The Legislative Analyst’s Office released its fiscal outlook on November 16th, warning that the State faces an estimated $24 billion deficit in 2023-24 and deficits of between $8 and $17 billion in subsequent years. The report includes a look at economic conditions, anticipated revenues, the impacts of inflation, and a discussion about reserves. It also makes recommendations to the Legislature, as members consider next year’s budget, on ways to bridge the expected revenue gap.
For housing, the concern comes from the report’s recommendations that the Legislature consider pausing, delaying, or reconsidering some of the $75 billion in one-time spending approved over the past two years. The report specifically highlights a $500 million program to clean up homeless encampments across the State. But there are other housing funds that are one time and could be impacted. Additionally, efforts to increase funding for housing and homelessness are likely to be challenging in the coming year. Advocates have been planning on making an ask for more funding for affordable housing, homeownership, and homelessness.
The Governor is expected to release his budget proposal on January 10th, which will kick off the budget season. The projections will be updated along the way, leading up to the final budget approval in June. Because housing and homelessness top the Governor’s list of priorities, advocates are hopeful that more housing funding is included in the budget proposal despite the fiscal challenges.