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OEDIT proposes one‑time diversion of $110M from Prop. 123 to balance FY27; agency says awards will be honored
Summary
The Office of Economic Development and International Trade told lawmakers it may temporarily reduce Proposition 123 spending by $110 million to help close the state's budget gap, promising existing awardees will be paid and that the agency will prioritize leveraging federal LIHTC dollars to preserve affordable‑housing production.
At the SMART Act hearing, Executive Director Eve Lieberman and Deputy Director Jeff Craft outlined OEDIT’s four wildly important goals (housing, rural jobs, investment and tourism) and presented a FY27 budget that includes a $110,000,000 one‑time diversion from Proposition 123 to support general‑fund balancing. OEDIT said the diversion is a single‑year measure and emphasized that awards already committed will be honored.
Lieberman told the committee the ballot language for Proposition 123 anticipated that the funding could be reduced under a TABOR cap scenario and that the proposed diversion is consistent with that contingency. Deputy Director Craft said OEDIT will redesign deployment to maximize leverage of federal Low‑Income Housing Tax Credit (LIHTC) funds and to minimize the slowdown in unit production; he committed to providing a detailed estimate of the diversion’s impact on future projects at a planned Prop 123 hearing on January 23.
Why it matters: Prop 123 was voter‑approved to expand affordable housing; a $110M one‑time reduction would slow future awards and require OEDIT to prioritize projects that most effectively leverage federal dollars. Several legislators asked whether any projects already in the pipeline would be left unpaid; OEDIT answered that previously made awards have the cash to be paid and that the reduction affects future funding capacity.
Sources: OEDIT presentation and Q&A during the Joint Business Committee hearing; quotes and explanations from Executive Director Eve Lieberman and Deputy Director Jeff Craft.
