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Governor Gavin Newsom unveiled the The state’s record $ 227 billion budget last week despite a year in which unemployment topped 10% and the homelessness crisis has reached devastating levels in Los Angeles and beyond.
He has offered to direct a large chunk of California’s bounty towards 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 this is a one-time boon, Newsom and lawmakers will need to find other resources to support further aid – and face pressure to raise tax rates on the wealthy even further.
“There’s a way the pandemic amplified all of these systemic and societal issues that we were always aware of,” said Brandon Greene, director of the racial and economic justice program at the ACLU of Northern California. “These gaps persist and widen. And if it can happen here in a Blue State where you have political capital, it can happen anywhere.
Low-income workers and people of color in California have suffered the brunt of the economic fallout from the recession and the physical consequences of the virus itself. The Latino Covid-19 death rate is 22% higher than the state average, and the black death rate is 16% higher, according to the California Health Equity Tracker.
Even before the pandemic, zip codes home to barely 2% of California’s population held 20% of the state’s net worth, according to the non-partisan office of the legislative analyst. In 2020, more than 40% of households earning less than $ 40,000 a year saw their working hours or wages reduced, and an equal share had to cut back on their diet, according to the Public Policy Institute of California.
“Inequalities that last for decades, these pre-existing conditions around race, ethnicity, pre-existing conditions around wealth disparities and income disparities, have obviously arisen and need to be addressed,” Newsom said during the presentation of its budget proposal last week.
Moments later, he made a stern statement about how the other side is doing: “The people at the top are doing very well.”
Newsom, 53, is a multimillionaire businessman in addition to being a governor, and his own personal life has punctuated the extreme differences in California. His dinner at the French Laundry in November not only infuriated the public for flouting his own advice against the rally; this posed an optical problem with menu prices that many Californians cannot afford even under normal circumstances. Newsom sent his own children back to private classrooms at the end of October, when most families were stuck in distance learning. When he had to quarantine in November, he said he was “blessed because we have so many rooms” in his Sacramento County home.
However, the Democratic governor has bragged about bridging the equity gap and has called his efforts “California for everyone” since taking office two years ago. He appointed the state’s first general surgeon, Nadine Burke Harris, who has focused her career on addressing childhood trauma in underprivileged communities and leading vaccine discussions with equitable distribution in mind. . Newsom has gone to great lengths to reopen public schools this spring, as it says students in low-income neighborhoods have the most difficulty with distance learning.
Newsom offered $ 600 stimulus checks to nearly 4 million low-income workers as part of its budget plan. He launched an effort to house tens of thousands of homeless Californians in hotel rooms when the epidemic began, then moved on to a program that would convert that into permanent housing. He has helped put in place protections for tenants against eviction and wants to extend those protections.
Californians have seen a whole host of relief in 2020, as all levels of government try to ease the burden. Children who live in communities that have long lacked good, high-speed internet access have been given hotspots and other Wi-Fi access. Cities have stopped using parking tickets and towing as way to generate income. More lower-ranking offenders have been released from prisons and prisons after virus outbreaks.
Supporters say the jarring juxtaposition of the pandemic, as the wealthiest in the state got richer and the poor got poorer, proves that this is not enough. They are pressuring Newsom and the Legislature to use California’s unexpected windfall to help the state’s poorest by widening the social safety net and turning temporary relief given during the pandemic into permanent solutions . They fear the momentum is already losing momentum and things will return to normal when the vaccine hits the masses and Covid-19 is a thing of 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 pull yourself by your boots. When the pandemic struck, we saw that was not true, and I hope we can develop a new understanding of how our society works.
California Democrats have proposed higher taxes on the ultra-rich as a solution, with groups like the California Teachers Association pushing for legislation last year to raise taxes for residents with more than $ 30 million in income. active. This bill failed, but Assembly member Luz Rivas (D-Arleta) has just proposed to raise corporate taxes by $ 2 billion to finance housing for homeless people.
Newsom made it clear last week that it would not accept major tax proposals, saying “they are not part of the conversation.” The pandemic’s remote work culture has shown information-based businesses that office locations may not matter as much as previously thought, while high costs of housing, California regulations and taxes are deterrent.
Taxing the wealthy more is proving to be a political risk and a threat to the very system that allows California to thrive even in bad times. Last month, Oracle and Hewlett Packard Enterprise announced they were moving their headquarters to rival Texas. Elon Musk, now the richest person on the planet, has also said he is moving to the Lone Star State, although his company Tesla will remain in California.
“There are about 1% of taxpayers who pay half the income tax in the state, and the reason state revenues have been so high is that these taxpayers have had a great 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 for UCLA Anderson Forecast. “But there comes a time when they’ll say it doesn’t work anymore. The question is, are we at a tipping point? There is certainly more evidence that we’re getting closer.”
The last major tax hike in California was a 2012 voter-approved tax on residents making more than $ 250,000 championed by Gov. Jerry Brown, which voters then extended until 2030. Voters in November, however, have rejected a voting initiative to tax commercial properties at their current value, which would have generated up to $ 12 billion more per year.
Supporters say another tax hike is expected, but even without one, the state might shift its priorities to better use its billions.
“This is all very frustrating, because with the fifth largest economy in the world, these things are fixable. The money is there, ”said Courtney McKinney, spokesperson 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 enough of a destabilizer to encourage the wealthy, business and political class in California to invest money in the fight against poverty and the pitfalls of the poor environment, sane ways. Easier said than done.”
Assembly member Alex Lee (D-San Jose), co-author of legislation to extend the moratorium on evictions for another year, said resistance to more permanent solutions to help low-income residents Income was a reminder that California was not as progressive as it claims.
In the November election, California proved that this isn’t the liberal stronghold people think it is. In addition to rejecting the increase in corporate property taxes, they opposed affirmative action and rent controls while siding with employers and dialysis companies instead of unions.
“Whether or not people should be kicked out during a pandemic during a recession… even just fighting for it means we’re not yet where we should be,” Lee said. “I think a lot of people are realizing that stuff, and that even though we have democratic super majorities, we are not living up to the progressive potential that we have. I would never call us a progressive state. “
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