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Washington Pays for Buildings. Rent Is Left to Chance.

Michealle Gady

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Paying for the Last Link: A Six-Part Series on Housing Finance in Washington, Part 3 of 6

In this series, I have argued that Washington can identify people who need housing but too often cannot provide the last link in the chain of care I described in July: a home. The previous article described the two ways public money pays for housing (money for buildings and money for people) and why the lowest-income households need both. Washington’s recent choices show how much more reliably the state has funded one than the other, and the people waiting in its shelters are the ones who feel it.

Washington Funds Buildings More Reliably Than Rent

On the capital side, Washington has made real commitments. The Legislature put $605 million into the Housing Trust Fund for 2025–27 and added $123 million in 2026. That same session, it also passed three laws that make building easier:

The rent assistance side looks very different. In 2021, the Legislature created a $100 surcharge on recorded documents to fund rental assistance, project-based vouchers, operating support for permanent supportive housing, and other homelessness services. Washington has funded homelessness services partly from document recording fees since the early 2000s. The 2021 surcharge was a meaningful step, but it deepened the system’s reliance on real estate transactions. According to the Washington State Department of Commerce’s 2025 annual report on homelessness, recordings in Washington have run below their historical median in each of the last three years, and the amount collected has barely grown even though the charge per document has risen over time. Lawmakers broadened the fee in 2025, a change the state estimated would raise about $35 million over two years for state homelessness and housing services, but the money still rises and falls with the housing market. Lawmakers introduced bills to create time-limited state rent assistance programs in 2023, 2024, and 2025, but none became law.

The consequences show up in the shelter data. In state fiscal year 2025, only 14% of households leaving shelters funded by the state’s Consolidated Homeless Grant moved into stable housing. The state is adding units, though not as fast as it needs to. Households with the lowest incomes cannot reach most of those units without ongoing help, and that help is scarce and unstable. That gap helps explain why so many people wait in shelters with nowhere to go next.

Durability Cuts Both Ways

In my July piece, I argued that the social care models we built over the past decade are reversible within a single budget cycle. North Carolina’s Healthy Opportunities Pilots lowered Medicaid costs by an average of $164 per enrollee per month, yet the program shut down at the end of June 2025 when the state legislature did not fund its continuation. North Carolina lawmakers have since approved $25 million in one-time funding to restart the program: $9 million in state money and $16 million in federal matching funds. That falls well short of the amount requested to bring the program back at full strength. Because the money is one-time, the program will again depend on the next budget. As of September, the state had not said when services would resume.

Housing finance has the same vulnerability, and it is concentrated in rent assistance. Lawmakers have to renew a recurring subsidy every budget cycle, and every renewal is a chance to cut it. The federal Emergency Housing Voucher program, described in Part 2 of this series, shows how quickly that can happen. When federal funding ran short in 2026 and the program began winding down, New York City’s housing authority said in April that it could not guarantee families a place in another program. Families faced months of uncertainty until a September stopgap law made the remaining households eligible for tenant protection vouchers.

Washington’s own Housing and Essential Needs program shows the slow version of the same problem. The state-funded program, which provides rent assistance to adults who cannot work, was designed as a temporary bridge. In the words of Commerce’s report, the subsidy “has effectively become permanent.” In 2025, the state Legislature extended it again, letting clients approved for federal disability benefits stay in the program with a gap subsidy. Meanwhile, referrals have grown faster than the program’s budget.

Even dedicated funds are not safe. Colorado voters approved Proposition 123 in 2022 to set aside roughly $300 million a year for affordable housing. In 2026, the Colorado legislature moved $130 million in Proposition 123 housing money to the general fund.

Buildings are more durable than budgets, but they are not immune. Public ownership did not protect federal public housing, which deteriorated for decades, in large part because federal funding for its operation and repair fell chronically short. A building lasts only as long as someone keeps paying to run it, just as rent assistance lasts only as long as lawmakers keep funding it. Washington needs to protect the buildings it has paid for, put rent assistance on the most stable revenue available, and spread that support across enough sources that losing one does not shut the system down.

Local, State, and Federal Governments Are Moving in Different Directions

Commerce’s annual report cites evidence that Housing First produces more lasting housing stability than the alternatives. Housing First moves people into permanent housing right away and offers support services once they are there. The report cites a research review in which Housing First outperformed programs that required people to enter treatment before they could get housing. Some of the state’s own cities, and now the federal government, are moving away from that approach.

For cities, the turning point was a 2024 U.S. Supreme Court decision. In City of Grants Pass v. Johnson, the Court held that enforcing camping bans in public spaces is not cruel and unusual punishment under the Eighth Amendment, which leaves cities free to enforce those bans even when they lack enough shelter beds. Since then, Commerce’s report notes, cities including Lakewood, Kennewick, Richland, Auburn, and Washougal have adopted ordinances that prohibit camping, sitting or lying down, or panhandling, either in parts of the city or citywide. The report also cites research showing that these laws interfere with the steady contact that outreach staff and case managers need with the people they serve, which slows the work of getting those people housed.

The federal government has turned against Housing First more directly. In May 2026, the U.S. Department of Housing and Urban Development released its 2025 national homelessness count; in announcing it, Secretary Scott Turner stated that “housing first” has “failed to meaningfully reduce homelessness.” The administration’s fiscal year 2027 budget request goes further, proposing five-year time limits and work requirements for many households receiving HUD rental assistance. Work requirements are the kind of precondition that Housing First is designed to avoid.

Washington providers, many of whom depend on state, federal, and local dollars, now answer to governments that disagree about what works.

Why This Belongs in the Health Conversation

For most of the past decade, the health and social care integration movement has relied on Medicaid to pay for housing-related services, such as help finding a unit, tenancy support, and case management. Washington’s Apple Health and Homes initiative connects people who have complex health needs with housing and with supportive services that Medicaid pays for. Medicaid generally does not pay for the housing itself.

As I noted in my July piece, Medicaid’s role is also narrowing. In March 2025, the Centers for Medicare & Medicaid Services rescinded its guidance on health-related social needs, which had laid out how states could use Medicaid to pay for housing-related services. Congress then enacted Medicaid changes that the state’s Health Care Authority estimated could cost between 200,000 and 320,000 Washington residents their coverage. Some of those losses began on October 1, 2026. According to the Health Care Authority, about 11,000 residents were projected to lose coverage that day under new federal limits on Medicaid eligibility for many lawfully present immigrants. A court order has preserved coverage for more than 800 of them. Medicaid pays for the supportive services in Apple Health and Homes. Commerce anticipates that the program will likely serve fewer people as eligibility tightens, work requirements begin, and state funding falls, unless state or federal policymakers act. People who lose coverage while relying on Medicaid-funded housing services will still need help finding and keeping housing. Unless the state, counties, or providers pick up the cost, many will go without it.

This is where the chain I described in July breaks. Health care can handle the first three links: a care coordinator can identify a patient’s housing need, make the referral, and coordinate the services. The fourth link, a home the patient can afford, depends on housing finance, because health care financing covers, at most, six months of back rent for a narrow group, not the unit itself or ongoing rent. If no one funds that link, the chain stops before delivery.

Next in this series: two ways Washington could make its housing capital go further, what the evidence shows for each, and the risks the state would need to manage.

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