State budget shortchanges Santa Clara County homeless response

At a time when the U.S. is reeling from social safety net cuts, Gov. Gavin Newsom’s proposed budget makes it even more challenging for groups to effectively address homelessness in Santa Clara County, nonprofit leaders and advocates said.

The governor’s proposed budget includes $500 million for Homeless Housing, Assistance and Prevention (HHAP) statewide for the upcoming fiscal year 2026-27 — half of what has normally been allocated. The need is far greater than the amount, which has been used to cover services such as homelessness prevention, temporary and permanent housing and outreach.

The State Senate’s proposed budget is more favorable then the governor’s with $1 billion for the latest round of HHAP funding and another $1 billion for the next round. The State Assembly has also said HHAP funding is a priority.

The California Legislature is in the middle of budget negotiations, with the state budget expected to be finalized June 15.

“(The governor’s proposed budget) makes it really difficult, and (the HHAP funding) comes with all sorts of strings attached,” Elizabeth Funk, CEO of nonprofit DignityMoves, told San José Spotlight. “On one hand (Newsom is) saying the local cities need to do their part, the cities need to step up, and then he’s not giving the resources to do it.”

San Jose has predominantly put HHAP money toward funding operations at its shelter sites. The newest round of HHAP awards comes with stringent requirements, including having a homeless encampment policy that aligns with the state’s, providing local matching funds and having a compliant housing element.

The state’s homeless encampment policy calls for cities to urgently remove encampments from public areas, and encourages localities to adopt policies making it illegal to camp in public. San Jose has swiftly removed encampments and instituted no encampment zones, including the most recent decommissioning of a large homeless encampment in East San Jose known as “the Jungle.”

In addition, Newsom’s proposed budget lacks any new funds for affordable housing, including low-income housing tax credits — one of the major sources for affordable housing projects. While the state is creating a new housing agency to streamline development funds for greater efficiency, it’s still unknown how it will interact with local dollars.

The State Senate wants to set aside $1 billion for affordable housing programs such as the Low-Income Housing Tax Credit program, as well as $1 billion in homeownership programs in addition to the $1 billion for HHAP this upcoming fiscal year.

“Across California, providers are working every day to help people move from homelessness to housing, yet the state continues to face a significant shortage of affordable homes,” Jennifer Hark Dietz, CEO of nonprofit People Assisting the Homeless (PATH), told San José Spotlight. “Without sufficient investment in affordable housing development and housing-focused solutions, communities risk addressing the visible impacts of homelessness without fully addressing its root causes.”

PATH provides supportive services for homeless people and has an affiliate that develops affordable housing.

More people in the county will fall into homelessness as rents rise and outpace wages. The average rent in San Jose for a two-bedroom apartment is about $3,200, according to Zillow. Half of San Jose families are rent burdened, meaning they spend more than 30% of their income on housing.

In Santa Clara County, one of the wealthiest counties in the nation, more than 10,700 people are homeless — an increase from 9,903 people in 2023.

A Mercury News analysis shows what sets the Bay Area apart from the rest of the country when it comes to homelessness is not mental illness, drugs or other factors but the sky-high rent, with the region ranking in the top 1% of costs.

“We all are living in an affordability crisis, and for anyone who can create funding streams and policy choices regarding reducing homelessness, it should be focusing on the affordability crisis,” Lori Katcher, board member at nonprofit Neighborhood Hands that connects people living on the streets to services, told San José Spotlight.

Sandy Perry, board president of the South Bay Community Land Trust, said in order to stop the flow of homelessness, the state and county need to focus more on homelessness prevention and rent control.

“Without increased renter protections, without an increased number of low-income units, they’re not going to stop the inflow into homelessness,” Perry told San José Spotlight.

Contact Joyce Chu at [email protected] or @joyce_speaks on X.