California Approves $351.7 Billion State Budget
California lawmakers have approved a new $351.7 billion state budget for Fiscal Year 2026-27, making it one of the largest budgets in state history.
Governor Gavin Newsom has since signed the spending plan, which includes new investments in housing, homelessness programs, infrastructure, and climate initiatives while also increasing certain taxes and limiting some business tax benefits.
For commercial real estate professionals, this budget includes several issues worth watching.
What You Need to Know
Increased Focus on Homelessness and Housing
The new state budget continues funding for housing initiatives and programs intended to address homelessness throughout California. State leaders are positioning these investments as part of California's broader effort to address affordability and improve conditions in communities across the state.
For our members, successful implementation could help improve conditions surrounding commercial properties, support business districts, and encourage greater economic activity in urban centers.
Business Taxes and Revenue Changes
To help balance the budget and prepare for future deficits, lawmakers approved several revenue measures, including changes affecting business tax benefits and new taxes in certain sectors. The budget also continues discussions around additional future revenue proposals.
While there are no major new taxes specifically targeting commercial real estate in this budget, the continued search for new revenue sources highlights the importance of remaining engaged in state policy discussions.
More Funding for Infrastructure and Economic Development
Funding remains in place for key infrastructure projects, housing initiatives, and programs intended to promote long-term economic development.
Improvements to infrastructure can support business growth, make commercial areas more attractive to tenants, and improve access to employment centers.
Continued Climate and Sustainability Investments
California remains committed to climate goals, with ongoing funding and policy support for clean energy and sustainability programs. Commercial buildings will likely continue to see new opportunities for incentives, but also additional regulatory expectations in the years ahead.
How It Impacts You
This budget could affect BOMA/GLA members in several ways:
- Public safety and homelessness programs may improve conditions around office and retail properties if funding is effectively implemented.
- Future tax discussions could create additional financial pressures on businesses and property owners.
- Infrastructure investments may help support leasing activity and economic recovery in key commercial districts.
- Sustainability initiatives could bring both new opportunities and new compliance requirements for building owners and managers.
Stay Connected
California continues to face long-term budget challenges despite stronger-than-expected revenues and significant reserves.
State leaders have acknowledged that future deficits remain possible, meaning discussions around taxes, fees, and regulatory programs are far from over.
For the commercial real estate industry, staying engaged in Sacramento remains critical.
We will continue advocating for policies that:
- Support economic growth and job creation
- Improve public safety and homelessness outcomes
- Encourage incentives rather than unfunded mandates
- Protect commercial property owners from additional taxes and regulatory burdens
As implementation of this budget moves forward, we will continue monitoring developments and keeping members informed about any policies that could affect building operations, investment decisions, and the long-term health of Southern California's commercial real estate market. Follow BOMA on the Frontline for updates.
