Housing advocates breathe sigh of relief after California’s coronavirus budget cuts

After Gov. Gavin Newsom rolled out his new coronavirus-decimated budget proposal this week, some affordable housing advocates expressed relief the damage wasn’t worse.

Staring down a $54 billion budget shortfall, Newsom on Thursday rolled back several ambitious plans he’d laid out just four months before to tackle the state’s homelessness and affordable housing crisis. But he didn’t gut everything — and what he did cut, he attempted to fill in using federal money.

“It was not as dire as was predicted by a lot of groups,” said David Garcia, policy director of the UC Berkeley Terner Center for Housing Innovation. “But there’s still a lot of changes to process.”

Newsom’s newly revised budget cuts the ambitious $750 million state fund for homeless housing and services he had proposed in January.

Instead, the governor intends to use $750 million in federal funds — which already have been allocated to the state — to buy the hotels and motels counties across California that are being used as temporary homeless housing during the pandemic. So far the state, in partnership with county governments, has leased more than 15,000 rooms as part of its Project Roomkey initiative — 7,200 of which are occupied. Buying those hotels and motels could allow counties to turn them into permanent housing, answering a question that has plagued homeless service providers for months: What happens to those residents once the pandemic ends?

“It’s terrific that the governor is signaling that the state is going to use a portion of its federal resources to make sure people stay housed,” said Matt Schwartz, president and CEO of the California Housing Partnership. “Is $750 million enough? No, it won’t be enough. We’re going to need more federal funding, and we’re going to need the state to double down on this amount if it wants to keep all 15,000 people housed.”

The governor also abandoned his earlier proposal to beef up Medi-Cal by $695 million, which would have provided for better treatment of mental illness among those experiencing homelessness. But if additional federal funds Newsom has asked for come through, that cut will be reversed.

Newsom said within the next few years, he hopes to be in a position again where he can jump-start the programs he was forced to cut this year.

“We’re not going to walk away from them,” he said.

In a bright spot for housing activists, Newsom’s revised budget retains key funds to finance affordable housing construction: $500 million in low-income housing tax credits. That will help make sure affordable housing continues to be built during what’s likely to be an upcoming recession, Garcia said.

“A lot of groups were concerned that that would not survive the revise,” he said. “So the fact that that is in there is a big relief for affordable housing builders.”

At the same time, the governor proposed cutting $565 million in funding for mixed-income developments, infill infrastructure grants and other housing programs.

Assemblyman David Chiu, D-San Francisco, was pleased the revised budget kept the $500 million in low-income housing tax credits, but expressed frustration at the loss of funding to help cities combat homelessness.

“I am deeply concerned that we are shifting away from addressing our housing and homelessness crises, which affects all other aspects of life for everyday Californians,” he wrote in a statement. “Our housing crisis has made people poorer, sicker, and more vulnerable to COVID-19. We cannot let up on addressing this issue.”