State Budget Nears Approval: Where It Falls Short—and Where It Moves Forward

The state budget deal emerging at the Capitol this week contains no money for a critical homelessness program over the next year, and a mere fig leaf of funding to implement voter-approved Proposition 36.

The $321.1 billion spending plan does not fund the Homeless Housing, Assistance and Prevention (HHAP) program in the 2025-26 fiscal year, and offers just $500 million in 2026-27. That’s down from the $1 billion in HHAP funding in each of the last four budgets.

In response, CSAC and the League of California Cities issued a joint statement about how as a result of this budget, “More tents will pop up alongside highways, train tracks and rivers, and more families will struggle.”

“Renewing the $1 billion in HHAP funding would be less than a third of a percent of the state’s budget,” the statement added. “Surely, for what Californians have declared to be their “most pressing issue,” that’s not an unreasonable ask.

Similarly, the spending deal inadequately funds the implementation of Prop 36, despite winning approval from nearly 70 percent of voters last fall.

It awards $50 million to behavioral health departments and $15 million to county public defenders. It also cuts $20 million in ongoing funding that probation departments have used for pretrial services, which outweighs $15 million in one-time probation funding for Prop 36.

This budget deal forces counties to implement Prop 36 for pennies on the dollar,” Knaus said. “Californians deserve better.”

At least one part of the budget package deserves praise. CSAC is closely watching proposals that would overhaul the California Environmental Quality Act (CEQA). The governor and legislative leaders are trying to leverage the budget process to muscle through elements of two CSAC-supported CEQA bills that might otherwise have stalled or been watered down: one by Asm. Buffy Wicks and the other by Sen. Scott Wiener.

At this writing, only some of the proposed CEQA language is in print. What we’ve seen so far is encouraging, and we look forward to reviewing the rest when it’s released.

“Counties are fed up with critical housing projects being held political hostage by special interests for reasons that have nothing to do with the environment,” says CSAC President and Inyo County Supervisor Jeff Griffiths. “This legislation will make California more affordable for families by helping to alleviate our housing crisis and, in turn, reducing homelessness.”

Summaries of the 2025 Budget Act agreement are available on the Senate and Assembly websites.

What happened to the Homeless Housing, Assistance, and Prevention (HHAP) Program?

The Legislative summaries of 2025-26 budget agreement (linked above) outline a forthcoming trailer bill (AB/SB 131) that is anticipated to include a $500 million appropriation for HHAP in 2026-27 and a variety of significant changes to the California Environmental Quality Act (CEQA) process. This appropriation for HHAP, should it materialize in print as anticipated, is consistent with the amount included in the Legislature’s joint budget plan. The trailer bill is also anticipated to include intent language about a future legislation that will establish parameters and accountability measures for this Round 7 of the HHAP program.

Key Takeaway: The Fight for Sustainable Homeless Funding is Not Over

This development notwithstanding, our disappointment remains that the Legislature and the Administration failed to include new HHAP funding in the 2025 Budget Act for 2025-26. This comes after counties and others were required to submit 3-year homelessness plans, more onerous application requirements, and increased accountability. The lack of funding continues the unreliable, piecemeal approach to addressing the most intractable crisis of our generation. Long-term problems demand long-term solutions. CSAC continues to communicate to the state that this is UNACCEPTABLE for Californians.

Housing, Land Use, and Transportation

The 2025 Budget Act spending package includes trailer bill language (SB/AB 130) that makes a variety of significant changes to CEQA procedures to facilitate housing development and reduce the procedural complexities for counties. We expect a second trailer bill (SB/AB 131) to contain even more CEQA changes, though at this writing it was not yet in print. Many of these provisions were included in AB 609 (Wicks) and SB 607 (Wiener) from this session. CSAC supported both AB 609 and SB 607. In addition, the 2025 Budget Act includes the following:

• Provides $620 million to support new housing projects with $500 million for Low Income Housing Tax Credits and $120 million in funding for the Mutli-Family Housing Program.
• Establishes a voluntary vehicle miles traveled (VMT) mitigation bank that allows counties to direct their transportation VMT mitigation funding to a program that funds infill affordable housing projects and related infrastructure projects in their region.
• Provides $100 million for the Active Transportation Program, which encourages projects that increase the use of active modes of transportation, such as walking and biking.
• Retains approximately $1.5 billion for transit service providers that the Governor proposed to cut in the May Revision budget proposal.

Agriculture, Environment, and Natural Resources

• $2 million for the Wolf-Livestock Compensation Program. This program is critical to northern counties with robust ranching operations. The fund will be used to compensate ranchers when livestock are killed by wolves.
• $6.75 million for the California State Library Parks Pass Program through the Department of Parks and Recreation. This program allows any person to check out a day-pass to a state park through their local library for free.
• $9.5 million for the Wildfire County Coordinator Program through the California Fire Safe Council. This funding is dedicated to supporting individual wildfire coordinators in each county to support wildfire preparedness.
• $3 million for the community home hardening program that includes a home hardening certification. This program is also proposed to be funded by Proposition 4 bond funds, which will be resolved later in the legislative session.
• Note: The budget does not include trailer bills related to regional water quality control plans or the Delta Conveyance structure at this time.

Health and Human Services

• Restores funding for California Department of Social Services homelessness programs that are administered by counties ($83.8 million for Home Safe, $81 million for Bringing Families Home, and $44.6 million for the Housing and Disability Advocacy Program)
• $31.5 million for the state to address the Foster Family Agency insurance crisis.
• $3.3 million for operations, an interagency agreement, and personnel for statewide collective bargaining for the In-Home Supportive Services (IHSS) program and establishment of a statewide bargaining advisory committee to examine the issue.
• $100 million for grants to local jurisdictions to address encampments and transition individuals into permanent housing.
• Preserves $276 million General Fund annual investment in state and local public workforce and infrastructure.
• Restores the Medi-Cal Asset Limit at $130,000 for individuals and $65,000 for each additional household beginning January 1, 2026.  

Government Finance and Administration

• Reduced the one-time backfill for insufficient Educational Revenue Augmentation Fund (ERAF) amounts for affected counties from $118 million to $79 million.
• $94 million to reimburse local governments for costs incurred to implement state-mandated programs in 2025-26, and retroactively suspended four mandates related to stormwater permit requirements from the period of December 2009 to December 2017.

Administration of Justice

• $100 million to save critical victim services statewide due to the anticipated shortfall in the federal Victims of Crime Act (VOCA) funding.
• $100 million in one-time funds to support implementation of Proposition 36, passed by the voters in November 2024. By entity, the funding allocations are as follows:
  • County behavioral health departments: $50 million for the Department of Health Care Services (DHCS) to provide non-competitive grants to counties.  
  • Public defense providers: $15 million for the State Public Defender to provide grants to indigent defense service providers for holistic defense.  
  • Pretrial services: $15 million for the Judicial Council to fund local pretrial services. Notably, this is not new funding for probation departments and pretrial release services will be reduced by $20 million ongoing.  
  • Courts: $20 million for the Judicial Council to distribute to trial courts based on each trial court’s share of non-traffic misdemeanor and felony filings in FY 2023-24. 
  • County and state reporting requirements are also included in the final budget agreement.  
• The 2025 Budget Act provided for in trailer bill language formula updates to the Juvenile Justice Realignment Block Grant (JJRBG), including an adjustment of per-county percentages of wards, such as those committed, or not committed, to a secure youth treatment center (SYTF).
• Additionally, the 2025 Budget Act authorizes the Board of State and Community Corrections (BSCC) to bring civil action to enforce compliance with minimum standards for juvenile facilities or closure via trailer bill language.

Background on the Budget Process Overall

As previously reported by CSAC, the budget development process may not necessarily end on June 15 each year. Some years, the Legislature will “meet” the June 15 constitutional deadline by passing a Joint Legislative Budget Plan. In other words, the Joint Legislative Budget Plan may act as a placeholder budget act to comply with the June 15 constitutional deadline and allow the Legislature and the Administration more time to negotiate the final spending plan, which will be carried by one or more “budget bill(s) junior.” Such is the process that culminated in the final spending plan for 2025-26 released on Tuesday.  

What happens next?

The Legislature is expected to vote on and pass the 2025 Budget Act package as soon as Friday, June 27, following the required 72-hour public review period. Once approved, the package will be sent to the Governor, who is expected to sign it into law before the state’s fiscal year ends on Monday, June 30.

CSAC will continue to report on the state budget and implications for county governments in more detail in the coming days. In the interim, please do not hesitate to contact CSAC legislative affairs staff with questions about specific policy areas.