Reiterating that housing affordability remains one of his top priorities in the new year, Gov. Gavin Newsom on Friday unveiled a budget proposal that builds upon last year’s historic housing investments.
After securing an unprecedented $1.75 billion for housing production last year, Newsom this year plans to allocate another $500 million annually for the state’s housing tax credit program — a key source of funding for affordable housing.
But the main housing thrust of Newsom’s 2020-21 budget revolves around homelessness, which he called “the issue that defines our times.”
Newsom previewed his intent earlier this week when he announced plans to launch a new $750 million fund to build housing for the state’s homeless population, and to help people at risk of homelessness make their rent payments. The fund, called the California Access to Housing and Services Fund, will be administered by the state’s Department of Social Services.
“We have never done this in the past,” Newsom said Friday. We believe this is the first-in-the-nation state-based housing vehicle of its type. It’s a novel strategy. It’s a new strategy.”
Even so, some affordable housing advocates were disappointed this year’s state budget didn’t include the same sweeping new funding and programs for housing production as last year’s.
The governor’s office warned the affordable housing community ahead of time that there weren’t sufficient resources to continue last year’s investments, said Matt Schwartz, president and CEO of the California Housing Partnership.
“It’s concerning, however, that there still are no signs of a comprehensive plan to get us to the several million new homes that the governor has set as a goal, and that we’re all striving towards,” Schwartz said.
While campaigning for office, Newsom had said the state needed 3.5 million new homes to escape the housing crisis, and he aimed to get them built by 2025. But on Friday, Newsom pulled back from that goal, saying his office is refining that number using new data.
“That 3-and-a-half-million goal was a stretch goal,” he said.
Newsom portrayed his budget, which will be revised in May and then must be approved by the legislature, as a balanced compromise. This year’s budget — $222.2 billion in all — includes a projected $5.6 billion surplus.
“We have to be prudent. We have to balance budgets. And we have to meet this crisis head-on,” he said during a question-and-answer session after his budget presentation. “And I think we’re doing both.”
A group of organizations, including The Non-Profit Housing Association of Northern California and the Western Center on Law and Poverty, had pushed the governor to invest $5 billion in housing and homelessness with this year’s budget.
“The budget released today is an encouraging next step, with a number of important new investments,” Ray Pearl, executive director of the California Housing Consortium, wrote in a news release. “But to build all of the affordable homes we need, we have to think even bigger — matching new and continuing state investments with the scale of the problem and making structural changes in the way the state finances and supports affordable housing.”
Newsom also set aside funds to address homelessness by transforming the Medi-Cal system to better treat mental illness among those experiencing homelessness. Those funds bring the grand total of homelessness-related funds in this year’s budget to more than $1 billion. Newsom earmarked about $1 billion for homelessness in last year’s budget, as well.
Newsom on Friday focused on how his office is deploying the $1.75 billion earmarked for housing production in the prior budget.
“The good news is the money now will start flowing,” he said.
Funds to help cities and counties build the sewers, roads and other infrastructure needed to support housing development will go out starting this month, and the total $500 million will be allocated by April, he said.
The $500 million Newsom allocated last year for housing construction through low-income tax credits also will go out this year, he said.
To boost housing construction, Newsom emphasized the need to pass strong legislation this year. When asked specifically about Senate Bill 50 — Sen. Scott Wiener’s controversial zoning reform bill — Newsom, as he has done many times before, stopped short of fully endorsing the bill.
“We need to get something done, and we’re working aggressively to do that,” he said.
