Governor’s May Revise Emphasizes Critical Need for Ongoing Advocacy for Long-Term Affordable Housing Solutions

Aerial view of housing development in progress
SF Chronicle: Bay Area could add 41,000 affordable homes. This map shows where they’d be locatedSF Chronicle:
May 9, 2024
Schapiro Knolls, MidPen Housing - Watsonville photo by Frank Domin

Governor Newsom has released his May Revise to the 2024-25 state budget proposal, which shows a growing state deficit and some cuts to affordable housing programs. The good news for housing advocates is that, even amid an extremely tight budget year, the May Revise restored NPH’s highest priority ask – $500 million to the Enhanced State Tax Credits. But there is work to do ahead – both inside and outside of the budget process – to advance our goals of securing a future where everyone has a safe, stable, and affordable place to live.

NPH remains committed to partnering with the Governor and Legislature to identify solutions that balance the fiscal reality facing California’s budget while also meeting the most critical housing affordability and homelessness needs across the state.

Overall, this May Revise was noticeably shorter than previous iterations. The full document was only 44 pages, when May Revise updates from prior years numbered into the hundreds of pages. What this signifies is that there are still many details that the Administration is leaving to the coming negotiations in the next month

Key budget implications for affordable housing and homelessness solutions from the Governor’s May Revise are highlighted below:

NPH has spent much of 2024 advocating for additional funding for affordable housing production by focusing on reinstating two sources: 1) the enhanced State Tax Credits, the program offering the best opportunity to leverage billions of local and federal dollars, and 2) HCD’s Multifamily Housing Program, the most flexible source of funding for our members to achieve our broad spectrum of housing goals. We are glad to report that, even in the midst of an extremely tight budget year, the Governor’s May Revise restores all $500 million to the enhanced State Tax Credits. This is a huge victory and we are grateful to our members who joined in this advocacy effort. However, with the deficit widening since January, additional cuts had to be made to balance the budget, and some of them fell on housing. In summary, the May Revise had the following additional revisions: 

  • Enhanced State Tax Credits: Reinstated $500 million for ‘25/’26
  • Multifamily Housing Program: Removed the last $75 million from ‘23/’24 
  • Adaptive Reuse Program: Removed $127.5 million  from ‘23/’24, eliminating this program

This is on top of previous cuts to housing programs from the January proposal: 

  • Regional Early Action Planning Grants 2.0 (REAP 2.0): A $300 million reversion of previously allocated General Fund 
  • Infill Infrastructure Grant Program: A $200 million reversion, leaving $25 million in 2023-24 for this program
  • Veteran Housing and Homelessness Prevention Program: A $50 million reversion
  • Housing Navigators: A $13.7 million reduction

As with last year, the Governor’s budget proposal attempts to maintain previously allocated funds to support homelessness programs. This includes some priority for encampment resolution grants and Homeless Housing, Assistance, and Prevention (HHAP) grants – critical programs that we are glad to see preserved. While taking questions on his budget presentation, the Governor once again emphasized his concerns with local tracking of homelessness spending and measurements of success. The May Revise included one major new cut to homelessness programs: 

  • Homeless Housing Assistance and Prevention (HHAP): What was a delay of $260 million for ‘25/’26 has now become a cut of $260 million. 

This is on top of previous changes to homelessness programs from the January proposal and the Early Action taken by the Legislature in April: 

  • Encampment Resolution Grants: Maintains $400 million for a third round 
  • Homeless Housing Assistance and Prevention (HHAP): cuts $100.6 million General Fund for HHAP administrative costs
  • Behavioral Health Bridge Housing: Shifts $265 million to the General Fund and delays $235 million General Fund originally planned for ‘24/’25 to ‘25/’26
  • Behavioral Health Care Infrastructure Capacity Grants: Delays $140.4 million

We look forward to working with the Administration on promoting supportive housing, improving results and accountability, and supporting significant progress on getting our unhoused neighbors safely off the streets.

NPH remains committed to partnering with the Governor and Legislature to identify solutions that balance the fiscal reality facing California’s budget while also meeting the most critical housing affordability and homelessness needs across the state. After negotiations between the Governor and the Legislature, the Legislature’s deadline to pass a balanced budget is June 15 and the Governor needs to approve a final 2024-25 spending plan before the new budget year begins July 1.

NPH and our members and partners will work to maintain the affordable housing and homelessness solutions in the current budget proposal and also advocate for additional investments to be included in the final state budget. In particular, we will continue to advocate for reinstating the proven investments for the Multifamily Housing Program, a flexible funding source that would invest in the state’s pipeline of affordable housing developments and allow projects that already received partial funding to move toward construction.

Housing advocates know that the state’s revenue is unpredictable, subject to the ups and downs of economic and budget projections. With no new funding currently proposed for housing programs, advocates must also seek solutions outside of the budget process. NPH continues to advocate and advance state and regional electoral solutions that can give tools to local jurisdictions to address their housing needs and to generate revenue at scale. 

The 2024 election presents a pivotal opportunity to advance our affordable housing priorities outside of the budget process and keep our forward momentum in ensuring that all Californians have a safe and stable place to live.

🏗️ State Affordable Housing Revenue Bond: NPH is working to advance a state affordable housing bond – AB 1657 (Wicks) – which would provide critical resources to keep California’s affordable housing production and preservation pipeline moving for the next several years. In particular, the bond would fund an estimated 28,495 additional new homes affordable to low-income families; 93,195 additional affordable homes preserved, rehabilitated, or retrofitted; and 13,232 new homeownership opportunities for families in need of housing throughout the state.

📜 Constitutional Amendment to Set Voting Threshold to 55%: Last year, the Legislature referred ACA 1 (Aguiar-Curry) to the November 2024 statewide ballot to authorize local communities to raise the resources they need to meet pressing affordable housing and infrastructure needs with 55 percent voter approval, the same as for school bonds. But the Legislature must revise the measure this legislative session to ensure that affordable housing projects will be able to provide the supportive services some residents need to stay housed, and to address voter concerns by narrowing the range of funding mechanisms the measure allows. NPH with our statewide coalition, Californians for Affordable Housing Now, are leading efforts to update this bill. 

🏢 Regional Affordable Housing Bond: Winning ACA 1 would be a landmark change, making it much easier to pass the proposed $20 billion 9-county Bay Area bond measure that would deliver a historic influx of resources for affordable housing and homelessness solutions through the Bay Area Housing Finance Authority (BAHFA). This bond could help create or preserve 72,000 new homes across the Bay Area.

Deepen your Engagement with NPH to Advance Affordable Housing Solutions!