February 28, 2019

The Assembly Budget Subcommittee with jurisdiction over housing funding held a joint informational hearing with the Assembly Local Government and Housing and Community Development Committees on February 26 to review the Governor’s housing and homelessness budget proposals for 2019-20. CSAC testified to offer the county government perspective.

Housing Planning and Incentive Funding

As outlined in CSAC’s January Budget Action Bulletin, the Governor has proposed allocating $250 million in one-time funding to update local and regional housing plans. The budget would also set aside $500 million for one-time incentive payments that local governments could use for general purposes in jurisdictions where housing production exceeds yet-to-be determined goals.

Members of the committees pressed the Department of Finance for more details on the Governor’s proposals, while the Legislative Analysts’ Office (LAO) raised several potential concerns. The LAO’s analysis and testimony pointed out that state law has required local governments to plan for specified amounts of new housing for several decades, and that current federal, state, and local subsidies for below-moderate-income homes are insufficient to meet those planning targets.

The LAO and members of the committees also expressed doubts about the efficacy of general purpose incentive funding in creating new housing. CSAC testified that any new planning targets must consider the limitations counties face in promoting housing production due to market forces, infrastructure challenges in unincorporated areas, and insufficient funding for subsidized affordable homes. 

Several members of the committee also expressed concerns with the Administration’s proposal to potentially tie city and county formula funds from SB 1’s Road Maintenance and Rehabilitation Account to housing production. CSAC reiterated our general concern with making state funding contingent on private market development decisions. We also thanked the Administration for their commitment that any linkage between transportation funding and housing would not hold local governments accountable for factors beyond their control.  

Homelessness Assistance Funding

Members of the committees supported the Governor’s interest in continuing fiscal assistance to local governments tackling the homelessness crisis in 2019-20, but pushed the Administration for additional details and discussed how the state can best address homelessness with a limited allocation of funding. CSAC testified applauding the Governor’s desire to continue to provide financial assistance to local homelessness efforts.

The committees’ discussion focused on the Governor’s proposed allocations of $300 million for local governments to expand or develop emergency shelters, navigation centers, and supportive housing and $200 million to reward jurisdictions that make progress in addressing homelessness. The LAO analysis again questioned whether additional direct assistance could be a better approach than local incentive funding.

Members of the committees also expressed reservations with setting up a new, one-time funding program without having additional information on the outcomes of the current allocations from the Homelessness Emergency Assistance Program (HEAP). CSAC expressed our support for continuing several aspects of the current HEAP program; specifically, the speed with which funding was allocated, flexibility to meet local needs, and the requirement for cities, counties, and non-profits to collaborate via Continuums of Care.

No action was taken, given that the hearing was informational. CSAC continues to solicit feedback from counties on the Governor’s housing and homelessness budget proposals. A full video of the Assembly Budget Subcommittee No. 4, Local Government, and Housing and Community Development hearing is available online.