New Taxes, More Debt, and Higher Labor Costs Are Not the Solution to Our Affordable Housing Crisis

Tom Scott
CA Executive Director, National Federation of Independent Business

As the California Legislature moves to act on a series of bills dubbed the “Affordable Housing Package,”NFIB announced our opposition to three key bills in the package: Senate Bill 2 (Atkins); Senate Bill 3 (Beall); and Senate Bill 35 (Weiner) on behalf of our 22,000 dues-paying small business owners.

There is no debate or question that we have a serious housing affordability crisis in this state, and we didn’t get here overnight. Each year, we need to build roughly 180,000 homes just to keep up with population growth, and over the last decade we have fallen short by at least 1,000,000. At the core of our exploding housing affordability crisis is basic economics: we have spiking demand coupled with stagnating supply, this leads to skyrocketing housing prices. This is a critical issue for small businesses who are seeing their workforce driven out of this state due to prohibitively high housing costs. 

Unfortunately, Senate Bill 2 (Atkins), Senate Bill 3 (Beall), and Senate Bill 35 (Weiner) do nothing to address these fundamental economic realities, but instead raise more taxes on struggling small businesses and working families, put California further into debt, and drastically raise labor costs to build a home.

SB 2 is a direct, regressive $75-225 tax on real estate documents, paid for by those who are least able to afford it such as widows, the elderly, and homeowners facing foreclosure. SB 3 borrows $4 billion, which will ultimately cost taxpayers $8 billion, to potentially build 70,000 subsidized housing units over 5 years—certainly not even putting a dent in the 180,000 new homes needed each year. And SB 35 fails to streamline or reform a single regulation while decimating local control, on top of mandating prevailing wage which would add an average $84,000 to the cost of each new home.

We cannot tax, fee, and mandate our way to housing affordability in this state. We all want to see solutions from Sacramento, but the hard work lies in significantly reducing the costs and barriers to build homes in this state. The average cost of all regulations to build one new home is roughly $100,000 in California; these costs are the true driver of our massive housing supply shortage, which is the cause for our current affordability crisis.

Each proposal this legislature considers to combat our affordable housing crisis should answer one simple question: will this bill make a home more or less expensive? Unfortunately, SB 2, SB 3, and SB 35 do not address this fundamental problem and instead only offer new taxes, more debt, and higher labor costs which will only exacerbate our affordable housing crisis.

Tom Scott is the State Executive Director for NFIB California, which represents 22,000 dues-paying small business members across the state.

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