(Bloomberg) -- California Governor Gavin Newsom vetoed a bill that would have made undocumented immigrants eligible for state-backed home loans, rejecting a measure that had the potential to inflame one of the most contentious debates in this year’s presidential election.
The bill would have expanded an existing program, called California Dream for All, to include residents regardless of their immigration status. In his veto message, Newsom cited limited state funding as the primary concern.
“Expanding program eligibility must be carefully considered within the broader context of the annual state budget to ensure we manage our resources effectively,” the governor wrote.
Newsom vetoed the bill amid a tight presidential race in which immigration has become a major focus for both candidates. Vice President Kamala Harris, who like Newsom is a California Democrat, has promised to bring back a bipartisan border security bill to address illegal crossings. Former President Donald Trump, a Republican, has vowed to ramp up deportations and ban mortgages for undocumented immigrants.
California’s program took effect last year to help first-generation homebuyers get interest-free loan amounts for as much as 20% of a home’s value, with a $150,000 cap. Under the proposed expansion, applicants would have needed to provide either a taxpayer identification number or Social Security number to qualify.
The measure sparked fierce debate across party lines before being approved by lawmakers. Republicans slammed it and said the state’s resources should be used for legal residents. The bill’s author, Assemblymember Joaquin Arambula, argued that undocumented immigrants who pay taxes should also stand to benefit from publicly-funded programs.
The Democrats have a supermajority in the state legislature.
“I have always believed this bill is about fairness,” Arambula said in a statement. “The veto doesn’t change the fact that many people – including undocumented immigrants – dream of owning a home so that generational wealth can be passed to their children.”
The program is funded with taxpayer dollars and money generated by mortgage loans issued by the California Housing Finance Agency. No new applications are currently being accepted. The program didn’t get any new funds for next year due to a $27.6 billion budget shortfall.
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