California’s cost of living rises with auto insurance, rent

For Californians, it’s not just finding affordable home insurance that’s a problem. Many motorists are having trouble getting auto insurance, citing delays in getting coverage and higher-than-usual premiums.

As CalMatters economy reporter Levi Sumagaysay explains, the predicament is the result of inflation and state regulations. The latter has helped consumers save billions but insurers call the rules cumbersome.

With 27 million licensed drivers in 2021, California has the most drivers of any state. And to do business here, insurers have to abide by state rules. That includes Proposition 103, which requires hearings for any personal insurance rate increase requests above 7% if a member of the public challenges it. Though these hearings are rare, the risk of one means that rate increase requests don’t typically go above 7%.

For one attorney Levi spoke to who represents insurance companies, Prop. 103 has also made California the “worst market.”

But since 2002, Prop. 103 and other state rules have helped save drivers $2.5 billion, according to calculations by the advocacy group Consumer Watchdog, which has challenged rate increases. And from 1989 to 2015, a study published in 2019 found that Californians saw the smallest rate increases (12.5%), compared with a national average (61%). More recently, California premiums increased 9.7% from 2018 as of August of this year, putting the state in the middle of the pack compared to other states’ increases.

For Californians finding it difficult to secure affordable auto insurance, know that drivers still have options. There are more than 130 companies that offer auto insurance in the state and save for a couple of exceptions, auto insurers are not leaving California. 

The same cannot be said, however, for fire insurance. Citing increased wildfire risks, some of the biggest home insurers have pulled out of California. This has led to soaring premiums and Gov. Gavin Newsom issuing an executive order in September directing the insurance commissioner to try to solve the problem. 

For more on why car insurance is getting harder to secure in California, read Levi’s story.

Speaking of California’s cost of living: CalMatters’ Jeanne Kuang reports that even the lowest-income tenants are being hit by rent increases. That’s because California has more than 350,000 privately owned low-income housing units that are exempted from the state’s rent cap, which lawmakers passed four years ago.

For the past two years, tenants living in low-income housing have experienced particularly high rent hikes due to inflation, rising insurance costs and the lack of rent payments during the pandemic. Affordable housing landlords and nonprofit developers argue that they need to raise rents to cover operating costs and repairs. 

In response, some advocates are pushing for state and local laws to cap rent increases on these units. Nine other states have rent caps on certain low-income housing, but California isn’t one of them. 

Landlords say a blanket cap would make it hard for them to keep their properties afloat and remove flexibility since landlords already work with tenants to try to keep rents low. Federal regulations also complicate the picture. But as one tenant whose rent increased by 40% put it to Jeanne: “How are you supposed to live in affordable housing, but it’s not affordable?”

For more on California’s rent hikes for low-income housing, read Jeanne’s story.

From CalMatters water reporter Rachel Becker:

The controversial plan to replumb the Sacramento-San Joaquin Delta cleared another hurdle Friday with the release of a final report detailing the environmental impacts of a tunnel that would bypass the Delta to pump more water from Northern California south. 

The effort, a priority of Gov. Newsom, is aimed at shoring up a vital water supply for 27 million Californians and 750,000 acres of farmland against climate change and the havoc that an earthquake, rising seas, and storms could wreak on fragile Delta levees. 

State officials estimate that the tunnel would allow the capture of about 500,000 acre-feet more water per year — enough to supply about 5.2 million people. 

• Jennifer Pierre, general manager of the State Water Contractors, an association of 27 public water agencies: “We can no longer afford to let this project be delayed any further. Our climate reality requires that we build and adapt.” 

But environmental groups, nearby residents and the salmon industry have long opposed a tunnel, fearing that construction could drive away residents and tourists. They also argue that drawing freshwater away from the Delta will further jeopardize a region that California regulators have described as already experiencing an ecological crisis.

• Barbara Barrigan-Parrilla, executive director of Restore the Delta: “The plan still largely ignores the project’s impacts on Delta urban environmental justice communities, and how construction will ruin small Delta farming towns, and the natural resources essential to the cultural and spiritual practices of Delta tribes.” 

State officials reported in 2022 that the tunnel project could harm endangered and threatened species, including the Delta smelt and winter-run chinook salmon — requiring thousands of acres of wetlands to be restored in an effort to reduce and offset the impacts. Critics have expressed skepticism that this would in fact protect salmon and other fish. 

Others have warned that the project’s cost — which has not been updated since a 2020 estimate of $16 billion — could make water less affordable for Southern California customers. 

Now, state agencies have until later this month to review the documents before the Department of Water Resources can certify the assessment and decide whether to move forward with the proposed route for the tunnel, an alternative, or no project at all. 

Though this is a major step in moving the project forward, the tunnel still must also clear a federal environmental review and receive a number of additional permits, including under the state and federal Endangered Species Acts.

The goal is to complete permitting by the end of 2026, which is also the end of Gov. Newsom’s second and final term. Construction could begin around 2030, and the tunnel is not expected to be online until 2040. 

It’s decision time for candidates who want to run in California’s 2024 election. Among the more fascinating filings late last week, a political couple pulled a last-minute switcharoo:

Assemblymember Carlos Villapudua, a Stockton Democrat first elected in 2020, filed to run for the state Senate seat now held by Sen. Susan Talamantes Eggman, who terms out after next year. 

That happened just hours after his partner, Edith Villapudua, dropped her bid for that same Senate seat (which she had announced in April 2022) and instead filed to run for her husband’s Assembly seat, likely an easier race. 

• Carlos Villapudua, in a statement: “After much thought and consideration, and after discussing with both my wife and my family, I have decided to announce my candidacy for the 5th State Senate District.” 

So if all goes according to the Villapudua strategy, one will serve in the Assembly and one in the Senate starting with the 2025 session. 

But the plan isn’t a done deal. Former U.S. Rep. Jerry McNerney also filed last week for the Senate seat. And the family dynamics are even more complicated: Miguel Villapudua, cousin to Carlos and a San Joaquin County supervisor, is also running for the seat. (The Republican-endorsed candidate in the March 5 primary is Jim Shoemaker, who unsuccessfully ran for Congress in 2022. Because the incumbent isn’t running, the filing deadline is extended until Wednesday.)

And for the Assembly seat, a new contender is Rhodesia Ransom, a former Tracy city council member who also pulled a switch. She had the endorsement of the state Democratic Party and the California Labor Federation in the Senate district.

In any case, it goes to show that the California Legislature can be a family business. As CalMatters’ Ben Christopher reported earlier this year, 10% of legislators at the time were related by blood or marriage to other legislators, past or present. And that’s been the case since 2001.

What does it matter? 

From Ben’s story: “In the state Capitol, the omnipresence of political families can shape the culture — and, in the cases of relatives serving at the same time, the way that lawmaking is done. At best, it provides a way for institutional knowledge to pass from one generation to the next despite term limits. At worst, it can provide fodder for cynics who believe that political power is only available to those who know the right people.”

In other election tidbits from Friday: The California Chamber of Commerce joined the California Business Roundtable and unions and endorsed Proposition 1, the March 5 measure to redirect some mental health money to housing and borrow $6.4 billion to add 10,000 psychiatric treatment beds. 

But the Secretary of State’s office announced that three versions of a proposed constitutional amendment to require “high-quality” public schools won’t be on the November ballot.