Big investments for city priorities in Legislature’s proposed State Budget; next two weeks are critical
The Legislature passed a budget bill on Monday, June 14. However, the bill is merely a framework that tees up a long summer of negotiations between the Legislature, Governor, and interest groups.
While there is general consensus on priority areas in the budget, the final spending amounts, as well as the allocation and distribution methods, have yet to be agreed upon. Key disagreements remain over the amount of money available to spend in future years, how quickly to spend money on key initiatives, and the best uses of the state’s American Rescue Plan funds. Those spending and reporting details will be hashed out in trailer bills, which contain the implementation language for the State Budget and don’t adhere to the same constitutional deadlines.
The League of California Cities has been calling on the state to commit at least $10 billion for cities over the next budget year to help cities recover from the pandemic, bolster investment towards meaningful solutions to homelessness, improve housing affordability, and advance critical infrastructure. The budget bill the Legislature passed this week includes significant earmarks for cities’ big priorities, but is light on the details. Read Cal Cities Executive Director and CEO Carolyn Coleman’s response to the budget bill, and review the below for a recap of the budget bill and how it relates to Cal Cities’ budget ask.
Housing and homelessness:
Cal Cities is asking for $5 billion for evidence-based homelessness and housing solutions to support cities in their efforts towards ending homelessness and increasing the construction of housing that is affordable to all Californians. These funds would be used to expand programs such as Homekey; Homeless Housing, Assistance and Prevention (HHAP); and Homeless Emergency Aid Program (HEAP) that deliver rapid rehousing, rental subsidies, and subsidies for new and existing housing and emergency shelters.
The approved State Budget historically commits $1 billion per year for direct and flexible funding to cities and counties to address homelessness, but details about the carrots and sticks related to this funding are lacking. Cities should remain cautiously optimistic, as the state contemplates attaching significant requirements and mandates on local governments.
The Legislature provided $2.2 billion specifically for Project Homekey with $1 billion available immediately. Cities should remain concerned over the lack of HHAP and HEAP funding that helps deliver rapid rehousing programs, which allow for more immediate solutions and provide resources to areas in which Project Homekey is not feasible.
The budget bill did include Cal Cities-supported $584 million for the Infill Infrastructure Grant program designed to support affordable housing. The budget bill also includes $250 million for sustainable community strategies planning grants and $200 million for first-time homebuyer assistance, with a set-aside to support Accessory Dwelling Unit (ADU) financing.
Direct and flexible state aid for cities:
Cal Cities continues to call on the state to invest $2 billion in direct and flexible state aid to cities to address local budget gaps left by the American Rescue Plan Coronavirus State and Local Fiscal Recovery Fund. The investment would prevent sustained cuts to good government jobs and jumpstart core services. Despite strong calls from Cal Cities and city leaders, the Legislature missed this opportunity to invest directly in our cities and did not include this direct funding for cities in the budget bill.
Recycling and organic waste diversion:
Cal Cities continues to advocate for a $250 million investment to support the implementation of waste diversion mandates (SB 1383). The Legislature set aside $130 million for a circular economy package to be negotiated throughout the summer.
Transportation:
The Legislature’s budget also includes $5 billion for streets, roads, and highway projects. Specifically, the budget includes a line item of $2 billion for local streets and roads programs including the Active Transportation Program (ATP) and Trade Corridor Enhancement Program. Cities should remain cautiously optimistic on this investment as more details are unveiled for discussion in the summer months.
Water and drought:
The legislature approved setting aside $3.4 billion for a water and drought resilience package to be negotiated throughout the summer.
Budget negotiations are far from over, and additional work will continue in the coming days and weeks. Cal Cities will continue to call on the Legislature and Governor to provide direct and flexible fiscal relief for cities and fight for additional resources that cities need. Cal Cities will also remain actively engaged in the trailer bill process, to ensure that funding for cities in key priority areas is distributed transparently, equitably, and respect local decision-making.