California Governor Gavin Newsom and Cabinet members walk an encampment site in Oakland, Calif., on April 15, 2022. (Office of the Governor via Bay City News)

California will withhold $1 billion in funding until the state’s local governments develop new plans to reduce homelessness, Gov. Gavin Newsom said Thursday.

Newsom said he plans to meet with local officials across the state later this month to review the state’s approach to reducing homelessness and determine if new strategies are necessary, but until then the state will withhold funding from the Homelessness, Housing, Assistance and Prevention grant program.

The current plans submitted by every county in the state and 13 of its largest cities under the grant program would only reduce homelessness by 2 percent by 2024, according to Newsom, a rate he called a failure “to meet the urgency of this moment.”

“At this pace, it would take decades to significantly curb homelessness in California — this approach is simply unacceptable,” Newsom said in a statement. “Everyone has to do better — cities, counties, and the state included.”

The state has provided more than $1.5 billion to date across two rounds of HHAP grant funding. The funding is dispersed based on a state-approved plan submitted by each jurisdiction that reduces the number of unsheltered homeless residents and boosts permanent housing units.

San Jose Mayor Sam Liccardo pushed back somewhat on Newsom’s assertion that local governments are not pulling their weight, arguing that state and local officials should “put down the megaphones and pick up the shovels.”

Liccardo suggested that the state should make better use of prefabricated, quick-build housing as a rapid housing solution.

Liccardo also called for more collaboration with construction labor officials to expand prefabrication factories, for 10 percent of the state’s budget surplus to be dedicated to housing construction and for requirements that land from all public sector agencies be made available for quick-build housing tracts and that unsheltered residents must accept housing when it is offered.

“With this approach, we’ve moved more than 700 people off the street in two years, and on Tuesday, we approved two more projects that will house hundreds more,” Liccardo argued. “More than 80 percent of our quick-build residents remain housed a year later.”

San Francisco Supervisor Ahsha Safai expressed support for Newsom holding off on dispersing homelessness funding and called on the city’s Department of Homelessness and Supportive Housing to be more aggressive in its goals of moving unsheltered residents off the streets and into permanent housing.

San Francisco would have received $47.3 million from the $1 billion pool of funding.

The state’s Department of Housing and Community Development already launched an investigation in August into San Francisco’s plodding and largely unsuccessful efforts to build more housing.

“San Franciscans know that the government’s homelessness response is not working,” Safai said. “The first step is to set aggressive goals that make real progress.”