ELECTION 2024
California’s ballot measures could worsen homelessness
John Seiler | October 31, 2024
On Nov. 5, voters in California cities can make the housing and homeless crises better – or worse. Alas, most likely the latter. They likely will pass the vast majority of local sales tax increases, school and other bonds that include property tax increases and rent-control edicts. Many of these measures even are intended to help the housing shortage.
According to a tally I made for The Orange County Register, just for Southern California 116 such measures are on city, county and school district ballots. Hundreds of similar measures are up for a vote in the rest of the state.
Why will these levies make city living worse? Let’s start with the sales tax increases, 13 of which mention helping solve the “homeless” problem. In Los Angeles County, Measure A is titled the “Homeless Services and Affordable Housing Ordnance.” It would replace the Measure H one-quarter-cent sales tax of 2017, expiring in 2027, with a new half-cent sales tax that never would expire unless voters repeal it.
Among other things, the title claims Measure A would “create affordable housing, support home ownership, provide rental assistance, increase mental health and addiction treatment, reduce and prevent homelessness; and provide services for children, families, veterans, domestic violence survivors, seniors, and disabled people experiencing homelessness.”
To make sure voters get the message, some variation of “home” or “homeless” is included four times in that one long sentence. But the homeless pay sales taxes, too. As do those at risk of being homeless. And building companies pay the tax on construction materials.
Then there are jobs. A 2020 USC study found, “Unemployment is a prominent factor in the persistence of homelessness across the country.” In Los Angeles County, 46% of the homeless cited “unemployment/financial” reasons for living on the street.
Overall for California, high taxation and stultifying regulations have contributed to the state suffering the country’s second-highest state unemployment rate of 5.3% for September, up from 5% a year earlier, according to the Oct. 22 report of the U.S. Bureau of Labor Statistics. Only Nevada was higher among states, at 5.6%. As was Washington, D.C., at 5.7%, despite 25% of U.S. GDP flowing through there as federal taxes. The national rate was 4.1%.
“Added regulations and higher taxes lead to lower employment growth,” Raymond Sfeir told me; he’s the director of the A. Gary Anderson Center for Economic Research at Chapman University in Orange. “Coupled with the higher unemployment rate in California, the state economy has performed poorly relative to the U.S. economy.”
Next let’s look at bonds. A typical one is Measure US for the Los Angeles Unified School District. The summary voters read says it would generate $9 billion, “to update school facilities for 21st century student learning and career/college preparedness,” etc. The cost is “2.5 cents per $100 of assessed valuation,” $456 million annually. Given how poorly LAUSD students perform today, it’s hard to believe the extra funding will make an improvement.
Notice the sleight of hand. Instead of in cents per $100 of assessed valuation, as with Measure US, usually bonds are described as costing so many dollars per $100,000. (Although it’s been decades before you could get even a shotgun shack in L.A. for that much. According to Zillow, the average value of a house in the City of Angels currently is $950,032.)
The LAUSD’s website actually concedes that in an explanation on its website few voters will read: “For a single-family residence within LAUSD boundaries at the median assessed value of $444,269, this would equate to approximately $111 a year or about $9.25 a month.” So, to be realistic, double that and the real cost is $222 a year. Quite a difference from “2.5 cents.”
Then there are transient occupancy taxes – hotel taxes. Mission Viejo’s Measure Y increases its tax from 8% to 12%. The ballot summary voters read says it “provide funding for police, crime prevention, emergency response and maintenance of city infrastructure assets, including streets, sidewalks, storm drains, parks and trails.” Maybe they’ll throw in a car wash, too.
But that will increase the costs for the homeless staying in motels. I’ve known such people from my church. This only will make their lives more miserable. A one-week stay costing $100 a night would see the tax grab another $28 they don’t have.
Sure, the homeless staying in motels can be a nuisance for cities. But other remedies exist, funded by numerous previous spending programs, such as state Proposition 1. Voters passed it last March 5. It provided $6.4 billion for housing, mental health care and alcohol and drug treatments for the homeless and veterans. Increasing such people’s housing taxes, as hotel taxes do for many, is counterproductive.
Finally and worst, there’s rent control, such as Santa Ana’s Measure CC, misnamed the “Rent Stabilization and Just Cause Eviction Ordinance Measure.” Among other things, it would limit rent increases to 3% per year, or 80% of the Consumer Price Index, which according to ShadowStats.com underestimates actual inflation. All rent control does is discourage building new housing, while encouraging converting rentals to condos.
The problem could be made worse for cities if statewide voters pass Proposition 33, which would prohibit statewide limits on rent control. In particular it would repeal the 1995 Costa-Hawkins Act, which does not allow cities to impose rent control on units built after that year.
“Prop. 33 would lead to more cities imposing rent control, which will work opposite to the state’s desire to build more housing units,” Sfeir warned. “There is plenty of evidence that shows developers build fewer housing units in cities that impose rent control. St. Paul, Minn., voted in November 2021 for a cap of 3% increase in rent. Comparing similar periods in 2021 and 2022, residential permits decreased from 1,391 units to 200. The City Council as a result enacted exceptions.”
He pointed out how rent control limits the rent of those lucky enough to be existing tenants. But in the long run it limits housing units, “going against the wishes of the state to increase construction. It is obvious that, if we end up with fewer housing units built than otherwise would have been the case, rents will go up rather than down.”
We’ll find out on Nov. 5 what path voters, generally misled by economically illiterate politicians, will take on bonds, taxes and rent control. Expect more homeless encampments.
John Seiler is on the Editorial Board of the Southern California News Group.
