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As we welcome the Legislature back today for the first day of the new legislative session, CHC is making preparations for two big changes from years’ past.
The first, of course, is all of the new faces in the Capitol: Thanks to a combination of term limits, redistricting, and other factors, almost 40 of the 120 members being sworn in today are taking their seats for the first time—and we know we have work to do to educate them about the complex world of affordable housing.
The second big difference is the budget forecast: After years of strong revenues and budget surpluses, even during the peak of the pandemic, the uncertain economy is finally threatening the state’s fiscal outlook. The Legislative Analyst’s Office is projecting a $24 billion deficit for the 2023-24 budget year—a number that could climb higher if the state dips into a recession.
That may sound like a lot of money, and it is. But as Asm. Phil Ting and others have pointed out, the state has done a lot to prepare for this scenario, and the state has at least $23 billion in reserve that it can rely on to weather a relatively short downturn.
What does this mean for affordable housing? For starters, we can expect a more restrained January budget proposal from the Governor than we’ve seen in recent years, while the Administration and Legislature wait for tax returns in April and updated budget numbers in May.
There is still a chance the economy could turn around, but even if it doesn’t, we will not be slowing down or scaling back our advocacy for affordable housing.
We have been in this situation before, and we know that when the state faces an economic downturn, two things are true: One, struggling Californians need affordable housing more than ever. And two, affordable housing providers, because of the counter-cyclical nature of our industry, are uniquely suited to continue building homes for the state’s lowest-income households when the economy slows down, providing tens of thousands of steady jobs for construction workers even when other parts of the homebuilding pull back their operations.
To do this essential job, we need public investments to continue.
This is the message we’ll be sharing over the next few months with the new Legislature and Governor, and we hope you’ll help us do the same with your local members.
Thank you, as always, for the work you’ve done to get us this far. We look forward to the job ahead next year.
Happy holidays to you and your families!
Sincerely,
Ray Pearl, Executive Director
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