California and the political food chain

While the relationships among the various levels of American government are often cooperative, always lurking in the background is what one might characterize as a political food chain.

Officials plot constantly to impose their will on counterparts occupying lower links of the chain while avoiding similar efforts by those above them — all in the name of better governance, of course.

We’re seeing one example of the syndrome now in the efforts of California’s legislators and Gov. Gavin Newsom to confront California’s housing crisis. They want to compel local governments, particularly cities, to make more land available for high-density housing to serve low- and moderate-income families, and override local zoning laws that favor single-family homes on large lots.

Local officials tend to view the state’s efforts as heavy-handed, one-size-fits-all violations of their traditional rights to control land use and thus shape the atmosphere of their communities. But advocates of state intervention say it’s needed to overcome not-in-my-backyard resistance that discriminates against the poor and the non-white.

As state officials strive to impose their will on local governments, they often resist the federal government’s efforts to do the same on states. California’s former attorney general, Xavier Becerra, filed more than 100 lawsuits against the federal government during Donald Trump’s presidency, many of which asserted the principle of states’ rights to resist decrees from Washington.

Becerra now heads the federal health and welfare agency and can be expected to crack the whip on any states that resist federal policies in the programs he manages. That’s how the food chain works; it’s not personal animosity, just institutional jousting for control.

The recently enacted $1.9 trillion “stimulus” that Becerra’s new boss, President Joe Biden, pushed through Congress provides another example. It gives state and local governments $350 billion in aid, supposedly to make up for revenue losses during the COVID-19 pandemic. But one provision prohibits recipients from using the windfall to reduce taxes, and that has generated criticism from state officials of all ideological stripes that it interferes with their ability to manage their finances.

In California, politicians and interest groups on the left say it could prevent them from reducing tax burdens on the poor, such as expansion of the earned income tax credit, and small businesses.

State Finance Direrctor Keely Bosler told Treasury Secretary Janet Yellen in a letter that strictly applying the tax cut prohibition would “limit a state’s ability to adopt policies that support federal goals and could thus constrain the economic benefits that were intended by the authorization of these funds.”

“We’re trying to provide additional relief to businesses that took it in the teeth during the recession,” H.D. Palmer, a spokesperson for Bosler’s Department of Finance, said. “We don’t want to go down that road until we’ve got further clarification from Washington.”

California business groups, meanwhile, say that the tax cut ban would undermine efforts to restore two business tax breaks that the state suspended last year when it appeared that COVID-19 would devastate state finances. With state revenues now running more than $14 billion over estimates, business leaders say that the tax breaks, which amount to more than $4 billion a year, should be reinstated.

The business-backed California Taxpayers Association and 16 other state taxpayer organizations also sent a letter to Yellen seeking clarity on what states can and cannot do under the tax cut language. The stimulus law gives her the authority to make those decisions in a classic example of how the intergovernmental food chain works.