California Budget Has No New Funding for Key Statewide Homelessness Program

Updated at 5:15 p.m. June 26 

Despite Californians widely demanding action on homelessness, the budget state lawmakers are close to passing for the next fiscal year includes no new funding for one of the state’s largest homelessness services programs.

As the state faces a $12 billion shortfall, the current budget guts the Homeless Housing, Assistance and Prevention grant program, though it does earmark an additional $500 million for the program in the following budget year.

Tara Gallegos, a spokesperson for the governor’s office, said the future funding is “contingent on stronger accountability measures.” And she noted that while the state has so far awarded more than $3 billion to the program, only $1.9 billion has been spent.

Last year, Gov. Gavin Newsom urged local governments across the state to crack down on homeless encampments following a Supreme Court ruling expanding cities’ ability to fine and jail people living outside, even if no shelter is available. And last month, he reiterated that call, urging cities and counties to do more to clear encampments from streets and sidewalks.

The cuts come as cities and municipalities try to build and preserve shelters and housing for those living on city streets.

“The fact is, addressing homelessness is primarily a local issue,” Tara Gallegos, deputy director of communications for Gov. Gavin Newsom, said in a statement to KQED, responding to questions from cities about the elimination of HHAP funding.

In a joint statement Wednesday, Carolyn Coleman, CEO and executive director for the League of California Cities, and Graham Knaus, CEO of the California State Association of Counties decried the budget proposal.

“Investing no new money this year and only half as much for next year will stop progress in its tracks,” they wrote. “More tents will pop up alongside highways, train tracks and rivers and more families will struggle.”

Since its inception six years ago, the HHAP program has provided funding to support constructing permanent housing, improving shelters and incentivizing landlords to rent to people experiencing homelessness, among other services. Carolyn Coleman, CEO and executive director for the League of California Cities, said the program has become an important tool for cities because its funding can support a variety of services.

“One of the reasons why HHAP has been so effective is because it has some flexibility that can be tailored to fit the local circumstances,” she said.

Luis Alejo, a Monterey County supervisor, said his county has used the grant funding for a number of projects — most recently to partner with the city of Watsonville and open a navigation center there, which would provide people experiencing homelessness room and board while they get help from case workers connecting them with public benefits and healthcare. The center is scheduled to open later this year, but Alejo said the project could be at risk if funding dries up.

“We had to build working relationships, we had to build trust, but having the resources helped us to help that collaboration transition … into shelters and permanent supportive housing,” he said. “If the legislature continues not having a single dollar for the next round of homelessness funding through HHAP, all these projects and all this collaboration will definitely be at risk in the coming months ahead of us,” he said.

According to state data, local governments received more than $600 million during the first round of HHAP funding in 2019. Most of those dollars went toward opening navigation centers and operating costs for new and existing housing and shelters.

During the fifth and latest cycle of funding, the state awarded almost $870 million, though only half of that money has been earmarked for specific uses and a little more than a tenth has been spent already. The sixth cycle, which was budgeted last year, includes $760 million and is expected to be awarded to cities later this year.

According to federal data, California is home to the largest number of people experiencing homelessness, but earlier this year, Newsom announced the state had dramatically slowed the increase in people living on the streets to 3% last year — far lower than the national increase of 18%.

Edie Irons, a spokesperson for the homelessness policy organization, All Home, said those numbers aren’t cause for celebration but they do demonstrate the state’s investments are beginning to work. For the first year since 2018, the number of people sleeping outside, as opposed to in a shelter, held relatively steady between 2023 and 2024, increasing less than half a percent.

Newsom wants local governments to use the money that has been doled out before the state sets aside additional funds. So far, the state has awarded more than $3 billion to the program, with only $1.9 billion spent so far.

“The Governor expects local governments to use the unprecedented funding already provided to them — including the billions in funding that has been allocated to locals but not yet spent — to get people off the streets and connected to the help they need,” Gallegos said.

Earlier this year, Newsom announced that California had dramatically slowed the growth of homelessness to a statewide increase of 3%. While the state is still home to the largest number of people experiencing homelessness, according to federal data, its rate is far lower than the national rate of 18%.

“It’s not great news — we want to see an actual reduction,” Irons said. “But holding the line in the state with the largest homeless population in the country is an accomplishment, sadly. And we won’t be able to sustain that progress or improve upon it without more funding to continue the solutions that are working.”

In the remaining weeks before the budget is finalized, housing advocates are hoping to strike the right deal with lawmakers and the governor to secure HHAP funding for the future.

Correction: A previous version of this story misstated the name of the CEO of the California State Association of Counties.