Governor vetos SB-5 affordable housing bill

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Governor's mansion
California Governor's Mansion in Sacramento

Gov. Gavin Newsom says he has vetoed a bill to authorize up to $2 billion in annual state funding for affordable housing projects in California.

Days announcing the veto on Senate Bill 5, Newsom on Sunday (Oct. 13) indicated he wasn’t likely to sign off on expensive measures due to the budget’s financial limitations.

“The one thing that concerns me and should concern everybody is our ability to balance the books, balance the budget,” Newsom said earlier. “There are a lot of things I want to do but there are certain fiscal constraints that preclude us from doing it. So I think you will see a number of bills where I wish we were in a position to support those bills, but the economic conditions do not necessarily support those bills. Those are the toughest ones for me.”

“Legislation with such a significant fiscal impact needs to be part of budget deliberations so that it can be considered in light of other priorities,” he said in his veto message.

If Newsom hadn’t issued the veto, the legislation would have shifted millions of dollars from local property tax revenues to pay for a variety of affordable housing projects over the next three decades.d Local jurisdictions would have applied for the funding, to be used for initiatives like transit-oriented development and infrastructure planning.

A statewide committee would then have reviewed the applications through a rubric that considered the number and type of units the project promised, with a third of the proposed units required to meet “affordable” criteria, according to a published report in the Sacramento Bee.

The law would have kicked off with a $200 million investment in 2021, to be increased gradually to reach an eventual annual cost of $2 billion by 2029. The fund would then have to backfill any money that schools would otherwise have received.

The Legislature would have the option to suspend the funds during a recession or economic slowdown.

Republicans opposed the bill, and some teachers organizations also believe it could threaten education funding across the state.

“Should California face another recession, this measure would harm schools by leaving them fiscally vulnerable to jeopardizing the most stable source of revenue they would receive should Proposition 98 be suspended,” the California Teachers Association wrote, referencing the statewide formula that sets aside state money for schools and community colleges.

SB ‘s author, San Jose Democrat State Sen. Jim Beall said the legislation would have added financial urgency to the state’s housing crisis.

“No other piece of legislation signed by the governor provides the expediency of SB 5 to get construction started and people into homes they can afford,” Beall said. “Zoning and streamlining alone will not result in any meaningful affordable housing production because local governments are left without a partner to support housing construction. Vetoing SB 5 kicks the can down the road and leaves local governments with fewer options and more burden to shelter residents.”

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