SACRAMENTO (CBS SF / AP) — Gov. Gavin Newsom proposed a $1.75 billion plan for housing Thursday and threatened to withhold transportation money from local governments that don’t build their fair share, declaring he’s not playing “small ball” on the housing crisis impacting the Bay Area and California.

The new Democratic governor also proposed spending $500 million for regions to build emergency shelters, navigation centers and other supportive housing to battle the state’s growing number of homeless.

“Homelessness is not a local concern in a few big urban centers, it’s not just a regional concern in urban metros, it is a statewide concern,” Newsom said. “Everybody has an obligation to step up and step in and do their job.”

• ALSO READ: 9 Astonishing Numbers On The Bay Area Housing Crisis In 2018

Newsom announced his plans as part of a $144 billion state budget proposal, his first major spending plan as governor. Legislators still have a say over the budget, which must be finalized by June.

Newsom is a former mayor of San Francisco, and he acknowledged that local leaders might not like the strings he’s attached to the housing budget. For example, the governor wants to tie transportation money from a recent hike in gas and vehicle taxes to more affordable housing.

“To me, transportation is housing, housing is transportation,” he said, adding that if local governments are “not hitting your goals, I don’t know why you’re getting the money.”

California is in the throes of a housing crisis, with far fewer units than needed to house the state’s nearly 40 million people and rising rents. Newsom wants to build 3.5 million new units, saying past goals weren’t ambitious enough. When housing is taken into account, California has the nation’s highest poverty rate, and it also has more homeless people than any other state.

The Democratic mayors of San Francisco and Los Angeles, both cities dealing with visible homeless populations and high rents, welcomed leadership from the state. Mayors of larger cities have pleaded for help from Sacramento as they absorb fallout from the housing shortage.

But Darby Kernan of the California State Association of Counties said tying gas and vehicle fee hikes to housing money isn’t the right idea. Opponents of the fee hikes tried unsuccessfully to repeal them last November, and Kernan said her organization doesn’t want to give the public a reason to question the tax hike.

She also said withholding money from counties isn’t fair.

“We can do all of the steps there are to plan for units, but we don’t build the units,” she said. “That is private industry, and so threatening to withhold our critical transportation dollars for something we don’t actually do, that is concerning.”

Newsom also said he wants to streamline the review process for new homeless shelters under the California Environmental Quality Act, noting that the Legislature will waive the act’s requirements for flashier projects such as sports stadiums. Reforming the massive environmental law is a tricky political topic that Newsom’s indicated he wants to engage on.

“I know it’s also controversial, but seriously, if you can create CEQA waivers to expedite stadium projects, and we do all the time, we sure as hell should be able to do that for 130,000 souls that are out on the damn streets and sidewalks in this state,” he said.

Kathryn Phillips, director of Sierra Club California, said the organization generally opposes “jamming” reviews through the court system. But she said that addressing homelessness doesn’t have the “luxury of time” that building a new sports stadium has.

The issues of housing and homelessness are deeply related in an expensive state where two-thirds of renters pay more than $1,500 a month for shelter, says Paul Tepper, executive director of the Western Center on Law And Poverty, which works on behalf of poor Californians.

In San Francisco and other similarly pricey California cities, renters can easily pay more than $3,000 a month for a one-bedroom apartment. Some low-wage workers sleep in their cars or mobile homes because they can’t afford anything near work.

“There is this enormous need for housing, and it is particularly acute for poor people,” Tepper said.

© Copyright 2019 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.

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