Dive Brief:

• California Gov. Gavin Newsom signed off on a $214.8 billion budget that legislators amended to include provisions to improve housing capacity and affordability.
• The budget includes $1.75 billion for the planning and production of new housing to increase supply, with support for local governments' housing efforts. Cities deemed not in compliance with a state law that sets housing goals will face fines ranging from $10,000 to $100,000 per month. 
• A city deemed to be in violation of state housing requirements would have one year to come into compliance before it would have to pay fines. If it does not comply, monthly fines could increase to up to $600,000, and a court eventually could overtake a city's housing plans. 

Dive Insight:

Housing has been one of Newsom's focal points since he took office earlier this year. He has made it a point to present ideas for increasing housing capacity, improving affordability and mitigating homelessness.

Newsom and the state legislature had stalled for a few weeks on reaching a budget agreement because of the housing provisions. Much of the budget was agreed upon in mid-June, but negotiations continued on homelessness mitigation program funding and some tax measures.

Newsom illustrated his commitment to the housing cause shortly after his January inauguration, when he authorized the state's attorney general to take legal action against Huntington Beach, CA over the alleged refusal to comply with the state's affordable housing requirements. The first-of-its kind lawsuit required the city to amend its housing plan and allow for additional housing units for citizens of all incomes.

Housing equity and targeting wealthy cities that do not do their part to keep affordability in check are priorities for Newsom. The language written into the new budget suggests Huntington Beach could be just the beginning of the state holding cities accountable for housing. Further lawsuits and financial penalties could ensue for cities viewed as not taking the housing crisis and finding solutions seriously enough.