Governor Gavin Newsom revealed the The state’s record $ 227 billion budget last week, despite a year in which unemployment soared beyond 10 percent and the homeless crisis reached devastating levels in Los Angeles and beyond.
He proposed to target much of California’s reward to struggling residents and low-income families, and it remains to be seen whether the state will continue to reap similar tax rewards in the years to come. If that is a windfall, Newsom and lawmakers will have to find other resources to support additional aid – and face pressure to further raise tax rates on the rich.
“There is a way in which the pandemic has amplified all of these systemic and social issues that we have always been aware of,” said Brandon Greene, director of the ACLU’s racial and economic justice program in Northern California. “These gaps persist and are increasing. And if it can happen here, in a blue state where you have the political capital, it can happen anywhere. “
California’s low-income workers and people of color have borne the brunt of both the economic consequences of the recession and the virus’s own physical toll. The mortality rate for Latino Covid-19 is 22% higher than the state average, and the black mortality rate is 16% higher, according to the California Health Equity Tracker.
Even before the pandemic, postal codes that house only 2% of California’s population held 20% of the state’s net worth, according to the nonpartisan Office of the Legislative Analyst. In 2020, more than 40 percent of families earning less than $ 40,000 a year saw hours of work or reduced wages, and an equal share had to cut back on food, according to the California Institute of Public Policy.
“Inequalities from decades, those pre-existing conditions around race, ethnicity, pre-existing conditions around wealth and income disparities, have obviously come to the fore and must be addressed,” said Newsom when outlining his budget proposal last week.
Moments later, he made a tough statement about how the other side is doing: “The people at the top are doing great.”
Newsom, 53, is a multimillionaire businessman as well as a governor, and his own personal life punctuated the extreme differences in California. His dinner at the French Laundry in November not only infuriated the public for despising his own advice against the meeting; it served as an optical problem with menu prices that many Californians cannot afford, even in normal times. Newsom sent his own children back to private classrooms in late October, while most families were stuck with remote learning. When he was quarantined in November, he said he was “blessed because we have many rooms” at his home in Sacramento County.
However, the Democratic governor is proud to close the equity gap and has classified his efforts as “California for all” since taking office two years ago. He named the state’s first surgeon general, Nadine Burke Harris, who focused her career on dealing with childhood trauma in underserved communities and led discussions on vaccines taking into account equal distribution. Newsom has made a lot of effort to reopen public schools this semester because it says that students in low-income neighborhoods are the ones who struggle the most with distance learning.
Newsom proposed $ 600 state stimulus checks to nearly 4 million low-income workers as part of your budget plan. He launched an effort to house tens of thousands of homeless Californians in hotel rooms when the outbreak began and then transitioned to a program that would convert that into permanent housing. He helped enact the tenant’s protection against eviction and wants to extend those protections.
Californians saw a series of relief in 2020, when all levels of government tried to ease the burden. Children who have lived in communities for a long time without broadband and quality internet access have received hotspots and other types of wi-fi access. Cities stopped using parking and towing tickets as a way to generate revenue. More lower-level offenders were released from prisons and jail after the virus epidemic.
Supporters say the shocking juxtaposition in the pandemic, as the state’s richest got richer and the poorest poor, proves that it is not enough. They are lobbying for Newsom and the Legislature to use California’s windfall to help the state’s most needy, expand the social safety net and turn temporary pandemic relief into permanent solutions. They fear that the momentum is already weakening and that things will return to normal when the vaccine reaches the masses and Covid-19 is in the past.
“These things that were implemented as a kind of lifeline are now expiring and people still need them,” said Jhumpa Bhattacharya, vice president of the Oakland-based Insight Center for Community Economic Development. “We live in a society where we don’t believe in government intervention, and there is this narrative that you can get up in your own boots. When the pandemic hit, we saw that this is not true, and my hope is that we will be able to develop a new understanding of how our society works ”.
California Democrats proposed higher taxes on the ultra-rich as a solution, with groups like the California Teachers Association pushing last year for legislation to raise taxes for residents with more than $ 30 million in assets. The project failed, but Congressman Luz Rivas (D-Arleta) only proposed to raise corporate taxes by $ 2 billion to finance the housing of people who live with homeless people.
Newsom made it clear last week that he will not accept big tax proposals, stating that “they are not part of the conversation”. The pandemic’s remote work culture has shown information-based companies that office locations may not matter as much as previously thought, while California’s high housing costs, regulations and taxes are a deterrent.
Taxing the rich even more is proving to be a political risk and a threat to the very system that makes it possible for California to prosper even in difficult times. Last month, Oracle and Hewlett Packard Enterprise announced that they were moving their headquarters to the rival state of Texas. Elon Musk, now the richest person on the planet, also said he was moving to Lone Star State, although his company Tesla remains in California.
“There are about 1 percent of taxpayers who pay half the income tax in the state, and the reason the state’s revenue has been so strong is that these taxpayers have had a very good year. As long as these people are willing to stay in California and be taxed, the money will come, “said David Shulman, senior economist emeritus at UCLA Anderson Forecast. “But there is a point where they will say it no longer works. The question is, are we at an inflection point? Certainly there is more evidence that we are getting close to that.”
The last major tax hike in California was a 2012 voter-approved tax on residents earning more than $ 250,000 defended by Governor Jerry Brown, which voters later extended until 2030. Voters in November, however, rejected an electoral initiative to tax commercial properties at their current value, which would have generated up to $ 12 billion more annually.
Proponents say another tax hike is over, but even without one, the state could change its priorities to make better use of its billions.
“It is all very frustrating, since with the fifth largest economy in the world, these things can be fixed. The money is there, ”said Courtney McKinney, a spokesman for the Western Center on Law and Poverty. “It’s a matter of priorities – whether or not millions of people plunged into poverty are seen as destabilizing enough to encourage California’s wealthy, business and political classes to put money into combating poverty and the pitfalls of the poor environment in ways sensible. Easier said than done. “
Congressman Alex Lee (D-San Jose), co-author of legislation to extend the eviction moratorium for another year, said resistance to more permanent solutions to help low-income residents is a reminder that California does not it is as progressive as it claims to be.
In the November election, California proved that it is not the liberal bastion that people think it is. In addition to rejecting the corporate property tax hike, they opposed affirmative action and rent control, while supporting employers and dialysis companies instead of unions.
“Whether or not people should be evicted during a pandemic in a recession … even though we have to fight for it, we are still not where we should be,” said Lee. , ultramaias, we are not living up to the progressive potential we have. I would never characterize us as a progressive state. “