California Governor Gavin Newsom showed some fiscal restraint for once and vetoed a bill that would’ve handed illegal immigrants access to the state’s taxpayer-funded Dream for All Shared Appreciation Loans program. Looks like the governor finally found a limit to his spending spree—who knew he had it in him?
The Dream for All Shared Appreciation Loans program provides significant down payment assistance to homebuyers, offering up to $150,000 for those lucky enough to qualify. The bill would have allowed illegal immigrant homebuyers to receive the same benefits.
Newsom finally realized that the state’s budget situation was too critical to ignore. Newsom’s decision wasn’t a courageous stand against frivolous spending. In his veto, he specifically pointed to the program’s “finite funding” as the reason for slamming the door on this bill. The program quickly depleted $255 million in just 11 days last year, running out of funds in record time. California’s budget is already stretched thin; thanks to a whopping $47 billion in cuts, shifts, and deferred spending, Newsom likely realized that continuing to throw money at this program wasn’t the most brilliant idea. Or maybe he finally had a moment of clarity about the state’s fiscal disaster.
The Dream for All program itself is a bit of a head-scratcher. The idea behind it is simple enough: first-time homebuyers can get down payment assistance of up to $150,000 or 20% of the home’s purchase price without putting any money down or making monthly payments. Sounds great, right? Except there’s a catch. The state only gets its money back, plus 20% of the appreciated value, when the house is sold, refinanced, or transferred. It’s a no-risk loan for the homebuyer, and the state is left hoping housing prices keep going up so they can recoup the money.
The program was wildly popular—so much so that 1,700 applicants burned through the entire budget in less than two weeks. And here’s where it gets interesting: there’s no rule on how long someone can hold on to the house. If a homeowner wants to keep the property indefinitely, the state might never see that money again. Some clever legal trust arrangements could ensure the bill never comes due, leaving the government stuck holding the bag.
Republicans are thrilled with Newsom’s veto. Senate Minority Leader Brian W. Jones, R-San Diego, didn’t waste any time patting the governor on the back. “Governor Newsom listened to our calls and rightfully vetoed the bill to give illegal immigrants free home loans,” Jones said, relishing the moment. The phrase “free home loans” might be a bit of a stretch, but when it comes to politics, accuracy is often the first casualty.
Jones and other Republicans have long argued that the Dream for All program is overcrowded and underfunded, so expanding it to illegal immigrants would be an irresponsible move. If the program can only support 1,700 applicants in a state with over 39 million people, how could it possibly handle more demand? Meanwhile, Democrats who supported the bill claimed that illegal immigrants, like other applicants, pay taxes and should be allowed to participate in the program.
The heart of the issue is California’s ongoing housing crisis. The state is facing a shortage of about 4.5 million homes, and sky-high housing prices are pushing residents to the breaking point. Many are considering fleeing the state altogether, looking for cheaper alternatives in places like Texas. The Dream for All program was supposed to help alleviate some of this pressure by giving people a leg up in the housing market with down payment assistance. The program itself contains a glaring contradiction.
The state claims it wants to lower housing prices by increasing the supply of homes, but it also has a financial incentive to keep those prices high. The program only works if housing prices continue to climb, allowing the state to cash in on the appreciated value when homes are sold or refinanced. So, while the government claims to be working on making housing more affordable, it’s also quietly hoping that home prices stay inflated.
With the veto in place, illegal immigrants won’t be getting taxpayer-funded down payments for homes anytime soon. Meanwhile, California’s housing crisis rolls on, and the state’s budget woes don’t seem to be going anywhere. Whether Newsom’s veto was a sign of newfound fiscal responsibility or just a desperate move to plug a financial hole, one thing’s for sure: this won’t be the last time the state’s spending habits come under fire.
