Gov. Gavin Newsom wants to dedicate billions of the 2021 budget toward addressing the state’s housing and homelessness crisis, he said Friday, laying out a proposal that includes funding to expand a successful pandemic housing program, increase living options for seniors and add beds in behavioral health facilities.

The budget proposes $1.75 billion in new investments for homeless housing, including $750 million to continue Project Homekey — the pandemic program that helps cities and counties buy hotels, apartments, dorms and other buildings and turn them into long-term homeless housing. Newsom also asked the legislature for funding to stimulate affordable housing construction and augment the construction workforce.

“In these darkest moments of the COVID-19 pandemic, this budget will help Californians with urgent action to address our immediate challenges and build towards our recovery,” Newsom said in a written statement.

Last year, continuing efforts to temporarily get homeless Californians off the street and out of crowded shelters during the pandemic, the governor’s office allocated $846 million in federal, state and philanthropic funds toward Project Homekey. Using those funds, cities and counties purchased 94 buildings, creating more than 6,000 units of long-term homeless housing. The purchases were granted exemptions from certain permitting requirements, speeding up the process and allowing the deals to close in a matter of months instead of years.

“Because it worked, we might as well double-down on it,” Newsom said Friday. “And that’s what we’re proposing to do.”

Of the $750 million Newsom requested to continue the program this year, he asked the legislature to make $250 million available immediately. And under his proposal, all future Homekey acquisitions would be streamlined as past acquisitions have been.

Newsom also wants to make $750 million available for cities and counties to spend on expanding their behavioral health treatment centers. That money would be a one-time grant spent over three years. Another $250 million would go toward buying or rehabilitating long-term care facilities and housing for low-income seniors.

“In this pandemic year with federal aid to local governments being way below what it should be, I think what we’re seeing from the governor’s budget proposal is very positive — major new investments both to combat homelessness and to create more permanent supportive housing in partnership with local governments,” said Matt Schwartz, president and CEO of the California Housing Partnership.

But Schwartz and other activists are disappointed this year’s budget proposal doesn’t include a long-term plan or permanent funding streams to address the housing and homelessness crisis. The state needs to create 1.2 million more homes over the next 10 years, Schwartz said — an effort he estimates will require $10 billion a year.

“What’s still needed is a bigger-picture plan,” he said. Schwartz hopes the governor will address that during his upcoming State of the State speech.

To ramp up housing production throughout the state, Newsom, as he did in 2019 and 2020, proposed an additional $500 million in low-income housing tax credits — a major source of funding developers rely on to build affordable housing. And the governor has asked for $8.5 million to expand a construction apprenticeship program with the goal of bringing more workers into the construction trades.

To make sure California cities comply with requirements to build enough housing for their populations, Newsom wants to use $4.3 million to create a Housing Accountability Unit that will work with local governments.

“Let me just make this clear to all my friends,” Newsom said. “This is to monitor city council meetings. This is to monitor board of supervisors meetings, planning commission meetings. We’re not going to wait for an article to be written to be proactive in terms of holding local government accountable to increasing housing production.”

Assemblyman David Chiu, D-San Francisco, praised the proposed accountability unit Friday, as well as what he called the governor’s “continuing commitment to addressing our housing crisis.”

“While no budget is perfect, this proposal is good news for California,” Chiu wrote in an emailed statement. “I look forward to working with colleagues to get emergency support out the door immediately and pass a final budget in June.”

The $227 billion budget includes a $15 billion surplus and $22 billion in reserves, which have allowed Newsom to bring back some proposals shelved last year as COVID plunged the state into an economic meltdown. That includes CalAIM — Newsom’s plan to reform Medi-Cal so it better serves the state’s most vulnerable residents, including unhoused patients, foster children and people struggling with mental health and substance abuse. The proposal would cost $1.1 billion in the 2021-2022 fiscal year, which would grow to $1.5 billion in the 2023-2024 fiscal year.

Newsom on Friday also emphasized the need for the legislature to expand the state’s pandemic eviction moratorium, currently set to expire Jan. 31.

“We have to get that done,” he said.