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July 2004, Volume 10, Number 3


California: Housing, Budget

Housing. The San Joaquin Valley is attracting "housing equity refugees" from the Bay Area and southern California, people in coastal areas whose homes have appreciated in value. By selling their homes and moving to the San Joaquin Valley, they can have nicer homes and money left over. San Joaquin Valley housing prices are rising sharply, and the percentage of San Joaquin Valley families who can afford to buy the median-priced $235,000 house in 2004 fell to 36 percent.

Many "normal" housing ratios do not apply in the San Joaquin Valley, such as one house per 1.5 jobs or 2.5 residents.

In Oxnard, the $6 million 24-unit Meta Street Apartments opened March 13, 2004, offering farm workers who earn $3,835 to $37,350 a year housing for 30 percent of their earnings. Nearly 150 farm worker housing units are in the planning stages, including a 24-unit rental project in Santa Paula and a 58-unit project in south Oxnard. Villa Cesar Chavez opened on 4.2 acres of land that had temporary farm worker housing built in the 1930s.

La Colonia in Oxnard has 9,500 people in the one-square-mile, and is largely a Latino enclave. The 260-unit The Courts complex houses residents who pay up to 30 percent of their income in rent. The complex needs repair, which the city plans to finance by allowing a private developer to build 300 more units. Some residents of The Courts worry that the increased density will result in overcrowding, and oppose the project even though their units would be remodeled.

The city of Carlsbad collects fees from developers when they convert farm land to housing. In July 2004, the City Council allowed some of the $6 million collected to be used for farm worker housing. Much of the land used to grow crops in southern California is leased, and farmers plan to use it only until it is developed, making them reluctant to invest in housing for workers.

Section 8 housing assistance is a three-decade old program that allows poor families, disabled people and the elderly to obtain one of 1.9 million rent vouchers available in 2004 from a local housing authority and take it to any private landlord in the community willing to accept it. The Department of Housing and Urban Development gave each of the nation's 2,500 participating housing authorities a specific number of vouchers each year, set rent limits for every community, and then reimbursed rental costs up to this limit. HUD wants to cap the cost of Section 8 vouchers, $16.4 billion in FY04, by giving housing authorities their last year's voucher allocation plus an inflation adjustment.

Economist Survey. The Economist surveyed California in its May 1, 2004 issue and concluded that the private sector remains the engine of the world's fifth biggest economy, but that the state's government is "broken" because Proposition 13 shifted taxes and power from local governments to the state government while term limits erased institutional memory in Sacramento. The education system has slipped, according to the magazine, because the shift in funding from local to state governments increased the power of teachers unions at the expense of local businesses.

The private sector continues to thrive from the clustering of entrepreneurs, finance, and brains, network effects and optimism, but the public sector is paralyzed, according to the Economist. California added a peak 497,000 jobs in 2000. In 2004, the state's employment is expected to rise by 120,000, and in 2005 by 300,000, what was normal job growth in the late 1990s.

Some 121 US cities and counties have living wage ordinances that require employers with city or county contracts, or using city or county land, to pay workers at least $9 or $10 an hour and provide health insurance benefits. For example, Berkeley's living wage law enacted in June 2000 set a minimum wage of $9.75 plus health benefits, or $11.37 an hour without health benefits. A restaurant owner sued Berkeley, but the U.S. 9th Circuit Court of Appeals on a 2-1 vote in June 2004 upheld a lower court ruling that said living wage ordinances were a lawful regulation of economic activity so that employers with city ties can be required "to contribute to the welfare of the surrounding community and not to exacerbate its problems."

California was still working on its $103 billion state budget two weeks after the July 1, 2004 deadline. Governor Arnold Schwarzenegger made deals with schools, universities, and local governments under which they accepted cuts now in exchange for protection from cuts in the future. Many legislators resisted these deals, to which they were not a party.

California spends $6 billion a year on prisons, and over the past two decades, the state opened 21 new prisons and no new UC campuses. In July 2004 a blue-ribbon commission criticized runaway costs, a high rate of repeat offenders and abusive guards. The state has 33 prisons and 160,000 inmates. Over half of ex-convicts return to prison for new crimes or parole violations, leading to suggestions to reduce recidivism that include more education, drug treatment and job-training programs. The commission was especially critical of the 31,000-member Correctional Peace Officers Association, the prison guards union.

The film, "A Day Without a Mexican," opened June 4, 2004, portraying life for Californians after a mysterious cloud magically all the Latinos. A state senator's wife must tackle the laundry without a maid, Border Patrol agents fear for their jobs, schools close and shoppers scramble for the last fresh fruits and vegetables. Californians hold candlelight vigils, singing "De Colores" and holding placards reading "Come back, amigos."

Joan Obra, "A New Migration Search for a better quality of life drives families to relocate to the Valley," Fresno Bee, March 28, 2004.

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