Zero Dollars, Zero Plan: Sacramento Zeroed Out Homelessness Funding Then Called It Responsible Governance
There is a particular kind of political audacity required to spend $24 billion on a problem, watch it get worse, and then propose zeroing out the budget while running for president.
That is where California finds itself in May 2026.
Governor Newsom’s January 2026 budget proposal eliminated all state General Fund dollars for the Homeless Housing, Assistance and Prevention program, known as HHAP — California’s primary flexible funding mechanism for local homelessness services. HHAP had started at $650 million in 2019-20 and grown to $1 billion by 2024-25. Under the Newsom January proposal, it would receive nothing in the current fiscal cycle. Not a reduction. A zero.
Service providers, county administrators, and housing advocates responded with alarm — and they were right to. HHAP is the only significant state funding stream that gives local governments the flexibility to design homelessness programs tailored to their specific conditions. Without it, cities and counties cannot sustain shelter capacity, street outreach teams, transitional housing programs, or the case management that actually moves people from encampments into permanent housing.
After months of pushback from mayors across the state, the Legislature suggested restoring $500 million for HHAP in the 2026-27 fiscal year. But that money is contingent on final budget negotiations, not guaranteed. It also represents a 50 percent reduction from prior allocations. The May 2026 revision adds new compliance requirements — cities must adopt encampment ordinances, align with state policy frameworks, and demonstrate they are leveraging local resources — without providing any new money to meet those demands.
The California State Association of Counties called it plainly: “Struggling Californians are on their own.”
Meanwhile, the spending that does remain is increasingly shifting away from solutions that work. The California Budget Center’s February 2026 analysis found that state investments have migrated toward temporary housing and institutionalization responses, while permanent housing.
funding has been cut or not reappropriated. Research consistently shows that Housing First approaches — which prioritize getting people into stable housing before addressing other conditions — produce better long-term outcomes than shelter-cycling or criminalization. Sacramento is moving in the opposite direction.
Medi-Cal, another pillar of the homelessness response, is also on the chopping block. The May Revision proposes narrowing Enhanced Care Management eligibility and cutting Community Supports — programs that coordinate intensive services for people with complex health and housing needs. These cuts reduce General Fund spending by $41.4 million in 2026-27 and $99.2 million ongoing.
The math does not work in anyone’s favor who is sleeping outside.
What Sacramento has constructed over five years is a funding architecture that is chaotic by design — enough money to show a commitment, not enough accountability to show results, and a budget process that treats homelessness spending as discretionary line items to be trimmed when the political winds shift. The people on the streets do not have the luxury of waiting for the next fiscal cycle.
Sources: California Budget Center, February 2026; Davis Vanguard, February 2026 and May 2026; CalMatters, June 2025 and January 2026; CalBudgetCenter.org, May 2026 May Revision analysis.*