Wednesday May 14, 2025
On Wednesday, May 14th, Governor Newsom released his proposed revision of the 2025-2026 state budget. When the initial budget was released in January of this year, the state was faced with the challenge of closing a deficit. This was accomplished by drawing down rainy day funds to arrive at a precariously balanced budget.
Fast forward to the Governor’s May Revise presser and the state finds itself facing a $12 billion dollar deficit, much of which the Governor credits to falling revenues resulting from President Trump’s tariffs and a high degree of economic uncertainty.
This time, there was no pulling from rainy day funds to make up the deficit, rather the approach was widespread budget reductions, borrowing from special funds and shifts from the General Fund to other funds. The independent Legislative Analyst Office (LAO) released their semi-annual updated revenue outlook and had pointed commentary on the state of the state’s economy and forecast revenues to be “…essentially flat, reflecting mounting risks and headwinds.”
With regards to California’s widening housing crisis, Newsom said, “We’ve done a lot, but we need to do more…. Let’s go, it’s time to accelerate urban infill, time to exempt from CEQA, time to focus on judicial streamlining, time to get serious…that’s why language will be included in the budget to get this done.”
Unfortunately, the proposed budget does not go far enough to align the Governor’s words with the state’s articulated goals of producing more affordable housing. While the Governor did show support for a state-wide housing bond, the revised budget misses the mark on funding for the State Low Income Housing Tax Credit (LIHTC). In a major disappointment to us and most other housing advocates, LIHTC funding has been left out of the budget just as it was in the 2024-25 cycle. Last year, through our advocacy efforts and in partnership with allied organizations and our allies in the legislature, an additional $150 million in LIHTC funding was injected into the final budget and it is our intention to take up this fight again.
Jenna Abbott, CCAH’s Executive Director said, “The cost of creating housing in California incredibly high, making a safe and stable place to live a stretch for working people. While the Governor talked a lot about the importance of bringing down costs for Californians, the lack of funding for LIHTC in the State budget represents a step backwards in producing that outcome when it comes to housing. If we want to achieve affordability in our state’s housing market, we must continue to supply a reliable stream of funding sources to our developer community. We urge the inclusion of additional funding for LIHTC in the budget.”
Your CCAH advocacy team will continue to voice the concerns of our membership and fight to salvage these vital funding sources that have been neglected in this revised budget. The next month in the Legislature, conversions will be laser focused on making adjustments and finalizing the 2025-2026 budget before the June 15th constitutional deadline. Should you have any questions please reach out to Paul Shafer.