Administration seeks to split Business, Consumer Services and Housing agency into two cabinet-level entities

Secretary Tamika Moss told Subcommittee 4 of the Senate Budget and Fiscal Review Committee that the administration is seeking legislative support for the 2025 governor's reorganization plan to split the Business, Consumer Services and Housing Agency (BCSH) into two cabinet-level entities and to establish a new housing finance committee.

Moss said the proposal would create a Business, Consumer Services and Housing Agency (BCSA) focused on consumer protection and professional regulation, and a California Housing and Homelessness Agency (CHHA) to concentrate on the housing continuum from homelessness to homeownership. "We are here requesting support around the 2025 governor's reorganization plan," Moss said.

Why it matters: Administration officials said the reorganization would concentrate senior leadership and technical staff to speed program delivery, strengthen oversight, and better coordinate housing finance across state programs. Gustavo Velasquez, director of the Department of Housing and Community Development (HCD), told the subcommittee that "creating the California Housing and Homelessness Agency will provide the right structure to our momentum and our progress towards housing and homelessness."

Key details and debate - Operational timeline: The administration said it expects to stand up the new housing agency and begin implementation in 2026, with many transition tasks (hiring delegations, procurement, organization change management) needing budget-year resources to begin. Deputy-level staff described a conservative staffing plan for the first year, with additional leadership positions planned in subsequent budget years. - Staffing and startup: Officials said many existing staff will be redeployed to support the new agency and the proposed housing development and finance committee (HDFC). The administration described a limited initial set of new analyst positions requested mid-year and roughly five new positions tied to HDFC operations, with more senior leadership positions proposed in later years. - Budget and timing concerns: Paul Steinhausen of the Legislative Analyst's Office recommended rejecting the administration's May revision funding request "without prejudice" until the Little Hoover Commission completes its review and the Legislature has time to consider the reorganization process and costs. Steinhausen noted the Little Hoover Commission has until its June 4 report to make recommendations and the Legislature has until July to act. - Legislative skepticism and oversight: Several senators pressed administration witnesses about whether the state needs a formal reorganization to achieve better program coordination. One senator noted existing coordination mechanisms and argued the secretary could convene program integration work without a statutory reorganization; others said a permanent cabinet-level agency would lock in institutional capability across administrations. Lawmakers repeatedly asked for fiscal detail tying the reorganization request to remaining housing appropriations and to near-term program delivery.

What the subcommittee did: Members left the item open for further consideration. Committee staff were asked to draft alternative language and options for consideration at a later hearing that would link any reorganization funding to availability of programmatic housing dollars.

Context: Administration witnesses emphasized that California already manages billions in housing resources that remain in active notices of funding availability and that the proposed committee and agency are intended to make those dollars stretch further by lowering transaction costs and improving coordination across programs. The LAO and Department of Finance said postponing budget-year funding decisions is an option the Legislature can use to ensure the statutory review and fiscal picture are aligned.

Next steps: The subcommittee will continue the discussion in later hearings once the Little Hoover Commission and legislative review processes proceed and when fiscal trade-offs are clearer.