Assembly subcommittee presses HCD on budget proposal that shows $0 for new housing production

The California State Assembly Subcommittee No. 5 on State Administration heard a department overview Wednesday from the Department of Housing and Community Development and a string of lawmakers and housing advocates pressing the administration over a January budget proposal that, as presented to the panel, included $0 in new general‑fund spending targeted specifically to new affordable housing production.

HCD Chief Deputy Director Zach Olmstead told the subcommittee that construction activity has increased in recent years and that funding from multiple programs remains available. "From '22 to '23, housing activity, housing construction was up 13%," Olmstead said, noting the department's data shows substantial activity in affordable and multifamily pipelines and several large funding notices of funding availability in play.

The nuts and bolts of why the hearing mattered came from members who said a zeroed budget risks projects in the pipeline. "When we come to this budget and we see a 0, I'm — I'm horrified," Assemblymember [Ward] said, pressing the administration to explain how projects that already need gap financing will move forward.

Olmstead listed specific program activity and amounts that HCD has been managing, including multi‑year awards and proposition funds that HCD described as currently open or in award phases. He also highlighted HCD accountability efforts, saying the housing accountability unit had reviewed hundreds of requests that unlocked nearly 8,000 units and the surplus lands program had potential for about 32,000 units statewide.

Legislative Analyst Office and Department of Finance staff told members they had no immediate objections to the department's data but reminded the committee that the governor's budget is a starting point for negotiations. Department of Finance representative Allison Hewitt said the administration considered the proposal a starting place and was open to continued dialogue with the legislature.

Public commenters and advocates urged the subcommittee to restore funding. Representatives of the California Housing Consortium, Housing California and Habitat for Humanity told lawmakers there are tens of thousands of shovel‑ready affordable units that need state funds to proceed. "There are about 45,000 shovel‑ready, affordable housing homes, that just need state funding to move forward," Marina Espinosa of the California Housing Consortium told the panel.

Why it matters: members warned a pause in new state contributions could stall or cancel projects that rely on layered financing, leaving units in the pipeline unfunded and slowing production of affordable housing. The subcommittee and administration repeatedly emphasized that multiple program funding lines exist (including bond and voter‑approved funds) but said a gap remains for many projects that rely on state gap financing and tax credits.

The hearing continued with program‑level and policy items, but lawmakers flagged the budget question as a high priority that will shape negotiations this spring.