On June 30, 2025, Governor Newsom signed the 2025-26 California State Budget into law. Susannah Parsons, All Home’s Director of Policy and Legislation, released this statement about the final budget agreement from the Governor and State Legislature:
The state budget enacted yesterday has been a marathon of negotiations to fill a $12 billion deficit, with a last-minute push to enact a host of housing-related priorities, yet it largely neglects homelessness—one of California’s most urgent problems.
Perhaps the most significant housing provision, added to the budget package very late in the process, would exempt new infill housing development from the California Environmental Quality Act (CEQA). We are hopeful that this will unlock more of the housing production the state needs to ease the affordability crisis. Legislative leaders also rallied to allocate funding for several state housing programs and initiatives, including:
- $120 million for the Multifamily Housing Program (MHP), which is only about a third of its allocation last year.
- $500 million for the state’s Low-Income Housing Tax Credit (LIHTC) program, which is consistent with last year.
- $300 million for the California Dream for All program, which will provide meaningful financial assistance for first-time homebuyers. All Home strongly supports AB 57 and AB 518, whose passage would set aside 10% of these funds for the descendants of enslaved people.
- $4 million to create the California Housing and Homelessness Agency (CHHA), contingent on the Legislature adopting the plan. This transformative proposal is a 2025 priority for All Home, which will streamline housing production and expedite service delivery across the state.
Despite these positive last-minute additions, this budget continues the pattern of one-off annual appropriations for affordable housing, despite the need for 100,000 additional units each year.
Meanwhile, the state budget finalized yesterday is a serious setback for homelessness, almost zeroing out state funding that communities rely on to provide critical services, housing, and other solutions for our unhoused neighbors. In the final days, the Legislature did add back in $100 million for the Encampment Resolution Program, which funds services in encampments and helps connect people to more safe and stable housing. But $100 million is a fraction of the state homelessness funding local governments have received in recent years, and a fraction of what they need to make a real impact.
California has begun to make meaningful progress addressing homelessness, but we now risk rolling back those gains. At a time when the federal government is poised to cut funding for health care, food aid, and housing programs for extremely low-income Americans, California should be leaning in, not pulling back.
Specifically, the 2025-26 budget allocates $0 for the Homeless Housing, Assistance, and Prevention Program (HHAP). Dozens of homelessness service providers and organizations, as well as all of California’s counties and cities, urged the Legislature and Governor to include HHAP in the budget. They know best that without sustained resources from the state’s only program to fund homelessness services, they will be forced to close shelters and wind down vital programs. While we appreciate the Legislature’s intention to allocate $500 million to HHAP in next year’s budget, there is no guarantee that will happen. If enacted, that funding level would represent a 50% cut to the program.
All Home is also disappointed to see no funding in the final budget to support the Bay Area Housing Finance Authority (BAHFA), which has the potential to be a critical partner in addressing housing affordability and homelessness in our region. With 60 other organizations, we urged decisionmakers to include $30 million to sustain baseline operations. This is a blow that could jeopardize BAHFA’s critical programs and already lean staffing.
There’s no sugar-coating it: this was a difficult budget year and we are headed into extremely challenging times at the federal, state and local levels. In challenging budget years, we should be holding steady on spending that benefits people with extremely low incomes, who will also bear the brunt of looming federal cuts. Instead we are likely to lose ground on homelessness that will be hard to win back, with life-and-death consequences for our most vulnerable neighbors that will be widely felt across every community in California.
