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July 2020, Volume 26, Number 3

California: Housing

California has expensive housing and 150,000 homeless residents. SB 50 aimed to reduce housing costs by limiting the ability of local governments to block high density housing near mass transit stops, but was defeated for the third time in January 2020 after opposition from local governments that resisted a loss of their authority over zoning.

The Covid-19 pandemic, which was worst in areas with dense housing and mass transit, may slow efforts to enact laws that allow the state government to overrule local governments and promote more transit-centered development.

Governor Gavin Newsom, elected in 2018, promised the state would add 3.5 million housing units by 2025, a goal unlikely to be reached. About 100,000 new housing units were built in 2019, when the state?s median home value was $556,000.

Greenfield and Salinas are getting more housing for H-2A workers. Developer Mike Avila is constructing seven buildings for 800 workers in Greenfield, with two buildings that house four workers per bedroom ready in spring 2021 for H-2A workers employed by Duda Farm Fresh Foods. Avila?s Harvest Moon project off North Davis Road near Salinas will house 1,200 workers in 10 buildings, making it the largest farm labor camp in Monterey county. Avila built the 800-bed Spreckels Crossing for Tanimura & Antle and the 600-bed Casa Boronda for Nunes Company.

McFarland, a city of 15,000 in Kern county, reversed an earlier vote in April 2020 and approved the conversion of two closed state prisons into private, 700-bed immigration detention facilities operated by the Geo Group. Geo, McFarland?s second-largest employer, after the school district, promised McFarland jobs as well as $2 million a year in taxes and fees.

Hispanics are 18 percent of US residents, and 34 percent of those diagnosed with Covid-19. In California, Florida and Texas, as well as states such as North Carolina, the Latino share of people with confirmed Covid-19 cases greatly exceeds the Latino share of the population. Hispanics were 39 percent of California residents, and 57 percent of Covid-19 cases in June 2020. The highest infection rate statewide is in predominantly Hispanic Imperial county, followed by Kings county, which has several meatpacking plants.

Many Hispanics are employed in essential jobs, live in crowded housing, and participate in extended family events, which may make them more prone to get and spread the virus.

Water. The federal government wants to transfer more of the water that flows into the Sacramento-San Joaquin Delta from Northern California mountains to farms and cities in the San Joaquin Valley and southern California, while the state and environmentalists want to keep more water in the Delta to preserve its ecosystem. A quarter of the water arriving in the Delta is used in the Delta or pumped south; three-fourths flows into San Francisco Bay and the ocean.

What is the optimal Delta outflow? Capturing more fresh water before it reaches the Delta in additional reservoirs is costly, and a great deal of water must flow into the San Francisco Bay in order to prevent salt water intrusion. Water managers have tried to preserve a large Delta outflow to prevent salt water intrusion and to preserve the ecosystem, dedicating 10 percent of the total outflow to environmental restoration.

Farmers and other water users want to reduce this environmental outflow toward zero, so that two-thirds of the water flowing into the Delta could be pumped south. The Trump administration in February 2020 signaled its support for reducing the Delta outflow to send more water south.

Budget. California?s unemployment rate, less than four percent in February 2020, rose to 16 percent in May 2020 and is expected to average 10 percent in 2020. Job losses were concentrated in lower wage sectors, including leisure and hospitality and retail.

There were 18 million California workers covered by unemployment insurance in February 2020, and 3.6 million or 20 percent applied for UI benefits during the six weeks between March 15 and April 25, 2020, including 30,000 or seven percent of the 431,000 workers employed in agriculture.

The highest share of UI claimants was in NAICS 71, arts and entertainment, where 45 percent of the 332,000 employees in February 2020 applied for UI benefits, followed by NAICS 71 accommodation and food service, where 34 percent of 1.7 million employees applied for UI. Fewer than six percent of those employed in NAICS 52 finance and insurance and NAICS 55 Management of Companies and Enterprises applied for UI benefits.

In January 2020, the state?s proposed a $222 billion budget for 2020-21 that included new initiatives to provide health care for unauthorized seniors and a $6 billion surplus. By May 2020, the state projected a $54 billion deficit due to $41 billion in lower taxes, $7 billion in increased health care costs for Medi-Cal for 14 million residents in July 2020, and $6 billion in spending on Covid-19. California?s state GDP was $3.1 trillion in 2019.

A revised $202 billion budget in June 2020 could reduce the pay of state employees by 10 percent and funding for higher education unless the state receives federal aid before October 2020. The revised budget preserves most state services for low-income residents, including a new tax break for unauthorized parents with earnings who have children under six.

California in May 2020 began distributing $75 million in state funds to 150,000 unauthorized residents in $500 grants on a first-come, first-served basis. The money was distributed by 12 nonprofits that reported thousands of calls from the estimated 10.6 million unauthorized residents of the state. Foundations have pledged another $50 million to provide grants to another 100,000 unauthorized residents. Applicants must prove they are unauthorized and jobless due to Covid-19.

California has 70 Indian casinos with 60,000 employees; some began to reopen in May 2020 despite state and local instructions to remain closed. The tribes closed their casinos in mid-March 2020 under pressure from the state government, and asserted their sovereignty to reopen.

Population. California surpassed New York as the most populous state in 1962, when there were 17 million residents. During the 1980s, the state?s population increased by over 600,000 a year due to natural increase and net immigration. California gained seven House seats after the 1990 census.

Population growth has stalled. California lost a net 88,000 people in 2019, leaving the state with under 40 million residents, as more US-born people left than arrived. Net immigration is positive, but lower than in the past, so California may lose a House seat after the 2020 census.