Gavin Newsom’s final budget would end homeless grant program, shelters could close
California cities may be forced to close homeless shelters next year if the legislature approves Gov. Gavin Newsom’s proposed budget.
The $349 billion budget, which Newsom released Friday, would omit a large homelessness grant that cities and counties have relied on each year to address the severe crisis since Newsom took office in 2019.
“Assuming (Homeless Housing, Assistance, and Prevention Program) money isn’t in this year’s budget, 2027 is when we’re going to start to see real problems with communities starting to start ramping down their projects in anticipation of loss of funding, said Alex Visotzky of the National Alliance to End Homelessness. “We need to see HHAP funded at $1 billion a year if we’re going to see continued progress on homelessness.”
During a news conference to unveil the budget, Finance Director Joe Stephenshaw said the omission of the funds were not a “cut.”
“(It’s not) due to cuts,” Stephenshaw said in response to a question from a reporter. “Those are due to one-time funding sources that are not on the books for this year ... (There are still) significant investments at the state level in combating homelessness.”
Stephenshaw pointed out that $500 million contained in the seventh round of the grant has not yet started going out to the communities, but that it will soon.
If the budget included a new round of HHAP, communities would receive it after Newsom was out of office. The governor is termed out at the end of this year, and is widely believed to be a top contender in the 2028 presidential race.
Newsom claims homelessness decline
Newsom during his final State of the State address Thursday claimed the state’s homeless population decreased last year.
“Early data, just compiled, shows that the number of unsheltered homeless people in California dropped 9% in 2025,” Newsom said, Thursday during the address. “We have not seen a drop like this in nearly two decades in California. Los Angeles, down 10.3%; Riverside, down 19%; Contra Costa County, down 34.8 .. Our investments are paying off.”
If true, that would be big news, and boost the governor’s potential presidential run, showing progress on an issue that has dogged his administration.
Newsom’s office calculated the 9% decrease using the 30 communities that submitted an unsheltered homeless census estimate last year to the U.S. Department of Housing and Urban Development, according to his office.
While those numbers included several large areas, such as Los Angeles, San Jose and Fresno, several other major communities — including Sacramento, San Francisco and Alameda County — did not submit new estimates last year.
When those communities add their numbers into the mix later this year, Newsom’s claim may not turn out to be true.
Homeless activists say one reason that the counts may be dropping is not because people are getting housed, but because people are deeper in hiding to avoid detection in the wake of the U.S. Supreme Court’s 2024 Grants Pass decision. That decision essentially removed protections for encampments to exist on public land if there were no shelter beds available, and has been followed by increased clearings of encampments in California.
“Grants Pass opened the door for municipalities to go all out on criminalizing their homeless communities,” said Niki Jones, executive director of the Sacramento Regional Coalition to End Homelessness, adding she does not believe the state has seen an actual decrease in homelessness.
If Newsom’s claim of a decrease in homelessness is true, Graham Knaus, CEO of the California State Association of Counties said, it’s a great reason to continue funding HHAP in the state budget.
“The governor rightly praises counties and cities for reducing homelessness,” Knaus said in a news release Thursday. “So why on earth would the state abdicate its responsibility and allow homelessness to soar again?”
That organization will likely be lobbying lawmakers to include HHAP in the final budget.
Newsom will revise his budget in May and legislators will pass a final version in June.
The Bee Capitol Bureau’s Lia Russell contributed to this story.
