Utah housing lessons for CA

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

Sorry, Utah.

And apologies to the rest of the West. California’s epidemic shortage of housing hasn’t just sickened our own state—by driving up prices, forcing residents into rentals and onto the street, and putting a $140 billion annual drag on the Golden State’s economy. The disease is spreading to our neighbors, too.

Today, every significant city in the Western United States is experiencing a minor league version of the California housing crisis. Shortages are especially severe in Seattle, Portland and Eugene, Oregon, and cities across the Mountain West are seeing big run-ups in home prices and rents; even in Boise, prices are increasing at a nearly 10 percent annual clip.

California’s housing crises and those of its neighbors share some of the same causes: lack of water sources to support development, shortages of skilled construction workers, and the rising price of increasingly scarce land near job centers. But our Western neighbors face an additional challenge: the influx of Californians unable to find housing in their own state.

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Herb Wesson’s Latest Pitch: City Owned ‘Bank of Los Angeles’ … Is It  Worth the Risk?

Jack Humphreville
LA Watchdog writer for CityWatch, President of the DWP Advocacy Committee, Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and Publisher of the Recycler

On Tuesday, Los Angeles City Council President Herb Wesson made a motion to look into the feasibility of creating the “Bank of Los Angeles” with a vision statement of “financing the building of affordable housing,” making loans to “small business entrepreneurs,” and accommodating the cannabis industry and its banking requirements.

“WE THEREFORE MOVE that the City Council INSTRUCT the City Administrative Officer (CAO) and the Chief Legislative Analyst (CLA), with the assistance of the Office of Finance/City Treasurer, and the City Attorney, to report back quickly to the Ad Hoc Committee on Comprehensive Job Creation Plan on the feasibility, requirements, legislative barriers, and any other relevant aspects of creating a state-chartered public bank, or other similar such financial institution, named the “Bank of Los Angeles” that would provide banking services to reinvest in the communities, neighborhoods, and residents of the City of Los Angeles primarily through the acquisition, construction, and rehabilitation of affordable and workforce housing, utilizing deposits and providing financial services and products to local businesses, including the cannabis industry.” 

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“Tax Land Wealth” Theory Ignores Ability to Pay

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

A recent Los Angeles Times op-ed by three professors at UCLA’s Luskin School of Public Affairs suggests the way to raise revenue to deal with homelessness is to tax land because “housing scarcity delivers unearned wealth to people who own housing.” This tired argument of taxing land wealth ignores two important principles: ability to pay and the question of whose asset is it—the homeowner or the state?

While the article focused on suggesting an alternative tax-raising mechanism to the linkage fee proposed by Mayor Eric Garcetti that would tax new development to fund housing for homeless, the proposal is built on the idea that land value increases over time, creates wealth for the property owner, and is a worthy target for taxation.

Property value increases are paper profits, not coin of the realm. Just because a property has increased in value does not mean the homeowner has the ability to pay new taxes. Look no further than California’s famous Proposition 13 tax revolt. The rebellion against increased taxes because of rising home values was based on the homeowners’ lack of ability to pay to keep up with the taxes.

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The California taxpayer’s case for independence

Dave Marin
Director of Research and Policy, California Freedom Coalition

On Tuesday afternoon, Attorney General Xavier Becerra’s office cleared the California Freedom Coalition’s initiative, “California Autonomy from Federal Government,” for circulation. If passed, it would direct the Governor, in coordination with our congressional delegation, to negotiate more autonomy for California, possibly up to the point of California becoming an independent country.

Why should California want more autonomy (or independence)? Viewed through the lens of taxpayer advocacy, the case is simple, if not stark.

You’ve probably heard that California is a “donor” state. If you combine state spending data from the Pew Charitable trusts with IRS data for 2014, you can calculate that California taxpayers were on the hook (that is, accounting for deficits) for $39.8 billion in excess of what we paid in federal taxes, or about $1,025 per person.

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Cap-and-trade deal also cut taxes

Loren Kaye
President of the California Foundation for Commerce and Education

As part of a comprehensive, bipartisan solution implementing the state’s ambitious climate change goals, the legislation that extended the cap-and-trade program also included several useful tax reductions.

These tax cuts will help mitigate cost increases on rural Californians and partially offset some costs for California manufacturers and energy producers.

Sales tax exemption

Manufacturers gained a partial, temporary exemption from state sales taxes, beginning in 2014, through 2022. The exemption applies to purchases of equipment used in manufacturing and research and development, but did not apply to businesses in the financial services, resource extraction or farming sectors. The exemption is limited to $200 million per taxpayer per year.

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The Cities Creating The Most High-Wage Jobs

Joel Kotkin and Michael Shires
Joel Kotkin, Editor of NewGeography.com and Presidential fellow in urban futures at Chapman University, and Michael Shires, Associate Professor of Public Policy, Pepperdine University

As the country moves toward full employment, at least as economists define it, the quality of jobs has replaced joblessness as the primary concern. With wages still stagnant, rising an anemic 2.5% in the year to May, the biggest challenge for most parts of the U.S. is not getting more people into the workforce but rather driving the creation of the types of jobs that can sustain a middle-class quality of life.

To that end, the key sector to watch is business and professional services. By far the nation’s largest high-wage sector — including such fields as law, accounting, architecture, advertising, engineering, scientific research and development, and computer systems design – it employs 20.5 million Americans, roughly the same as the finance and manufacturing industries combined. Over the past decade, the number of people working in business and professional services has expanded by nearly 2.5 million, including an increase of more than half a million jobs in the last year.

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Surprising Item in Poll on the Environment; But What If They Asked a Follow-Up Question

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

The Public Policy Institute of California released its poll on Californians & the Environment and the poll indicated that residents and voters are definitely pro-environment. But, the poll included a surprise for those who followed the cap-and-trade debate.

Californians were asked if they supported cap-and-trade even if the process added 15-cents per gallon to gasoline. First, cap and trade had to be explained because more than half those asked had not heard about it.

Putting that thought aside, respondents favored cap and trade by 60% to 34% even with the additional cost. When the pollsters broke the answers down into categories based on Household Income, a surprise showed the greatest support came from those in the lowest category—those households that bring in under $40,000 a year. Respondents in that category were most strongly in support—65% in favor, 28% opposed.

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We did it in CA, Now Let’s Make Washington Work for Us

Arnold Schwarzenegger
Former Governor of the State of California

(Editor’s Note: Former Governor Arnold Schwarzenegger has been fighting gerrymandering once again – this time by supporting a case, Gill v. Whitford, that is expected to be heard by the United States Supreme Court this fall. The case is the first purely partisan gerrymandering case to go to trial in 30 years, and seeks to establish a standard that will limit future redistricting efforts to benefit one party over the other. Schwarzenegger is crowdfunding a campaign to support the fees associated with the case and has promised to match every dollar donated. You can find his campaign at www.makewashingtonworkforus.com.)

Congress spends year after year failing to pass immigration reform, infrastructure investment, an actual energy policy, any measures to reduce our debt, or really anything at all. The people complain, and give them an approval rating worse than Herpes, colonoscopies, and cockroaches. But every two years, we re-elect 98% of them.

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Why California’s Greatest Historian Couldn’t Get Elected in San Francisco

Michael Bernick
Former California Employment Development Department Director, whose newest book is The Autism Job Club (with R. Holden).

(This essay appeared earlier this week in Zocalo Public Square, and has been slightly edited).

Kevin Starr is widely regarded as California’s pre-eminent historian—a prolific author and public intellectual for nearly 50 years—and his death earlier this year generated much writing about his life and scholarship. But one episode in his life was not widely known: his race for Supervisor in San Francisco in 1984. I was a volunteer in that campaign, and got to see firsthand how the campaign, and its aftermath, would influence Starr’s career.

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Rapidly growing hyperloop industry offers alternative to California high-speed rail

Marc Joffe
Policy Analyst, California Policy Center and Founder, Public Sector Credit Solutions

Since Elon Musk introduced hyperloop in 2012, several startups have been formed to commercialize the technology. Hyperloop is a 21st century approach to intercity travel in which pods fly through sealed, low pressure tubes at speeds of up to 760mph. Although a large amount of hyperloop research is occurring in California, our state government is ignoring it while pressing ahead with a costly high-speed rail project that is based on mid-20th century technology.

The two largest hyperloop companies are based in Los Angeles County. Hyperloop One has raised $141 million in capital thus far. After some internal friction, the firm appears to be gaining momentum, recently announcing a successful test run at its development facility near Las Vegas. The company reported levitating a pod and accelerating it to a speed of 70mph during a 5.3 second run. Its next goal is to reach a speed of 250mph with a passenger on board.

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