Governor’s May Revise Doesn’t Go Far Enough to Support Housing, Homelessness Solutions that Our Communities Desperately Need

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Late last week, Governor Gavin Newsom released his May Revise to the 2022-2023 state budget proposal. While this new proposal includes additional investments for affordable housing and to address homelessness, it falls short of adequately addressing our state’s deep housing needs. These housing needs have remained unmet for too long and are negatively impacting the ability of everyday Californians to get by and thrive.

Key Investments 

The Governor’s proposal added key housing investments to build more downtown-oriented and affordable housing through funding adaptive reuse. This could pair well with a priority bill for NPH, AB 2011 (Wicks), which would create new streamlining provisions for underutilized commercial areas and present a new and improved framework for labor requirements.

Much More Is Needed, Especially as Our State Budget Includes a Near $100 Billion Surplus

It is clear that much deeper investments will be needed to fully address the long-term needs of our communities in the Bay Area and throughout California.

For context, the Governor announced that the state has a $97 billion-dollar projected surplus – up over $50 billion dollars from January’s projected surplus of $45.7 billion. Of the $97 billion surplus, $49.2 billion is marked for discretionary use.

This historic state budget mirrors a corresponding reality: The economy has created massive growth for few wealthy individuals, while too many Californians continue to struggle with homelessness and the high cost of living. Our state’s massive budget surplus reflects the widening chasm between the very rich and very poor, and demonstrates how critical it is that we alleviate the suffering of California’s people now and invest in affordable housing solutions.

With the state possessing a nearly $100 billion surplus, we firmly believe that the overall proposed $2.5 billion investment in affordable housing and homelessness solutions is a missed opportunity to put people and communities first and to respond, at scale, to the state’s affordable housing needs. 

California has thousands of approved, shovel-ready affordable housing units waiting for financing—each one of them a potential home for the millions of lower-income families and workers on waiting lists for housing. The state can and should do more in this year’s budget to get this housing built for the Californians who desperately need it.

Why the People of California Need More

The people of California need ongoing affordable housing investments, at scale, that can address displacement, homelessness, and the severe lack of affordable housing opportunities. We appreciate the Governor’s leadership on housing solutions, and want to see the investment to match. Building more affordable housing, preserving existing affordability, preventing homelessness, and keeping tenants housed are the ways we can begin to solve our state’s deep housing woes that have plagued Californians for decades, especially for our low-income communities and communities of color, who continue to contend with unfair and discriminatory housing policies and practices. We must prioritize big, bold housing investments because it is the right thing to do.

What’s Next?

NPH will continue to work diligently with our partners and allies, making the case for affordable housing and pressuring our lawmakers to prioritize the future of our communities. The families of today and the next generations are depending on these efforts. Having a safe, stable, and affordable place to live is the foundation for this future.

What’s New in the Governor’s May Revise?

AFFORDABLE HOUSING PRIORITIES

  • Adaptive Reuse
    • The May Revision adds $500 million to accelerate affordable housing production and builds upon the $1.5 billion in investments proposed in the Governor’s Budget (here is our analysis of the January proposal). The $500 million addition for adaptive reuse spending is split into $250 million in 2023-24 and $250 million in 2024-25 to convert commercial buildings into affordable housing.

HOMELESSNESS RESPONSE

The May Revision builds on the proposed January investments by providing additional interim bridge housing solutions and includes funding to support the administration of the Community Assistance, Recovery and Empowerment (CARE) Court framework — a new process for local courts to deliver support for individuals with specific behavioral health needs.

  • Prevent Homelessness
    • Project Homekey – The May Revision proposes an additional $150 million in the current year, for a total of $2.9 billion in Homekey funding over two years.
    • The May Revision also includes $500 million over two years to house unsheltered individuals on state-owned land through grants to local governments for interim housing and site preparation.
    • As part of the 2021 Budget Act, $1 billion is currently available for Homeless Housing, Assistance and Prevention (HHAP) in 2022-23. The Administration is committed to extending HHAP at current levels for additional years beyond 2022-23, pending further discussion with the Legislature to meaningfully increase outcomes and accountability on local HHAP spending to focus on highest priority needs, such as encampment resolution, Homekey operating sustainability, and CARE Court housing supports.
  • Transitional Housing
    • The May Revision builds on January’s proposed budget by adding $3 million one-time General Fund to provide transitional housing to youth discharged from the California Department of Corrections and Rehabilitation’s (CDCR) Division of Juvenile Justice by the Board of Juvenile Hearings in 2022-23.

What’s Missing from the May Revise, and What We’re Advocating for

Deeper investments in housing are needed to meet our communities’ needs; we must build more affordable homes, preserve existing affordability, and keep tenants housed. It is critical that in these historic years of budget surplus we prioritize supporting our communities in need, and nowhere is the need greater than in affordable housing and homelessness. 

To help alleviate this, the final state budget can reflect California’s Roadmap Home 2030, which emphasizes the need for sustained investments at the scale that meets our housing challenges. The Roadmap Home 2030 is a bold, long-term plan to create the future we want for California by building affordable homes, protecting low-income renters, ending homelessness, and advancing racial equity and economic inclusion.

NPH, along with our partners and allies, will advocate for the following to be included in the final state budget proposal:

  • More Permanent Supportive Housing and Affordable Homes for Extremely Low-Income Families and Individuals and Ongoing Homelessness Prevention Programs: In addition to last year’s one-time investment dedicated primarily to conversion of Project HomeKey units, we need an infusion of funding for ongoing operational costs and services. These are critical in order to ensure we’re not just bringing our unhoused neighbors in from the streets but also keeping them permanently housed and supported. 

We would like to see the final budget reflect more of the priorities that are shared between NPH and the California State Senate. These Senate priorities include:  

We will continue to advocate for more ambitious and urgent funding allocations but are encouraged to see that the State Senate is prioritizing many of our key housing programs.