The spending plan he presented earlier in the month would deal with an estimated $45 billion deficit by not adding funding for a major state program to tackle homelessness.
It also cut money from a handful of affordable housing programs, just as Newsom is pushing local governments to plan more units for the lowest-income Californians.
Lawmakers want to restore some of those cuts and find a way to continue local homelessness grant funding. Senate President Pro Tem Mike McGuire, D-Healdsburg, said his office would have more to say on these issues in the “days ahead.”
The Legislature must pass a budget by June 15, and negotiations with the governor over contentious issues could drag on until the start of the 2024-2025 fiscal year on July 1.
“I really want to see us not regress on California’s No. 1 issue and the support that is needed,” said Assemblyman Chris Ward, D-San Diego, during a May 16 meeting of the Assembly Budget Subcommittee on State Administration.
Lawmakers Want to Keep Funding
Newsom’s revised budget would strip $260 million in extra 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 press conference, Newsom kicked the issue back to lawmakers.
Assembly Budget Subcommittee on State Administration Chair Sharon Quirk-Silva, D-Fullerton, called the housing and homelessness program cuts “devastating” during the May 16 meeting.
“It’s one thing to make investments, billions of dollars,” Quirk-Silva said. “It’s another thing to pull the rug out and kind of say, well, sorry, in this budget, we really can’t do these things.”
It’s currently unclear how lawmakers would restore the cut funding and balance the budget.
Qurik-Silva told The Sacramento Bee that she and other lawmakers are trying to rank priority housing programs. HHAP, a regional planning grant program, and an initiative to help developers build low-income rental housing have all come to the top of the list.
The governor’s January budget stripped $300 million from the Regional Early Action Planning Grants program to backfill the general fund. That initiative provides money to help local governments plan for housing in their communities.
Newsom’s revised budget cut an additional $75 million from the multifamily housing program, which provides loans for developers building low-income rentals. His January budget had already cut $250 million from the program.
“We’re working really hard to get some of those funds back,” Quirk-Silva said, although she did not explain exactly how that would happen.
McGuire would not provide details about budget negotiations.
“I can’t stress enough how critically important it is to provide resources to get folks off the street and into housing and connect them to services along with helping tackle our workforce housing shortage,” McGuire said in a statement.
Daniel Lopez, a Newsom spokesman, in a statement shifted blame onto cities, saying they have not spent all of their HHAP funding and have not provided enough of their own “direct funding for homelessness.”
“It’s time for accountability and results,” Lopez said. “Local jurisdictions must meet the goals they 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 sadly, we just really believe that we will go backwards on the gains we have made.”
Sen. Steve Padilla, D-San Diego, chair of the Senate-side budget subcommittee dealing with housing and homelessness, said lawmakers are “arguing to protect some of the funds and make some changes to what the governor submitted.”
He said potential funding gaps for service providers can cause “additional costs and loss.”
“We’re trying to mitigate against that,” Padilla said. “At the same time, we also know that there’s a lot of funding in HHAP rounds already, including five, that still remain undistributed. So the Legislature’s sort of weighing, how do we be prudent with the dollars and when they’re being expended so that we can close the gap?”
The Assembly “would like to figure out a way to continue the HHAP grants,” said Nick Miller, a spokesman for Assembly Speaker Robert Rivas, D-Hollister.
Cities Dependent on Homelessness Grants
Cities, counties and service providers have come to rely on HHAP to administer critical homelessness programs. The state has continued to allocate the 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 long-term.
Sacramento officials have said losing future HHAP funding could prompt the city to close shelter beds, even though there’s a 2,400-person waiting list.
The California Big City Mayors Coalition this week sent a letter to Rivas and McGuire, as well as the chairs of both budget committees, urging them to add $1 billion for round six of the HHAP program.
“Respectfully, we believe 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 on a given night in the state in 2023, according to U.S. Department of Housing and Urban Development data.
The governor has also used HHAP as a cudgel for homelessness accountability. In late 2022, he halted HHAP grant disbursement after receiving local plans he did not find aggressive enough.
Newsom during his revised budget presentation took a similar approach when explaining why he wants to pull back the $260 million in supplemental money.
“I know that may not sit well with some, but we’re struggling with seeing the performance I want to see on the streets and sidewalks,” he said. “We’ve been clear about that.”
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