From the Pasadena Star-News: Swimming in cash from an unexpected budget surplus and federal stimulus money, California is planning rent forgiveness on a scale never seen before in the United States.
A $5.2 billion program in final negotiations at the state Legislature would pay 100% of unpaid rent that lower-income Californians incurred during the pandemic and would be financed entirely by federal money. The state is also proposing to set aside $2 billion to pay for unpaid water and electricity bills.
When California became the first state to shut down its economy last year, Gov. Gavin Newsom predicted dire shortfalls in the state’s budget. But a year later, the state finds itself with so much money that it is poised to not only cover 100% of unpaid rent for low-income tenants, but also to give an additional $12 billion back to taxpayers, by sending state stimulus checks of at least $600 to millions of middle-class Californians.
The state’s separate rental relief program would be available to residents who earn no more than 80% of the median income in their area and who can show pandemic-related financial hardship. In San Francisco, a family of four would have to earn less than $146,350 to qualify.
California is not the only state flush with money.
At least 22 states that had unused pandemic relief money and that had trimmed their budgets anticipating fiscal challenges have now found themselves with a surprising surplus in revenue. Idaho is on track for a record-breaking $800 million surplus at the end of this month, while others like Oklahoma, Utah and Washington reported similar budget increases. And while some states haven’t decided how to spend the money, others are funneling the cash into education, construction and reviving local arts.
In California, the governor proposed a $100 billion recovery package that pours money into everything from the most expensive education bill in the state’s history, to billions of dollars to buy hotels and apartments for the homeless and a program to forgive traffic violation fines for low-income residents. Newsom and the Democratic-dominated Legislature are now ironing out the details of what would be the nation’s most generous rent payment program.
“Nationwide this is certainly the largest rent relief there’s ever been,” said Russ Heimerich, a spokesman for the California Business, Consumer Services and Housing Agency, a state umbrella organization that is overseeing the rent relief program. “The big question is can we spend it all.”
The enormous wealth of tech entrepreneurs and Hollywood moguls, and the sales of surging stocks and multimillion-dollar homes helped produce this year’s record budget surplus. California’s tax system, heavily reliant on capital gains and the incomes of the wealthy, fills state coffers in years when the stock market does well.
California is grappling with a problem other states might envy: handing out so much money can be a slow, bureaucratic process. A more modest program, already in place, was aimed at covering some but not all back rent, yet it has struggled to keep up with demand. Only around 8% of the $619 million in requests for rental assistance in that program through Monday morning had been paid, according to Heimerich. After complaints that the 32-page form for rent relief took three hours to complete, the state abridged the application. It now takes an average of 30 minutes, is available in six languages and is easier to fill out on a smartphone.
Other states have offered pandemic-related rental relief programs, but some of those that cover 100% of the back rent set restrictions on the assistance. Georgia limits its rent relief to $15,000 per household. Oregon and other states do not have a financial cap, but instead cover a maximum of 12 months of missed rent regardless of cost.
For California, the pandemic has been a case of a long-term crisis running into a short-term emergency.
The state already has more than half of the nation’s unsheltered homeless population — each night about 114,000 Californians sleep outside or in their cars — and federal data show the homeless count was rising just as the pandemic hit. The cause is no mystery: The state has a $700,000 median home value and California renters are among the nation’s most burdened, with 27.3% of tenants paying more than half of their pretax income in rent, the thirdhighest rate in the nation.
Despite the state surplus, the pandemic has been an economic catastrophe for restaurant waiters, Uber drivers and workers in the state’s vast travel industry. Newsom’s stimulus package is a mammoth effort to redistribute this pandemicaggravated inequality.