Dive Brief:

• Newly inaugurated California Gov. Gavin Newsom, D, released his proposal for a $209 billion state budget with a focus on equity and ensuring a "California for All." The budget places a large emphasis on measures to ease the burden of the state's housing crisis.
• The budget proposal includes a one-time, $1.3 billion general fund and expanded tax credits to spur housing development, especially for low- and moderate-income housing. Some funds will incentivize local governments to increase housing production through grants that can go toward initiatives such as rezoning for greater density and revamping local processes to speed up housing development. Newsom said the state will withhold state tax dollars from municipalities that block housing expansion or do not commit to adding units at a quick pace.
• The budget also includes $500 million in funding to address homelessness including opening emergency shelters.

Dive Insight:

Newsom's budget proposal makes good on his campaign promise to address housing affordability and capacity. He previously stated the lofty goal of building 3.5 million new housing units by 2025 to ease the housing affordability crisis.

Individual cities throughout California have taken their own housing action, such as San Francisco Mayor London Breed's proposal to use a property tax windfall to boost affordable housing and homelessness mitigation programs. But leaders increasingly turn to the state for help as they acknowledge what Newsom has stated: The affordability crisis now is widespread throughout the state and no longer is contained just to large cities. 

Newsom tries to not only increase housing affordability by generating more units but also tackles the state's growing homelessness problem. He's smart in doing so, considering data from the U.S. Department of Housing and Urban Development shows that California leads the nation in homelessness and about one-quarter of all people experiencing homelessness in the United States live in California. Newsom said that a lack of affordable housing directly contributes to an increase in the homeless population.

Newsom's proposals are quite aggressive and some criticize them for being impossible to implement or difficult to enforce. Punishing cities for not getting on board with housing unit production by withholding funding is a bold tactic that could prove challenging to put into practice. Yet, the aggressiveness of the actions illustrates Newsom's commitment to easing the housing affordability crisis, a topic for which his predecessor, Jerry Brown, often fielded criticism for not doing more to address.

State lawmakers must approve a final budget by June 15.