Governor Gavin Newsom has signed a $321 billion spending plan for the new fiscal year. The final budget bill was the product of extensive negotiations between the Governor and state lawmakers.
The budget rolls back some of the deeper cuts Newsom had originally proposed, instead leaning more heavily on reserves and internal borrowing to close the state’s $12 billion deficit. However, the agreement includes no new funding for the Homeless Housing, Assistance and Prevention (HHAP) program in FY 2025–26. Instead, HHAP will receive $500 million in FY 2026–27 — half the $1 billion allocated in FY 2024–25.
The lack of HHAP funding was not unexpected but is still a significant setback. Without those funds, city and county officials have warned that California’s homelessness crisis could worsen.
“Investing no new money this year and only half as much for next year will stop progress in its tracks,” said Cal Cities and the California State Association of Counties (CSAC) in a joint response.
The budget package does contain other provisions that align with local government priorities, including $100 million in one-time funding to implement Proposition 36 and two accompanying California Environmental Quality Act (CEQA) reform bills aimed at expediting construction projects.
The new laws exempt several categories of projects from CEQA’s environmental review requirements. Experts say the reforms will make it easier to build infill housing, water infrastructure, and advanced manufacturing facilities.
CSAC President and Inyo County Supervisor Jeff Griffiths issued the following statement on the reform bills:
Counties strongly support the CEQA overhaul in the state budget package.
No longer will CEQA be leveraged to stall critical county wildfire, water, and housing projects.
This legislation will make California more affordable for families by helping to alleviate our housing crisis and, in turn, reducing homelessness.
Read the enacted budget here.