City officials from throughout the state are sounding the alarm over the lack of certainty regarding homelessness funding in the 2025-26 State Budget. As legislative leadership and the Governor negotiate a final budget deal, city leaders are calling for an immediate and ongoing investment of $1 billion in the state’s flagship Homeless Housing, Assistance and Prevention (HHAP) grant program.
“Cities of all sizes are investing their own dollars to support our unhoused residents and connect them with the services they deserve, but without a strong investment from the state, their efforts are unsustainable,” said League of California Cities President and Rancho Cucamonga Mayor Pro Tem Lynne B. Kennedy. “If the state fails to invest in homelessness funding, homelessness programs statewide will be upended and the lives of thousands of unhoused residents will be endangered. Our cities are doing the work. Our residents expect the state to step up and invest to the scale of this crisis.”
The current legislative budget deal includes zero funding for homelessness in the 2025-26 budget and only an intent to fund HHAP — a key source of state funding for many communities — to only half its normal levels in 2026-27. Any reduction in funding may lead to interruptions in the vital services cities provide to unhoused residents. City leaders throughout the state are expressing their alarm over the absence of funding.
“While I am encouraged by the Legislature’s intent to fund HHAP in 2026-2027, doing so at half of the amount of previous rounds jeopardizes the progress we’ve made on addressing the homelessness crisis,” said Riverside Mayor Patricia Lock Dawson. “If Round 7 is cut in half, Riverside would lose more than 100 shelter beds, 35 housing units, and vital rental assistance and support services for nearly 100 households. That means people could be forced onto the streets almost overnight, threatening to undo years of progress.”
Federal and state reports demonstrate that targeted and sustained funding leads to decreases in homelessness. With a permanent, ongoing source of funding, cities of all sizes could develop long-term solutions that help the most vulnerable residents. Long-term, reliable funding would result in greater regional collaboration and more informed policymaking, allowing cities to build momentum and drive progress.
“Cities cannot address the burden of homelessness alone,” said San Luis Obispo Mayor Erica A. Stewart. “Here in San Luis Obispo, we have doubled our local contribution in recent years to over $3.5 million annually from our general fund to reduce homelessness. While we remain deeply committed to supporting our community, the lack of ongoing state funding continues to hinder our efforts and makes sustainable progress impossible.”
Cal Cities’ homelessness survey data highlights the scale of this challenge: 85% of cities have launched programs to address homelessness, yet 68% report that the number of individuals entering homelessness exceeds their ability to achieve a net reduction. The uncertainty of state support and growing financial strain threaten the sustainability of local efforts. In fact, 93% of cities expressed concern about maintaining current services over the long term.
“The City of Long Beach has leveraged state HHAP dollars efficiently, and we are seeing real results that are saving lives,” said Long Beach Mayor Rex Richardson. “These funds helped expand our shelter and services capacity, which contributed to a decrease in chronic homelessness. Now is not the time to take the foot off the pedal on our statewide homelessness response. We should double down on our efforts to expand housing and services to help more people permanently exit homelessness.”
Cal Cities is calling on the Governor and legislative leadership to find a permanent home in the budget for funding to prevent and reduce homelessness. The lack of homelessness funding in the current budget proposal poses an existential threat to homelessness programs statewide and endangers the thousands of unhoused residents who depend on these services.
“All people have value. Regardless of income, our residents should be able to afford groceries, pay their light bills and above all else, have a place to call home,” said Eureka Mayor Kim Bergel. “California cities of all sizes are committed to reducing homelessness and providing services, but our efforts alone are not enough. We need the state to invest in ongoing funding to ensure every Californian can afford a roof over their head and access the services they deserve.”
The cities below are a small sampling of those throughout the state that are making significant progress in supporting and reducing the number of unhoused individuals in their communities. Their work provides valuable insight into how cities are responding and underscores the need for a strong partnership from the state.
Bellflower has used over $9 million of its own money for shelter, housing, outreach services and encampment clean-ups — including on state- and county-owned properties — and outreach efforts to fill the gaps left by larger agencies. Bellflower has not been able to access HHAP dollars but leveraged its own funding and a county grant to open the New Hope Shelter, a 50-bed shelter that connects residents with services and housing.
Modesto has invested over 3.8 million in General Fund dollars over the last two years in permanent housing, shelter, job training, outreach, behavioral health and addressing encampments. Most recently, the city used its own funding, with contributions from the state’s Homekey program, continuum of care and private funding, to build Jenny’s Place, a 54-unit permanent housing project that cost $23 million.
Napa combined General Fund dollars with county, state and federal funding — including state HHAP and encampment grants — to increase housing and services and ultimately, reduce homelessness by 26% over three years. The city’s partnership with the county allowed them to pool resources and more effectively utilize available funding. Nearly 90% of all residents who exited homelessness are still housed.
Salinas, home to 50% of Monterey County’s homeless population, has leveraged $76 million in one-time grant funds to address homelessness, including building permanent supportive housing, emergency shelter and a navigation center. Without more support, the city may need to cut many of its outreach and service programs, including the navigation center, as early as this year.
Victorville used over 4.6 million city dollars to supplement grant-funded interim housing, outreach, encampment cleanups and the 170-bed Wellness Center, a first for the region. The city employs nine full-time workers to support these operations. But with no permanent, dedicated revenue source to sustain these programs, staff must continuously pursue new funding opportunities or risk tapping deeper into the General Fund.
Established in 1898, the League of California Cities is a nonprofit statewide association that advocates for cities with the state and federal governments and provides education and training services to elected and appointed city officials.