For 50 years, California has required cities and counties to plan for enough new housing so that residents can live affordably. But many local governments fail to approve new development, contributing to the state’s housing crunch. Now, Gov. Gavin Newsom is proposing a radical new step: punishing communities that block homebuilding by withholding state tax dollars.

Newsom unveiled his proposal Thursday at his state budget presentation, which also included more than $2 billion in new funding for housing and homelessness initiatives. The governor said his aggressive approach speaks to the depth of the state’s problems, which have forced millions of Californians to pay more than half their income on rent, pushed home prices to new highs and added thousands to the homeless population.