Middle class is disappearing in California as wealth gap grows

PovertyCalifornia made major news this month, surpassing Britain and reclaiming a valuable economic marker as the fifth largest economy in the world. Its post-recession growth is accelerating under President Trump’s administration and the state even turned in a modest surplus.

However, the state remains one of the most unequal in the nation — one that has both billions of dollars in Silicon Valley and rampant homelessness. The Golden State’s efforts to eliminate poverty instead accentuates it, and its tax system inadvertently aids those who are already wealthy. With the middle class leaving in droves, California’s society represents a neo-feudal mix of robber barons and poor. It’s an unsustainable mixture.

California has a gross domestic product of more than $2.7 trillion. This represents about 13.9 percent of the national U.S. economy. The topline numbers are a bit misleading, as the state represents a similar 12.1 percent of the national population.

California represented the world’s fifth largest economy before the recession, falling to 10th largest in 2012 while growing at an anemic 0.1 percent per year. The state has been fortunate to be the center of the tech and internet sectors, which represent almost 10 percent of the total. Part of the growth was due to a rapidly expanding real estate sector, which heavily benefits wealthy residents. …

Click here to read the full article from The Hill

Court Says California Cities Must Let Homeless Sleep On Streets

homelessA ruling this month by the 9th U.S. Circuit Court of Appeals which holds it is unconstitutional to ban homeless people from sleeping on the streets is likely to complicate the attempts to crack down on homelessness problems by local governments in California.

While the ruling involved a 2009 law adopted by Boise, Idaho, it is binding on California, which is one of the states under the 9th appellate court, which is based in San Francisco.

“[J]ust as the state may not criminalize the state of being ‘homeless in public places,’ the state may not ‘criminalize conduct that is an unavoidable consequence of being homeless — namely sitting, lying, or sleeping on the streets,’” Judge Marsha Berzon wrote for a three-judge panel.

The finding that the law is a cruel and unusual punishment under the Eighth Amendment was welcomed by activists who have long argued that such restrictions make being poor a crime.

Maria Foscarinis, executive director of the National Law Center on Homelessness & Poverty, told the Idaho Statesman that “criminally punishing homeless people for sleeping on the street when they have nowhere else to go is inhumane, and we applaud the court for holding that it is also unconstitutional.” Her group provided an attorney to the handful of Boise homeless men and women who sued over the city’s law.

If Boise does not appeal the ruling, the 9th Circuit will have expanded on the protections for the homeless that it created in 2007. The appellate panel ruled then that Los Angeles could not ban people from sleeping outside when shelters were full.

Legality of living in cars is next battleground

Meanwhile, the next fight over homeless rights in California has already emerged. It involves regulations in many cities that have the de facto effect of banning people from sleeping in their vehicles, even if the practice is not specifically singled out.

In Los Angeles, for example, a city ordinance that bans overnight parking in residential areas and a growing number of such restrictions in commercial areas have made it increasingly difficult for vehicle dwellers to find anywhere to sleep. This has made life difficult for the estimated 15,000 people who live in their cars, trucks or recreational vehicles in the city. The policy prompted sharp criticism from some quarters this spring over a perception that City Hall was insufficiently sympathetic to those without shelter.

City officials in San Diego and Santa Barbara are going in the opposite direction, starting trial programs in which car dwellers are allowed to use a handful of designated parking lots overnight – so long as they meet a handful of rules meant to preserve public safety and to minimize littering and public defecation and urination.

But San Diego may have to expand its program or develop other new policies as well. Last month, federal Judge Anthony Battaglia issued an injunction banning the city from ticketing people for living in their vehicles.

Unlike in the other high-profile federal cases involving city laws and homelessness, Battaglia’s argument wasn’t based on the idea that penalties which appeared to single out the homeless were cruel and unusual.

Instead, he concluded that “plaintiffs have shown a likelihood of success on the merits of their claim that the ordinance is vague because it fails to alert the public what behavior is lawful and what behavior is prohibited.” He noted that some people were given tickets merely for reading books in their cars.

The injunction is not permanent, but Battaglia indicated he is likely to make it so in coming months.

This article was originally published by CalWatchdog.com

California’s Shameful Poverty Crisis

PovertySeven years ago, the Census Bureau began calculating poverty by a new “supplemental” method, responding to criticism that the half-century-old official poverty rate was too simplistic and inaccurate.

The new method quickly gained wide acceptance as much more accurate because it included more forms of income and, most importantly, adjustments for widely varying costs of living.

Almost immediately, California achieved the dubious distinction of having the nation’s highest poverty rate, mostly because of its high costs of living, especially housing. Currently, it’s still No. 1 with a 20.4 percent poverty rate, more than twice that of No. 50 Vermont.

The Public Policy Institute of California and Stanford University’s Center on Poverty followed suit, using a similar methodology to calculate poverty rates for the state’s 58 counties.

Their California Poverty Measure currently tabs the state’s rate at 19.5 percent with Los Angeles County the highest at 24.9 percent and Placer County the lowest at 13.1 percent.

PPIC and Stanford also calculated an additional “near-poverty” rate of 19.2 percent, which implies that nearly 40 percent of Californians are coping with economic distress.

And now we have an even deeper dive into persistent economic despair in the nation’s richest state.

United Ways of California, a coalition of local organizations that raise money for charities, commissioned “Struggling to Stay Afloat,” which delves into poverty not only at the state and county levels, but right down to neighborhoods.

Moreover, the new study breaks down the data not only geographically, but by race or ethnicity, gender, occupation, marital status, education and other factors.

Overall, it found that “1 in 3 households in California, over 3.3 million families – including those with incomes well above the (official) federal poverty level – struggle every month to meet basic needs.”

Not surprisingly, Latinos have the highest poverty of any ethnic group, with 53 percent of households having incomes that fall below the “real cost measure.” The incomes deemed to be adequate vary widely from community to community, depending on local living costs.

All three of these statistical exercises are telling us the same thing – that California has an immense poverty problem rooted more in high living costs than in its family incomes. And housing is the most important cost driver.

The political response to California’s poverty crisis has been tepid, even though Democrats who dominate its politics often denounce economic disparity.

Raising minimum wages and welfare grants and offering a state tax credit to the working poor may have some impacts on the margin. However, the extra incomes they generate are quickly consumed by higher housing costs, plus the higher gas taxes, local sales taxes and energy bills being imposed to deal with other political priorities.

Poverty must be attacked at its roots, such as the ever-worsening shortage of housing, which drives its costs ever-upward, and the lack of education and training for good jobs that employers want to fill, but can’t.

Capitol politicians have sidestepped the politically difficult task of overcoming local opposition to housing construction, or reducing environmental red tape. The state Democratic Party just endorsed a ballot measure that would make local rent control ordinances easier to enact, thus discouraging new housing investment even more.

Nor has the dominant party been willing to buck the union-led education establishment and insist on more accountability for educating poor kids – more than half of the state’s 6 million K-12 students – so they can break their families’ poverty cycles.

Cowardice and tokenism cannot and will not erase California’s shameful status as the nation’s most poverty-ridden state.

This article was originally published by the San Jose Mercury News

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