Governor-elect Gavin Newsom’s Agenda
Governor Newsom has laid out an ambitious agenda: including more housing and more affordable housing, universal pre-school, universal health coverage, tax reform and more. All of these cost money, and there are very real budgetary limits. Many will require the cooperation of multiple interest groups frequently at war with each other and gubernatorial leadership will have to mesh these competing agendas. Ultimately many will need approval by the state’s voters.
Housing. The Governor has promised by 2025 to get 3.5 million new units of housing built to address our state’s serious housing shortage – we are #49. We are now building about 125,000 units a year, up from 40,000 a year for the last decade. This will require a huge increase in housing starts. While most of the financing will be private, some public financing to get new building underway and to make it affordable to low and middle income working families will be necessary. The financing could be in the form of tax credits and bond financing. The state’s voters approved two housing bond measures in the most recent election. Many local communities have restrictive zoning, difficult planning and permitting processes and organized homeowners who do not favor new building in their own backyards that pose severe obstacles to building and locating new units. There have been bills in the legislature to ease these local obstacles by Senator Weiner but they have run into enormous local opposition.
Universal pre-school and improved access to better and more affordable child care. The Governor has committed to universal pre-school. Less than 1/3rd of California’s children are in pre-school, and it costs many young working families an arm and a leg that they can ill afford -- in some cases more than the annual tuition at a UC university. These two programs could put California’s young children in much stronger positions to succeed in school and thereafter in careers, creating a large net benefit to society as a whole – about two times what it costs as studied and reported by the Rand Corporation. https://www.rand.org/pubs/research_briefs/RB9118/index1.html Oklahoma and Georgia already do this, and it’s very popular with the parents and grandparents of the state’s children. California voters soundly rejected a ballot initiative for universal preschool in 2006. It would have increased taxes on higher wage individuals to pay for the cost of the program. It was opposed by then Governor Arnold Schwarzenegger and some education proponents opposed it as well for their own reasons.
Universal health coverage. The Governor has expressed his support for the single payer approach to universal coverage and acknowledged the reality that it would never achieve the waivers required to finance it from the Trump Administration. He may move to universal coverage by making Covered California coverage and benefits much more affordable to the middle class consumer and MediCal more accessible to individuals regardless of immigration status as he did when he was the Mayor of San Francisco. The financing could include a broadening of “pay or play” taxes as he did in San Francisco and the extension of the state’s MCO tax that otherwise sunsets this year. It could and should be paired with some much needed restraints on the increasingly high prices of medical care and services.
Tax reform. It’s unclear what tax reform measures Governor Newsom favors, but he has referenced lessening the state’s dependence on volatile capital gains and other taxes on a relatively small number of very wealthy Californians. These tax revenues crater during recessions for which we are overdue, putting important state and local programs at dire risk. California has very progressive individual income tax rates and high sales taxes, but low property taxes, especially for long time businesses and homeowners. Some tax reform ideas include lowering the state’s sales tax and extending it to services, and a 2020 ballot initiative to amend Prop 13 as it applies to businesses. Past tax reform measures from Governor Schwarzenegger (known as the Parsky Commission) were opposed by both Democrats and Republicans.
It’s in all our interests to improve the state’s housing, education, health and economic conditions. We should wish the Governor well on his ambitious agenda and do what we can to make it viable, effective and most importantly affordable.
Prepared by Lucien Wulsin
Dated: 12/5/18