Lurie, Newsom Tout Millions in Homelessness Funding for San Francisco Amid Budget Blows

As San Francisco stares down another year of painful budget cuts, California Gov. Gavin Newsom announced Friday the state will provide the city with millions of additional dollars for homelessness programs.

The injection of homelessness funding comes as San Francisco is facing a nearly $936.6 million budget deficit in the next two fiscal years, according to a city report released in December 2025. The Trump Administration’s cuts through the ‘One Big Beautiful Bill Act’ are also projected to pull nearly $300 million from the city’s budget for programs like food assistance and Medi-Cal.

“We are changing our approach to homelessness to get people off the street and on a path to stability,” Lurie said at a press conference in the Mission District alongside Newsom. “But we can’t do this alone.”

On Friday, Newsom announced that a combined $419 million will go to San Francisco, Los Angeles and San Diego in the sixth round of grants awarded through the Homeless Housing Assistance and Prevention Program. The HHAP program has distributed around $4.5 billion for local homelessness response so far, according to the governor, and additional dollars will be doled out in the next six months.

San Francisco will receive about $39.9 million, which will fund shelters and navigation centers throughout the city. Just prior to the latest round of grants, the state awarded $187 million to San Francisco, according to the HHAP fiscal data dashboard.

In its last budget negotiations, Lurie spearheaded a controversial effort to reallocate funds that voters approved through Proposition C, a tax on the city’s wealthiest companies to fund homelessness services. The approved budget shifted some dollars that were set aside for permanent supportive housing toward temporary shelter and transitional housing.

But long-term state funding for homeless programs is also unclear. California allocated initial funding for the HHAP program in the 2024-25 fiscal year budget, but no additional funding for that specific program was allocated in the 2025-26 budget.

The proposed 2026-27 budget, which is still under review, includes around $500 million for HHAP, about half of what was originally allocated. Newsom on Friday underscored that the state had very little investment in homelessness response prior to his administration.

Additionally, decades ago, the state shut down many poorly run public hospitals and closed beds for people experiencing severe mental illness, with the aim of pivoting to a community-led response.

But the local approach never fully materialized, setting up generations of Californians without adequate behavioral health resources as the population grew.

“The state had no vision. The state had no plan. The state was not involved in housing and mental health and homelessness just seven years ago,” Newsom said.

California voters in 2024 passed Proposition 1, which Newsom advocated strongly for, giving the state a $6.4 billion bond for housing, services and treatment for people experiencing homelessness.

The Governor’s office reports that unsheltered homelessness in California has dropped 9% statewide in the last year, based on counties’ 2025 data.

“I’m tremendously proud of the progress we’re making. Before I got here, between 2015 and 2019, we saw almost 52% increase in unsheltered homelessness,” Newsom said on Friday. “We’ve seen real progress in the last few years.”