California Legislature Hopes to Cure Housing Crisis with More Taxes

Real estate signs in California (Travis Wise / Flickr / CC / Cropped)
Travis Wise / Flickr / CC / Cropped

The Democrat-dominated California legislature is trying to move over 100 new bills to end the housing crisis with higher taxes and more subsidized housing.

The legislature has become emboldened on raising taxes for social priorities after state voters in November approved continuing the nation’s highest income tax, increasing a tobacco tax, and establishing a marijuana tax.

More importantly for Democrats, about 80 percent of the approximately 430 local tax sales, property, and user fee increases to support issuing more bonds passed in November, according to the California Local Government Finance Almanac.

With voters more open to tax increases, the California Department of Housing and Community Development (DHCD) published a report titled “California’s Housing Future: Challenges and Opportunities,” whichhighlights that the home ownership rate in California, at 53.4 percent, is the lowest since the 1940s.

The report blames the private sector for reducing annual new home production from its 200,000-per-year average during the period from 1955 to 1990, to about 80,000 a year currently. The DHCD claims that California will face a 1.8-million-unit housing shortfall by 2025. It suggests that government intervention is necessary to increase building by another 100,000 units per year.

According to the Los Angeles Daily News, the California legislature has responded to the housing crisis by introducing over 130 housing bills this year. It adds:

The three most notable bills are Senate Bill 2, which would raise money for affordable housing by charging a $75 on some real estate documents recorded with the county; SB 3, a $3 million bond for affordable housing production; and Assembly Bill 71, which would eliminate the state mortgage interest tax deduction on second homes used by their owners.

Other significant legislation includes: Assembly Bill 1506, which would local rent control provisions eliminated in the 1990s; Assembly Bill 291, which would prohibit landlords from using immigration status to evict tenants; Senate Bill 35, which would exempt from local control all infill multi-family housing developments in areas that are not meeting so-called housing goals for low income residents; and Assembly Bill 72, which would fund more state enforcement of local government compliance with state housing laws.

The new affordable housing push, however, comes after a long string of California welfare-state policy failures.

In a gut-wrenching example of the how residents have “benefited” from the state’s generous policies, California has again been crowned king of the U.S. Census’s “Percentage of People in Poverty” measurement, with a stunning 20.6 percent rate. And while the state has 12 percent of the nation’s population, it has 22 percent of the nation’s homeless.

For the last two decades of Democrat control, the California legislature has introduced a couple dozen housing bills each year. But most saw little support, due to concerns about homeowners retaliating with another taxpayer revolt, as they did in the 1978 passage of Proposition 13, which was approved by almost 2/3 of voters.

The success of that statewide initiative led to a reduction of property tax rates on homes, businesses and farms of about 57 percent, and Republican domination of the governorship for the next two decades.

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