Newsom’s Proposed Budget Cuts Threaten Homelessness Efforts in Santa Clara County
Nonprofit leaders and advocates warn that Gov. Gavin Newsom’s proposed state budget for the 2026-27 fiscal year will significantly hinder efforts to combat homelessness in Santa Clara County. The governor’s plan allocates $500 million for Homeless Housing, Assistance and Prevention (HHAP) funding statewide, which is half of previous typical allocations, while simultaneously introducing more stringent requirements for local governments to access these resources.
Santa Clara County, frequently cited as one of the wealthiest regions in the nation, saw its homeless population rise to more than 10,700 people, up from 9,903 in 2023.
Budget Disparities and Funding Tensions
The governor’s proposal faces competition from the State Senate, which has advocated for a more robust $1 billion investment for the latest round of HHAP funding, with an additional $1 billion earmarked for the following cycle. According to Elizabeth Funk, CEO of DignityMoves, the governor’s plan creates a difficult paradox by demanding that local cities take greater action while providing fewer resources to support those mandates.
The current HHAP funding model requires cities to adopt homeless encampment policies that align with state standards—which emphasize the urgent removal of encampments—and mandates local matching funds. San Jose has already moved to comply with these state directives, including the recent decommissioning of a large encampment in East San Jose known as “the Jungle.”
Samantha Carter notes that the tension between state funding strings and local housing crises highlights a systemic disconnect. While the state is moving to consolidate development agencies for efficiency, the lack of new affordable housing funds, such as tax credits, may force cities to prioritize visible encampment clearing over the long-term work of building permanent, low-income housing units.
The Affordability Crisis
Beyond HHAP funding, the governor’s budget lacks new provisions for affordable housing, including low-income housing tax credits. Jennifer Hark Dietz, CEO of People Assisting the Homeless (PATH), stated that without sufficient investment in housing-focused solutions, communities risk addressing the visible symptoms of homelessness rather than its root causes.
The financial pressure on residents remains a primary driver of the crisis. Data from Zillow indicates the average rent for a two-bedroom apartment in San Jose is approximately $3,200. With half of all San Jose families considered rent-burdened—spending more than 30% of their income on housing—advocates like Sandy Perry of the South Bay Community Land Trust argue that the state must shift its focus toward rent control and prevention to stop the inflow of residents into homelessness.
What Happens Next
The final state budget is expected to be settled by June 15, following ongoing negotiations between the California Legislature and the governor’s office. The final outcome could determine whether the state adopts the Senate’s $1 billion proposal for affordable housing programs and tax credits, or if the governor’s more restrictive budget prevails. If the state moves forward with reduced funding, local agencies may be forced to make difficult operational choices regarding shelter services and outreach programs that have historically relied on HHAP grants.
Frequently Asked Questions
Why is the proposed 2026-27 HHAP funding controversial?
The $500 million allocation is half of what has historically been provided, and critics argue the funds come with “strings attached,” such as strict requirements for local encampment policies and matching funds, which limit local flexibility.
How does San Jose’s rent burden impact homelessness?
With the average two-bedroom rent at $3,200, half of San Jose families are rent-burdened. Advocates suggest this affordability crisis is the primary factor driving homelessness, outranking other issues such as mental illness or drug use.
What is the difference between the Governor’s and the Senate’s budget proposals?
The Senate has proposed $1 billion for HHAP funding and an additional $1 billion for affordable housing programs, including tax credits and homeownership initiatives, which are largely absent from the governor’s current proposal.
How do you believe your local community should balance the need for immediate shelter services with the long-term goal of increasing affordable housing units?