California Senate Proposal Tackles Rents, Economic Recovery

SACRAMENTO — The government would cover rent payments for some low-income Californians impacted by the coronavirus under a proposal backed by state Senate leaders.

The Senate wants to forgive rents for low-income tenants, giving landlords tax credits equal to the value of their missed payments, which they can keep or sell for cash. Tenants would then have up to 10 years to pay back their missed rents to the state, with some not having to pay the full amount because of an unspecified “hardship exemption.”

“This is not a giveaway to anyone,” Democratic Sen. Steven Bradford said. “Our goal is to keep tenants housed and keep landlords out of foreclosure.”

The proposal is part of an ambitious economic recovery plan leaders unveiled Tuesday, which includes a separate $25 billion “economic recovery fund” that small businesses, nonprofits and local governments could tap to help weather the virus-induced downturn.

The money would come from people voluntarily prepaying their taxes for 2024 through 2033. The state would get the money upfront, while the taxpayers would get a discount.

Related Story: California Court Denies Bid to Block Payments to Immigrants

It is estimated to take two years to fill up the fund. The state could start spending the money sooner to help stimulate the economy. But beginning in 2024, state revenues would be up to $3 billion less each year until 2033. Legislative leaders believe the economic crisis will have passed and the state’s annual operating budget of more than $200 billion could easily absorb the losses.

“The ultimate effect of course would enable taxpayers to invest in California to help California struggling through this very challenging crisis,” Democratic Sen. Bob Hertzberg said.

Tom Bannon, chief executive officer for the California Apartment Association, called the proposal a “creative effort.” He said the association that represents owners, investors, developers and managers wants to “refine” the proposal, but did not give details.

Some Republican Leaders Have Warned Not to Count on That Money

The proposals come as state lawmakers are scrambling to craft a state budget that will have $54.3 billion less money to spend than lawmakers had planned in January. Gov. Gavin Newsom is scheduled to reveal his spending proposal on Thursday.

Senate President Pro Tempore Toni Atkins on Tuesday vowed the body would avoid “major ongoing program cuts or broad middle class tax increases,” saying those options work in the short-term but “actually cause more economic damage and prolong our budget struggles.”

Senate Budget Committee chair Holly Mitchell, a Democrat from Los Angeles, said lawmakers have identified savings approaching $100 billion over the next two years. About $41 billion would come from the state’s reserves and other budget maneuvers that include internal borrowing and shifting some costs to future years.

Most of the rest would come from the federal government, with lawmakers estimating they would get $33 billion from what they hope will be an upcoming aid package proposed in Congress. Newsom and leaders from four other western states signed a letter to Congress on Monday asking for $1 trillion in aid for state and local governments.

But some Republican leaders have warned not to count on that money. Senate Republican Leader Shannon Grove, who represents Bakersfield, did not sign the letter asking Congress for the additoinal help. She said the request “comes at a price.”

“I could not support an effort that continues to allow our state government to run (amok) without protecting industries by streamlining burdensome government regulations, reforming unsustainable projects, and supporting private businesses which are California’s vital economic engine,” she said.