low-income rental housing. His January budget had already cut $250 million from the program.
“We are working very hard to get some of that money back,” Quirk-Silva said, although she did not explain exactly how that would happen.
McGuire would not provide details about the budget negotiations.
“I cannot emphasize enough how critical it is to provide resources to get people off the streets and into housing and connect them to services, while helping to address the workforce housing shortage,” said McGuire said in a statement.
Daniel Lopez, a spokesman for Newsom, laid the blame on the cities in a statement, saying they have not spent all of their HHAP funding and have not provided enough of their own “direct homelessness funding.”
“It’s time for accountability and results,” Lopez said. “Local jurisdictions must meet the goals they have set for themselves to reduce unsheltered homelessness in their cities.”
Quirk-Silva called a $500 million investment in low-income housing tax credits included in the governor’s revised budget a “bright spot.”
“But we still want to see more investment,” Quirk-Silva said. “Because unfortunately we really believe that we will go backwards with the gains that we have made.”
Sen. Steve Padilla, D-San Diego, chairman of the Senate budget subcommittee dealing with housing and homelessness, said lawmakers are “advocating to protect some of the funds and make some changes to what the governor has submitted.”
He said potential funding shortfalls could cause “additional costs and losses” for service providers.
“We’re trying to mitigate this,” Padilla said. “At the same time, we also know that there is already a lot of money in the HHAP rounds, including five, which are still not being distributed. So the Legislature’s consideration: How do we be prudent with the dollars and when they are spent so that we can close the gap?”
The Assembly “would like to find a way to continue the HHAP subsidies,” said Nick Miller, a spokesman for Assembly Speaker Robert Rivas, D-Hollister.
Cities that rely on subsidies for homelessness
Cities, counties and service providers rely on HHAP to manage critical homelessness programs. The state has continued to allocate funding on a round-by-round, budget-by-budget basis, even as organizations representing cities and counties have pushed for a consistent funding stream that would allow them to better plan for the long term.
Sacramento officials have said the loss of future HHAP funding could prompt the city to close shelter beds, even though there is a 2,400-person waiting list.
The California Big City Mayors Coalition sent a letter this week to Rivas and McGuire, as well as the chairs of both budget committees, urging them to add $1 billion for the sixth round of the HHAP program.
“We respectfully believe that there is no more important budget priority for the state of California,” the letter said.
Even as Newsom has funded and celebrated the program during his time in office, he has also expressed frustration over a perceived lack of quantifiable results.
California’s homeless population has continued to grow: More than 180,000 people were unhoused in the state on any given night in 2023, according to data from the U.S. Department of Housing and Urban Development.
The governor has also used HHAP as a cudgel for accountability for homelessness. At the end of 2022, he stopped paying out HHAP grants after receiving local plans that he felt were not aggressive enough.
Newsom took a similar approach during his revised budget presentation when explaining why he wants to withdraw the $260 million in additional money.
“I know this may not sit well with some, but we are having a hard time seeing the performance I want to see on the streets and sidewalks,” he said. “We have been clear about that.”
