Gov. Gavin Newsom unveiled his proposed state budget Monday while also announcing a $46 billion surplus that could bolster San Francisco’s pandemic response, increase school funding and help build more affordable housing. 

Outlined in a more than 400-page document, the $286.4 billion budget—a 9% increase in spending from last year—would invest heavily in priorities like combating the spread of Covid and addressing climate change, as well as investing in schools, housing and crime prevention. 

Specific to San Francisco, the governor targeted an increase of $10 million to the UC San Francisco Dyslexia Center and $2 million to UC Hastings College of the Law. While the full impact of Newsom’s budget on the city is not yet clear, state-run programs like Covid testing sites and schools, which are funded with state dollars, will reevaluate their budgets in light of Newsom’s announcement.

“This year we are in a substantially better place than we projected last January,” Newsom said during a virtual press conference. 

Monday’s budget release is just the first step in the process—the spending priorities will be revised in May before being finalized and approved by the Legislature in mid-June. Here’s a quick breakdown of where some of the money may go and how it could affect San Francisco:

Schools

• Newsom called out two local universities in his budget proposal as he looks to spend $10 million to fund dyslexia research at UC San Francisco Dyslexia Center and $2 million to support operating costs at UC Hastings College of Law. Newsom struggled with dyslexia as a child and recently published a children’s book on the learning disability called “Ben & Emma’s Big Hit.”
• Total funding for K-12 schools in Newsom’s budget comes out to $119 billion, bringing per-pupil spending to $20,855—the highest total ever. That would boost funding for San Francisco Unified School District’s public schools, which serve 57,000 students, and comes amid a push for expanded Covid safety measures in schools. SFUSD reported a 3.2% drop in enrollment last year, so the funds could help address the district’s budget crisis. 

Housing

• In total, the proposed state budget includes $9 billion for housing resources.
• A state mandate could require San Francisco to create 82,000 housing units before 2031, according to an early draft of the plan. SF initiatives, such as Mayor London Breed’s “Cars to Casas,” have recently focused on restructuring zoning laws to incentivize the construction of multi–family homes.  
• Monday’s state budget draft offers a proposed allocation of $1 billion over the next two years aimed at accelerating these developments in downtown–oriented areas. An additional $500 million in statewide grants would further incentivize cities to upzone single–family housing units. 

Homelessness

• The 2021 budget allocated $12 billion from 2021–2023 to address homelessness through 2023. In addition to this, the 2022 budget proposes an additional $2 billion over the next two years to expand housing opportunities and behavioral health infrastructure.
• In 2021, the state allocated $5.8 billion for Project HomeKey, which allowed San Francisco to purchase 25 hotel rooms and house 2,300 total rooms at the peak of the program. The new budget doesn’t include any additional funds for this program, but FEMA announced in November that cities could apply for reimbursement on temporary Project RoomKey units until April 1. The remaining funds will be used to transition people into permanent housing and close down the existing hotels, according to a representative from the Department of Homelessness and Supportive Housing. 
• San Francisco is expecting to receive a portion of a $50 million Encampment Resolution Grant this spring. The new proposed budget includes an additional $500 million to expand this program in the interest of rehousing strategies for the homeless, as well as $1.5 billion over the next two years to implement tiny homes or other alternative housing settings. 

Covid

• The state plans to invest $1.4 billion to expand testing. Newsom is urging the state Legislature to immediately approve the funds through an emergency measure as residents in San Francisco and across the state struggle to access tests during the Omicron surge. Another $1.3 billion is set to go toward vaccine distribution, hospital surge efforts and contact tracing. 

Small Businesses

• Newsom’s budget waives filing fees for new businesses and allocates $150 million for those waitlisted in past rounds of the state’s Small Business COVID-19 Relief Grant Program. These and other programs have helped lift San Francisco’s businesses out of pandemic-related hardship. 

Opioid Crisis

• The budget attempts to address the state’s opioid epidemic by adding $96 million to the general fund for the Medication Assisted Treatment Expansion Project, which applies to a myriad of treatment programs. 
• Also mentioned is an $86 million one-time settlement geared toward creating a public awareness campaign for youth opioid education. 

Crime

• Newsom proposes $128 million over three years to help local police and prosecutors respond to organized retail theft crimes, including funding for the state Attorney General and the California Highway Patrol. San Francisco had its own well-publicized incidents this winter, which led to the arrests of nine people and charges for the coordinated burglaries in Union Square.