Today, Governor Newsom unveiled the May Revision to his January 10th budget proposal based on updated revenue projections for the state. As expected, the updated projections represent a dramatic shift from a $5.8 billion budget surplus to a budget deficit that is $41.2 billion below January’s projections. The new budget reflects the severe impact that the COVID-19 pandemic has had on the state’s economy, leading the Administration to project an overall budget deficit of $54.3 billion over the next year and a half. Click for more details.

Despite this grim outlook, the May Revise includes affordable housing in its top priority investments for encouraging the state’s economic recovery. The Governor’s budget proposes maintaining key funding programs for the preservation and production of affordable housing, including the recent $500 million expansion of the state Low Income Housing Tax Credit program, the real estate transaction fee created in 2017 through SB 2 (Atkins), ongoing funding for infill housing through cap and trade auctions, and $4 billion in Proposition 1 bonds for veterans and affordable housing programs. 

The May Revision also proposes to leverage federal funds and existing state programs and properties to implement a comprehensive strategy to increase housing supply and to support preservation, protection, and production of housing. This includes:

• Preserving existing subsidized affordable housing stock by stabilizing existing deed-restricted affordable housing and guarding against private sector actors buying up distressed assets;
• Seeking strategies to stabilize tenants in existing units;
• Significantly streamlining, upzoning and producing new housing units, especially on excess and surplus lands, in transit-oriented infill areas and on public land; and,
• Building a workforce development strategy to support a skilled and trained housing workforce pipeline with high-road wage rates, and promoting innovative alternative construction methods. 

However, the following funds which were appropriated in last year’s budget are proposed for reversion:

• $250 million from the CalHFA Mixed-Income Loan Program.
• $200 million in 2019 Infill Infrastructure Grant funds. (This does not include the IIG funds that were approved pursuant to Prop. 1.)

CHC issued the following statement from Executive Director Ray Pearl:

“We applaud Governor Newsom’s ongoing commitment to supporting lower-income households bearing the brunt of the impacts of the COVID-19 emergency—and for recognizing the essential role affordable housing can play in keeping people safe and healthy during this crisis, while also powering California’s economic recovery.” 

“The May Revise continues to invest in some of the state’s most successful and essential funding programs for the preservation and production of affordable housing, including the newly expanded Low Income Housing Tax Credit—one of the best financing tools we have for building much-needed affordable housing.” 

“California faced daunting affordable housing challenges before the COVID-19 crisis and will face many of these same challenges once this emergency has passed. Affordable housing development provides well-paying jobs and critical housing opportunities for Californians struggling the most—and we’re eager to play an important role in supporting the state’s economic recovery.” 

“We urge the Legislature to adopt the Governor’s proposed investments in the final budget to maintain and expand access to the affordable housing Californians need.”