Proposition 123 Revenue Uses

Joint Budget Committee. Among other things related to affordable housing, Proposition 123, which was approved by the voters at the 2022 statewide election, created the affordable housing support fund (fund) and continuously appropriated money from the fund to the division of housing within the department of local affairs (department) for enumerated uses relating to an affordable home ownership program and a program serving persons experiencing homelessness and to the division of local government, also within the department, for enumerated uses relating to a local planning capacity development program. A specified percentage of money from the fund is allocated for the implementation of each program, and from each allocated percentage the division of housing or the division of local government, as applicable, is permitted to use up to 5% to pay for the direct and indirect costs of administering each program.

Beginning in state fiscal year 2026-27, the bill makes the expenditure of up to 5% of the money from each program's allocation of funding for administration of each program subject to annual appropriation by the general assembly and clarifies how that 5% amount is calculated.

The bill also allows the division of housing, subject to annual appropriation by the general assembly, to expend money under the program serving persons experiencing homelessness for:

• Capital needs at 2 state-owned supportive residential communities for persons experiencing homelessness (supportive residential communities); and
• Direct and indirect costs of operating the 2 supportive residential communities.

Proposition 123 also included a prohibition on the general assembly appropriating funds from the fund and the affordable housing financing fund to supplant other state support for affordable housing projects. The bill clarifies when appropriations from the fund and the affordable housing financing fund would violate this prohibition.

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)