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What will a $6 billion cut to HUD mean for California’s housing woes?

If California was looking to Washington for help in tackling its housing crisis, it got a firm response from the White House today: enquire elsewhere.

In a proposed budget released this morning, President Trump requested a $54 billion budgetary reshuffle that would see a significant spike in defense spending and deep cuts for just about every other discretionary program. If enacted, the “Budget Blueprint to Make America Great Again” would affect virtually every aspect of California policy. But amid a worsening housing and homelessness crisis, the proposed $6 billion (13 percent) cut to the Department of Housing and Urban Development would come at an inopportune time for the Golden State.

Trump’s “skinny budget” is a wish-list—a starting point for Congressional budget negotiations. But even as a declaration of presidential priorities, it has many California housing agency heads and progressive advocates worried.

Yesterday, as rumors of the ten-digit spending cut were circulating, the Sacramento Bee reported that the cuts might mean that no additional vouchers will be awarded this year to those awaiting Section 8 housing support in that city. Similar concerns echoed across the state.

Though the President’s preliminary budget is short on detail, the bulk of the proposed cuts would fall upon housing development grants, rather than on programs that provide direct rental aid to those who need it. It would zero out the following:

  • Community Development Block Grant Program
  • HOME Investment Partnership Program
  • Choice Neighborhoods
  • Self-help Homeownership Opportunity Program
  • Section 4 Capacity Building for Community Development and Affordable Housing

Of those, the loss of the Community Development Block Grant would hit the state the hardest. Last year, California received $357 million dollars through these grants. They’re awarded to cities and counties and then channeled to affordable housing and public space development initiatives, small business loans, community beautification projects, and even general assistance programs like Meals on Wheels. The scope is broad by design, based on the idea that locals are in the best position to know how to solve local problems. But what some call flexible, others see as scattershot. In its budget proposal, the Trump administration says that the program is “not well-targeted to the poorest populations and has not demonstrated results.”

Likewise, the end of the HOME Program would mean the phasing out of the largest federal block grant system aimed exclusively at local and state affordable housing development. Last year, the state received $129.5 million through this program; since 2012 HOPE has funded the construction and renovation of 7,391 units. apartments

Choice Neighborhoods is a legacy of the Obama administration that has supported public housing revitalization projects in San Francisco, Sacramento, and Los Angeles. The Self-Help Homeownership Opportunity Program goes towards housing construction nonprofits like Habitat For Humanity.

Taken at face value the budget appears to leave many of HUD’s more high-profile programs, such as the Low Income Housing Tax Credit program and the Housing Choice (Section 8) program, largely intact. But some policy analysts and advocates are skeptical.

The cuts to HUD come at a time when many housing advocates are urgently calling for more spending. The Center on Budget and Policy Priorities estimates that if current spending levels are maintained, housing agencies across the country would be forced to issue 100,000 fewer housing vouchers for low-income families, as rising rents mean that there is less rental assistance to go around. Nearly 15,000 of those lost vouchers would be in California. Speaking to the Washington Post, Douglas Rice of the center said that the proposed HUD cuts would double that shortfall to 200,000. 

Policy makers across the state have offered similar reactions. Butte County is contemplating cutting assistance to 250 to 300 households. This morning, Los Angeles Congresswoman Karen Bass warned that eroding support for Section 8 could undercut the city’s new voter-affirmed plan to tackle homelessness.

Low-Income Housing Tax Credits appears to be safe for now—but with Republicans clamoring for tax reform, many housing advocates worry that future cuts to the corporate income tax could reduce demand for such federally issued credits. Housing developers have already noted a reduction in demand for such credits as businesses anticipate facing lower rates before too long.

Those concerned about housing in California shouldn’t panic yet. The presidential budget proposal is only the opening bid in what is sure to be a long, tedious debate, and already there are signs that even the President’s allies in Congress may not have the stomach for such spending reductions. But for those who were hoping that D.C. might chip in to help California address the housing crisis, this isn’t an encouraging first step.

What will a $6 billion cut to HUD mean for California’s housing woes?

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If California was looking to Washington for help in tackling its housing crisis, it got a firm response from the White House today: enquire elsewhere.

In a proposed budget released this morning, President Trump requested a $54 billion budgetary reshuffle that would see a significant spike in defense spending and deep cuts for just about every other discretionary program. If enacted, the “Budget Blueprint to Make America Great Again” would affect virtually every aspect of California policy. But amid a worsening housing and homelessness crisis, the proposed $6 billion (13 percent) cut to the Department of Housing and Urban Development would come at an inopportune time for the Golden State.

Trump’s “skinny budget” is a wish-list—a starting point for Congressional budget negotiations. But even as a declaration of presidential priorities, it has many California housing agency heads and progressive advocates worried.

Yesterday, as rumors of the ten-digit spending cut were circulating, the Sacramento Bee reported that the cuts might mean that no additional vouchers will be awarded this year to those awaiting Section 8 housing support in that city. Similar concerns echoed across the state.

Though the President’s preliminary budget is short on detail, the bulk of the proposed cuts would fall upon housing development grants, rather than on programs that provide direct rental aid to those who need it. It would zero out the following:

  • Community Development Block Grant Program
  • HOME Investment Partnership Program
  • Choice Neighborhoods
  • Self-help Homeownership Opportunity Program
  • Section 4 Capacity Building for Community Development and Affordable Housing

Of those, the loss of the Community Development Block Grant would hit the state the hardest. Last year, California received $357 million dollars through these grants. They’re awarded to cities and counties and then channeled to affordable housing and public space development initiatives, small business loans, community beautification projects, and even general assistance programs like Meals on Wheels. The scope is broad by design, based on the idea that locals are in the best position to know how to solve local problems. But what some call flexible, others see as scattershot. In its budget proposal, the Trump administration says that the program is “not well-targeted to the poorest populations and has not demonstrated results.”

Likewise, the end of the HOME Program would mean the phasing out of the largest federal block grant system aimed exclusively at local and state affordable housing development. Last year, the state received $129.5 million through this program; since 2012 HOPE has funded the construction and renovation of 7,391 units. apartments

Choice Neighborhoods is a legacy of the Obama administration that has supported public housing revitalization projects in San Francisco, Sacramento, and Los Angeles. The Self-Help Homeownership Opportunity Program goes towards housing construction nonprofits like Habitat For Humanity.

Taken at face value the budget appears to leave many of HUD’s more high-profile programs, such as the Low Income Housing Tax Credit program and the Housing Choice (Section 8) program, largely intact. But some policy analysts and advocates are skeptical.

The cuts to HUD come at a time when many housing advocates are urgently calling for more spending. The Center on Budget and Policy Priorities estimates that if current spending levels are maintained, housing agencies across the country would be forced to issue 100,000 fewer housing vouchers for low-income families, as rising rents mean that there is less rental assistance to go around. Nearly 15,000 of those lost vouchers would be in California. Speaking to the Washington Post, Douglas Rice of the center said that the proposed HUD cuts would double that shortfall to 200,000. 

Policy makers across the state have offered similar reactions. Butte County is contemplating cutting assistance to 250 to 300 households. This morning, Los Angeles Congresswoman Karen Bass warned that eroding support for Section 8 could undercut the city’s new voter-affirmed plan to tackle homelessness.

Low-Income Housing Tax Credits appears to be safe for now—but with Republicans clamoring for tax reform, many housing advocates worry that future cuts to the corporate income tax could reduce demand for such federally issued credits. Housing developers have already noted a reduction in demand for such credits as businesses anticipate facing lower rates before too long.

Those concerned about housing in California shouldn’t panic yet. The presidential budget proposal is only the opening bid in what is sure to be a long, tedious debate, and already there are signs that even the President’s allies in Congress may not have the stomach for such spending reductions. But for those who were hoping that D.C. might chip in to help California address the housing crisis, this isn’t an encouraging first step.

Want to submit a reader reaction? You can find our submission guidelines here. Please contact Dan Morain with any questions, dmorain@calmatters.org, (916) 201.6281.

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Aug. 15, 2018 2:36 pm

McCarthy praises Trump policy over “backwards” California—and is met with protest

Election Reporter
Protesters carry signs that read "Trump Loves 'My Kevin'" and "Kevin McCarthy AKA Trump Puppet!" outside the Sheraton Grand Hotel in downtown Sacramento
Protesters outside the Sheraton Grand Hotel in downtown Sacramento. Photo by Elizabeth Castillo for CALmatters

House Majority Leader Kevin McCarthy today touted federal policy under the Trump administration, in contrast to what he termed “backwards thinking” coming out of California.

“Once President Trump was elected, it seemed as though California wanted to be in a position to just sue and fight instead of take a pause and listen,” he said.

Speaking at a Sacramento event hosted by the Public Policy Institute of California, McCarthy offered a laundry list of reasons why he and his caucus deserve to be reelected this November. He championed the Republican-led federal tax overhaul, which cut personal and corporate taxes across the board last December. He credited those changes to the tax code for the recent round of rosy economic statistics nationwide. He also called for tighter borders and defended the president on trade policy, predicting agreement on the North American Free Trade agreement “probably sometime within the next month.”

In contrast to federal policy, McCarthy slammed the state of California, leading with his criticism of the recent increase in the gas tax. Last year, state lawmakers hiked taxes on gasoline and diesel and introduced two new vehicle fees to fund more than $5 billion in extra transportation spending per year.

“It’s the backwards thinking between what California is doing and what Washington (is doing),” he said. “Washington lets you keep more of your own money.”

McCarthy, whose district includes Bakersfield, is hoping to replace fellow Republican Paul Ryan as the next Speaker of the House. He’s considered the most likely successor—but only if Republicans maintain their House majority after November’s midterms.

He’s also long maintained a cozy relationship with President Trump, who once called the congressman “my Kevin.” As CALmatters’ Laurel Rosenhall wrote in her profile of the congressman last year, he has served as Congressional Republicans’ Trump-whisperer throughout the president’s tumultuous first term, “charged with shepherding the president’s legislative agenda.”

“No politician has more clout with the Trump White House than he does,” she wrote.

This November, voters will be given the chance to repeal that increase in the gas tax, with its business and labor defenders arguing that it’s necessary to maintain the state’s crumbling roads and highways, but Republicans hoping to channel opposition to boost GOP turnout.

McCarthy also lambasted plans to implement a single-payer health insurance system, either in California or nationwide. He called the state’s vehicle emission standards, which the Trump administration recently challenged, “impossible to reach” and predicted that whoever becomes the next governor of California will be forced to cancel the high-speed rail project, which is now estimated to cost up to $98 billion. Republican gubernatorial candidate John Cox has promised to do just that if elected.

The interview was interrupted for several minutes by immigration activists chanting “McCarthy, where’s your heart?”

Angela Hart on Twitter

@GOPLeader being shouted at by protesters. https://t.co/O489U4osyA

After the banner-toting activists were ushered from the room, McCarthy bemoaned what he sees as the demise of civility in our national discourse—an erosion for which many hold Trump responsible.

“Why can’t we sit down and communicate with one another?” McCarthy asked. “Why do we have to be so divided?”

Elizabeth Castillo contributed to this story.

Want to submit a reader reaction? You can find our submission guidelines here. Please contact Dan Morain with any questions, dmorain@calmatters.org, (916) 201.6281.

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Two years from now, California voters may have a chance to touch the third rail of state politics.

A coalition of good-government groups, social justice organizations, affordable housing advocates and teachers unions held press conferences across the state today announcing they had submitted signatures for a measure that would significantly increase property taxes on California businesses and generates tens of billions in revenue for local and state governments. If it qualifies for the 2020 ballot—which it likely will—it would mark the first time in decades that voters would have a chance to change a key provision in Proposition 13, the landmark 1978 ballot measure that placed stringent caps on California property taxes, making them some of the lowest in the country for both residential and commercial property.

What would this initiative actually do? 

California treats commercial and residential property almost identically when it comes to taxes.  In most cases, Prop. 13 allows properties to be reassessed for tax purposes only when they are sold to a new buyer. That means that a homeowner and the Target down the street (assuming Target owns that land) pay taxes on the value of the property when they acquired it, not at its current market value. That’s a huge discount for both homeowners and businesses, especially those who bought property a long time ago in a pricey area.

This initiative would treat California commercial property different than residential property, a concept in the Prop 13 wonk world known as “split roll.” Under the proposal, businesses would have their properties reassessed to market values every three years or less. Nothing would change for residential properties—the most untouchable part of Prop. 13. Commercial properties would still be taxed at 1 percent of their value.

Who’s behind it, and what do they want? 

Backers include good-government groups like the League of Women Voters, social justice groups like the Alliance of Californians for Community Empowerment and some prominent state and local teachers’ unions. Big money has come from Bay Area philanthropic organizations such as the San Francisco Foundation and the Chan-Zuckerberg Initiative (yes, that Zuckerberg). The California Teachers’ Association, one of the most powerful labor unions in the state, has not endorsed the initiative.

More than anything else, proponents want the revenue that would be generated from “split roll.” Prop. 13 has long been criticized for starving local governments by denying them a steady revenue source. Proponents estimate that altering this part of Prop. 13 would provide $11.4 billion annually for state and local governments, with about $4.5 billion going to schools.

Who opposes it, and why? 

The California business community writ large, including organizations like the California Chamber of Commerce and anti-tax groups like the Howard Jarvis Taxpayers Association. They argue that at best, increased property taxes would simply be passed on to consumers, and at worst, businesses would reduce employment or shut their doors entirely and flee to other states. The cost of doing business in California is already high—this would make it even more difficult to squeeze a profit.

This won’t be on the ballot for 2 years—why should I care now? 

Because even though you may not be voting on this until 2020, the political repercussions start now. Changing Prop. 13 is still an uphill fight—one that dissuaded advocates from their initial plan to place the initiative on this fall’s ballot. But the pro-split roll camp can proudly boast that they collected 800,000 signatures, and received a big bankroll to do so. A recent USC Dornsife/Los Angeles Times poll found that 54 percent of Californians said they would support the measure.  The core of Prop. 13—property tax initiatives for homeowners—is obviously a much tougher fight than targeting commercial properties.

The prospect of split roll on the 2020 ballot could also induce legislative action at the Capitol.  Leading gubernatorial candidate Gavin Newsom has voiced lukewarm support for the concept, but has repeatedly stated that Prop. 13 reform should be part of a “broader conversation on tax reform in the state.” With both legislators and special interests eager to avoid a costly battle at the ballot box, the initiative could spur action for a broader compromise well before voters get a chance to weigh in.

Want to submit a reader reaction? You can find our submission guidelines here. Please contact Dan Morain with any questions, dmorain@calmatters.org, (916) 201.6281.

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Aug. 13, 2018 6:45 pm

Meet California’s shortest-serving state senator in more than 100 years

Political Reporter
The newest member of the Legislature is Vanessa Delgado, a Montebello Democrat who will be able to cast critical votes for the next three weeks. And then—poof.
The newest member of the Legislature is Vanessa Delgado, a Montebello Democrat who will be able to cast critical votes for the next three weeks. And then—poof.

In probably the strangest outcome of California’s elections so far this year, a new state senator was sworn in Monday—with just three weeks left to go in the legislative session.

Vanessa Delgado, a Democrat from Montebello, was elected last week to replace former Sen. Tony Mendoza, who resigned in February after an investigation found he likely harassed several young employees.  

But voters had two chances to vote for Delgado this year—once to complete the remainder of Mendoza’s term and again to serve a new four-year term that begins in December—and in an odd twist, they chose her only to fulfill the rest of the current term. That means Delgado will serve as a senator for just three-and-a-half months.

“This is an unexpected result, but it’s what the voters decided,” she said in a brief interview after being sworn in while her parents and 15-year-old daughter looked on.

Delgado, a real estate developer who resigned as Montebello mayor to join the Legislature, will be the shortest-serving state senator in more than a century, according to legislative historian Alex Vassar. (The last time a senator served a shorter term was in 1903, Vassar said, when Orrin Z. Hubbell served 15 weeks before he died.)

Delgado arrived in Sacramento Monday as the Legislature begins the most consequential final three weeks of the legislative year, a time when lobbying is intense and lawmakers face tough decisions on hundreds of bills. In September she’ll return to the district in southeast Los Angeles County and work on constituent issues until Dec. 2. Then—poof—her time as a senator will be done.

The man who hopes to replace Delgado on Dec. 3 was also in Sacramento Monday. Democrat Bob Archuleta, who faces Republican Rita Topalian on the November ballot, mingled with lobbyists and Democratic senators at a campaign fundraiser near the Capitol, just minutes before Delgado began her super-short term.

Want to submit a reader reaction? You can find our submission guidelines here. Please contact Dan Morain with any questions, dmorain@calmatters.org, (916) 201.6281.

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