Are Taxes the Solution to CA’s Homeless Problem?

800px-Helping_the_homelessApparently, politicians up and down the state think the solution to California’s homeless problem is taxes. In San Francisco, members of the board of supervisors want to tax the tech industry. In Los Angeles, the city council wants to raise property taxes on all property owners. On the state level, legislative leaders plan to shift income taxes from the rich paid to a fund to help those with mental illness to finance housing bonds for the homeless.

Homelessness is a complex problem and the solutions are not easy. As far back as 2001 a brief by the Public Policy Institute of California identified some of the reasons for a growing homeless population including the high cost of housing, debilitating personal habits and attributes of many of the homeless—alcoholism, crack cocaine addiction, and mental disorders— and income inequality. Its safe to say that since then the homeless situation has worsened.

But is raising taxes the solution?

In some cases it makes sense. Take the Proposition 63 income tax dedicated to help with mental illness. The fund was not being well spent according to an audit. The state effort to shift some revenue from that fund to a more useful function to finance bonds allows a foundation for helping the homeless across the state.

But the local solutions have less merit and again target business in large part as the answer to a problem.

In San Francisco, supporters of the tech tax blame the tech business for the homeless problem arguing that the booming tech industry is responsible for increased housing costs in the city. The tax would raise about $120 million a year.

Given that the city by the bay has been a haven for the homeless and downtrodden well before the boom in technology, it seems tech is being made a scapegoat. An attack on one industry could be an impetus for individual companies to pull up roots and find a friendlier business environment. The precedent setting idea of taxing one industry to solve a societal problem is dangerous for all sectors of the business community. The obvious question: Who’s next?

The Los Angeles approach is different but still questionable. The city council approved putting a $1.8 billion bond on the ballot, which will probably cost twice as much to pay off with interest and will be backed by property taxes. The council is also considering a parcel tax on all properties and may move forward with both plans until a final decision is made in August on which to put on the ballot.

The property taxes will fall heavily on residents who are struggling with the high costs of housing in the region. Homeowners, businesses and apartment owners will carry the burden. Renters covered by the city’s rent-control provisions will not have the tax passed on to them.

In both San Francisco and Los Angeles a two-thirds vote is required to pass the taxes.

Opposition from the business community and some local pols, including the mayor, are lining up against the tech tax in San Francisco. However, the mayor of Los Angeles has promised to find revenue for homeless issues and will support the final plan. Business reaction could be mixed, although the parcel tax, especially if the tax is calculated on a property’s square footage, will certainly bring out strong opposition from business.

One thing that is often ignored in looking for solutions to local problems is to improve the business climate, create jobs, and allow people to earn more. Admittedly, this is not a silver bullet solution for the homeless crisis but it should be talked about constantly instead of always falling back on the T-solution. Taxes.

This piece was originally published by Fox and Hounds Daily

L.A. Needs Jobs, Not Tax Hikes, to Fight Poverty, Homelessness

 

homelessIn 2007, about a year before the economy crashed, the Gallup Poll found that 28 percent of Americans had at some point worried about becoming homeless.

It’s worse today. A new UCLA study found 31 percent of county residents worried about becoming homeless. Even among people earning between $90,000 and $120,000, 1 in 4 were afraid they would one day live on the street.

The fear is a symptom of a stagnant economy. If people felt confident that they would always be able to find a job, some kind of job to pay the bills, everybody would be sleeping better at night. Instead, there is widespread anxiety that unemployment could be imminent, devastating and at an ever-younger age, permanent.

When economic stagnation is the problem, a tax increase is not the solution. Higher taxes drain away resources needed for growth and job creation. Beleaguered businesses shrink, close or leave. Poverty spreads like water on a marble floor.

So it’s particularly depressing to see the city and county of Los Angeles plotting to raise taxes in the name of helping the homeless.

Mayor Eric Garcetti’s proposed $8.75 billion budget includes a pledge of $138 million to help get homeless people into affordable housing, but the future of Garcetti’s 10-year, $2 billion plan to house the homeless depends on persuading voters to approve a higher sales tax, more borrowing, or a new transfer tax on real estate transactions. None of those proposals reached 50 percent approval in a recent poll conducted for the city. They’d need a two-thirds vote to pass.

L.A. County’s proposed budget would spend $100 million to help the homeless, about one-fifth of what county officials say is needed. A poll on how to pay for it found 76 percent support for a half-percent tax increase on income over $1 million, about 67 percent support for a half-percent increase in the sales tax or a 15 percent sales tax on marijuana, and 47 percent approval for a $49 parcel tax added to property tax bills.

But can the problem of homelessness be solved with higher taxes?

There is reason to doubt it.

The Skid Row Housing Trust recently opened an affordable housing development to serve homeless veterans. “The Six” provides 52 units of permanent supportive housing, but it cost $16.7 million, about $321,000 per unit.

The Los Angeles Homeless Services Authority says 46,874 people in L.A. County are without a roof over their heads. To house each of them in a place like “The Six” would cost $15 billion.

Suppose we paid it. Would Los Angeles then be free of homeless encampments? Would the sidewalks be clear for pedestrians? Would red lights be just red lights, and not a 30-second Dickens novel?

Not likely, thanks to the federal courts.

In 2003, the American Civil Liberties Union sued the city of Los Angeles over enforcement of a section of the city code that allowed police to arrest people for sleeping on the street. The city lost. The Ninth U.S. Circuit Court of Appeals said the Constitution “prohibits the city from punishing involuntary sitting, lying or sleeping on public sidewalks that is an unavoidable consequence of being human and homeless without shelter in the City of Los Angeles.”

The courts have also protected panhandling, calling it a First Amendment right. Last year, cities in Maine and Illinois were told they could not ban panhandling on the medians at intersections or in a busy downtown area.

So Los Angeles taxpayers could spend twice the city’s annual budget on housing the homeless and still have no legal way to stop a new wave of people from replacing them on the streets.

Homelessness is not one problem and it doesn’t have one solution, unless you’re a politician searching through polling data for a way to get voters to support another tax increase. Nobody likes homeless encampments? Bingo!

What’s needed in Los Angeles is a comprehensive effort to improve the business climate so people can find good jobs or run small businesses profitably. Every government policy that burdens businesses or consumers with higher costs reduces hiring, deepens poverty and puts more people at risk of living in vehicles, shelters or tents.

Sadly, our elected officials think of businesses not as engines of economic well-being, but as cash registers to be robbed by government do-gooders. They would rather have their picture taken in a homeless shelter than get out of the way and let people earn a living.

That should keep everybody up at night.

L.A. Turns to Feds for Help With Homeless

homelessStruggling to slow L.A.’s spike in homelessness, city leaders have booked an appointment with the federal government.

“Secretary Julian Castro will be in Los Angeles on Tuesday to meet with Mayor Eric Garcetti, City Council members and county supervisors, HUD spokesman George Gonzalez said,” according to the Los Angeles Times.

Hoping for cash

Despite the crisis, which has drawn unfavorable media attention amid L.A.’s recent boom in homeless-heavy areas like the city’s downtown, expectations were set low. “No major announcement was expected to come out of the meeting. Gonzalez said it was intended as an ‘exchange of ideas’ on the state of homelessness in Los Angeles,” the Times added.

City leaders hope the agency’s concern could manifest in additional funds to fight what Mayor Eric Garcetti has declared a public emergency around homelessness, as Los Angeles city and country governments both prioritized the issue. As the New York Times reported last month, the announcement marked the first time a U.S. city had made such a proclamation. “National experts on homelessness say Los Angeles has had a severe and persistent problem with people living on the streets rather than in shelters — the official estimate is 26,000,” noted the Times.

Uncertain goals

After announcing his initiative, Garcetti said, “he received a call from Castro, who had toured Skid Row earlier this year,” as the Los Angeles Daily News reported.

“The focus on homelessness came after a count conducted this year by Los Angeles Homeless Services Authority showed that the number of homeless people in the county increased by 12 percent since 2013. More than 44,000 people are homeless in Los Angeles County and about 70 percent of them live on the streets, in vehicles or in make-shift encampments.”

Questions remained as to what exactly Castro intended to accomplish through his visit. “He did indicate several times that HUD approved of the way that local elected officials were tackling homelessness,” Southern California Public Radio observed; in remarks, Castro noted that “more than anything else, I’m here […] to listen,” while insisting that “criminalizing homelessness is not the best approach. That is something that HUD has recognized very firmly.”

Despite the focus on L.A.’s significance to the Department of Housing and Urban Development, city officials appeared to place their funding hopes in the Federal Emergency Management Administration. Although former Secretary of Labor and current L.A. Supervisor Hilda Solis recently invoked the agency, the Daily News observed, its spokesman for the area covering Los Angeles threw doubt on the idea. “For homelessness, I’ve never heard that as a cause of an emergency because that’s a local social issue that would generally be handled at the city or county or state level,” he said.

A big pledge

In the interim, Los Angeles has pledged to allocate substantial sums to curbing homelessness, which has become an especially galling problem among veterans. “Members of the City Council say they are working on a $100 million plan to combat homelessness,” SCPR reported. “County supervisors this month voted to boost spending on homelessness to $100 million for the year. Earlier, Mayor Eric Garcetti had said he would release a blueprint to end homelessness in August.”

Garcetti’s priorities around urban issues have not been without their critics. At a recent speech in South Los Angeles, the mayor was confronted by Jefferson Park protesters, some of whom pounded on his vehicle and demanded the resignation of the current Los Angeles Police Department chief Charlie Beck. “I am disappointed that our conversation was cut short when there is so much work for us to do together to make our neighborhoods stronger and safer,” Garcetti later remarked, according to CBS Los Angeles. “I believe in our city and my commitment to our shared concerns continues stronger than ever.”

Originally published by CalWatchdog.com