May Revision keeps billions in current housing rounds but proposes no new ongoing housing dollars; advocates urge restoring LIHTC and HAP

The Department of Housing and Community Development told Assembly Budget Subcommittee 5 that the May Revision contains no new ongoing affordable housing or homelessness appropriations but retains several existing award rounds and one-time allocations the department is administering.

"HCD has $3,400,000,000 in existing funding that we are working on expeditiously getting out the door," Deputy Director Matt Schuler told the subcommittee. Schuler listed funds that remain available to the department, including $2.25 billion for Homekey Plus, a $775 million Affordable Housing and Sustainable Communities round, a multifamily funding package totaling about $382 million and a tribal multifamily set-aside of $54 million. HCD also described $200 million in a flexible housing pool from Proposition 35 over two years and $100 million retained for the Encampment Resolution Fund in 2025–26.

The May Revision also proposes reverting $31.7 million in previously appropriated affordable housing funds that HCD said were undersubscribed or unawarded. Schuler described the reverted dollars as funding from catalytic infill and a commercial property pilot that did not attract eligible applicants.

Legislators and housing advocates expressed concern that the May Revision includes no new ongoing investments in core programs that the Legislature and advocates have prioritized. Panelists and public commenters urged restoring ongoing funding for the low-income housing tax credit (LIHTC), the Homelessness Assistance Program (HAP), the multifamily housing program (MHP) and other state-backed finance tools. Mark Stivers of the California Housing Partnership, Divya Sherpa of Housing California and other advocates said the programs slated for reversion or zeroing out are highly oversubscribed and that the state needs multi-year commitments to preserve pipeline momentum.

Assemblymember Matt Haney and others told the committee they were alarmed by the zeroing of LIHTC and HAP in the May Revision and noted that, while large one-time pots exist to award in the next year, most of the $3.4 billion is not ongoing recurring funding. HCD staff said the currently available rounds are expected to proceed but that the department does not project additional ongoing appropriations in the May Revision.

The Legislative Analyst's Office told the committee it viewed the reversion of $31.7 million as a reasonable budget solution given the administration’s deficit and that the money had not been awarded; LAO also noted tradeoffs and downsides to reverting funds that were intended for housing programs.

Public commenters, including the League of California Cities and housing advocates, warned that the lack of ongoing funding would force local providers and cities to scale back services and could slow production of deed‑restricted units. Many urged the Legislature to identify new multi-year revenue sources or reauthorization options to maintain program effectiveness.

Ending note: The subcommittee did not adopt funding changes at the hearing. HCD underscored it will continue to administer the active competitions and that legislators will weigh whether to restore or reauthorize ongoing housing investments in final budget actions.