From CalMatters’ housing reporter Ben Christopher:
California voters will soon get a third chance to say “yes” to rent control.
This week, the Secretary of State announced that supporters of a measure that would let cities put new restrictions on how much landlords can hike the rent have gathered enough signatures to put it on the November 2024 ballot.
Sound familiar? You may have voted on something like this before.
At a virtual press conference on Thursday, Michael Weinstein, the controversial head of the Los Angeles-based AIDS Healthcare Foundation and the chief financial backer of all three campaigns to date, said the third time may be the charm — if only because the rent continues to be too damn high for so many Californians.
- Weinstein: “The situation has gotten so extreme and dire and catastrophic…. We can never give up, that’s the bottom line.”
California’s relationship with rent control is complicated.
A nearly three-decade-old state law blocks local governments from setting rent caps on homes built after 1995,, or to any single-family homes. The law also lets landlords hike the rent as much as they like once a tenant moves out.
The proposed proposition — like its two unsuccessful forebears — would repeal that law, allowing local governments “to maintain, enact or expand residential rent control” however they see fit.
A more recent state law put a California-wide cap on rent hikes of no more than 5% plus inflation with an absolute maximum of 10%. That ceiling is too high for the coalition of tenant organizers, labor groups and local Democratic politicians backing the ballot measure.
If 2018 and 2020 are anything to go by, they’ll have a few obstacles to overcome in 2024:
And rent control’s foes are ready to open their wallets again.
- Mike Nemeth, a spokesperson for the California Apartment Association: “In recent years, we joined a broad coalition of pro-housing groups in soundly defeating similar measures…we will prepare to fight this latest proposition.”
In more rental news: Recently released data sheds more light on the uphill battle renters face to call a place a home in California. Citing information from Apartment List, the San Francisco Chronicle reported on Thursday that San Francisco — “a national symbol of unaffordable housing” — doesn’t even crack the top 10 most expensive Bay Area cities in which to rent a two-bedroom unit. The city comes in 13th place, behind several others in Silicon Valley: Santa Clara Mountain View, Campbell and Sunnyvale in Santa Clara County, with Foster City, in San Mateo County, topping the list.
Using data such as how long a unit stays vacant and how many renters vie for each vacancy, the real estate listings company RentCafe deemed Silicon Valley the fourth most competitive rental market in the state, as reported by the Bay Area News Group. The top two most competitive places to rent? Orange County and San Diego.
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1 Is CA rethinking ‘local control’ for schools?
As more public school board meetings become the backdrop of a growing culture war across the state, CalMatters’ K-12 education reporter Carolyn Jones explores how “local control” is dividing certain school districts and state officials.
Some context: Last week, the Chino school board voted to notify parents if a child identifies as a gender different from the one assigned at birth. The debate got so contentious that Tony Thurmond, the state’s top education official who attended urging the board to reject the policy, ended up getting escorted out by police. In the same week, Temecula Valley Unified’s school board pulled an about-face and agreed to purchase state-approved textbooks that included a lesson about gay rights leader Harvey Milk — but only after Gov. Gavin Newsom threatened to fine the district over its initial textbook rejection.
Besides providing public comment or enforcing fines, what other powers do state officials actually have over schools? Among other things, they can push legislation.
That’s the path Assemblymember Corey Jackson is taking with his Assembly Bill 1078, which would make it harder for school districts to ban books. For the Moreno Valley Democrat, local control — the decade-old policy that gives school districts a large degree of control over how they operate and spend their funds — has gone too far.
- Jackson: “I know my history too well to have faith in local control. If a school district discriminates against students, puts politics ahead of education, I honestly don’t have any limits when it comes to limiting local control.”
But some districts, even those that comply with state law, fear that bills like Jackson’s will chip away at their autonomy, and impose undue hardships on the vast majority of schools.
- Troy Flint, California School Boards Association spokesperson: “School districts and county offices of education believe that their knowledge base and relationships, as members of the community, are essential in developing and implementing policies that make sense for their particular student populations. So naturally, they are very protective of local control.”
One expert Carolyn spoke to anticipates that the heated rhetoric between school boards and the state will only intensify as the presidential election nears. “I don’t think it’s going to die down,” said Julie Marsh, a professor of education policy. “School boards have become a pawn in a broader national campaign.”
2 Tech layoffs show signs of slowing
From CalMatters’ economic reporter Grace Gedye:
After a slump, is California’s tech sector starting to perk up?
In 2022 and in early 2023, titans including Google, Meta, TikTok and Amazon said they were laying off thousands of employees. The layoffs followed a massive hiring spree during the first years of the COVID-19 pandemic, when tech profits were skyrocketing, said Sean Randolph, senior director of the Bay Area Council Economic Institute.
- Randolph: “These companies, by and large, had hired more people than they needed in anticipation of high growth…So what we’ve seen mostly over the last, say, 18 months has been sort of a correction, a scaling back.”
And yes, as the East Bay Times reported Tuesday, LinkedIn cut almost 200 Bay Area employees.
But overall, tech layoffs have waned in recent months, according to the TrueUp layoff tracker.
The surge in interest in generative AI — tools like ChatGPT that can create new text, images or data — could also be a boon to Bay Area tech companies. Of the 13 generative AI companies with $1 billion or more in funding, seven had headquarters in the Bay Area as of May, according to data compiled by the Bay Area Council Economic Institute.
There are other positive signs. The information and business and professional services industries — which include most tech workers — have seen net job growth in the past few months in the Bay Area, offsetting layoffs, said Somjita Mitra, chief economist at the state Finance Department. Statewide, applications to start businesses were about 8% higher in the first half of the year, compared to the first half of 2022, she said.
The tech industry’s booms and busts affect the state’s budget too. Tech workers tend to earn large salaries, which California taxes at higher rates than low wages. And they often receive bonuses or hold shares of their company that, when sold, get taxed as personal income. They also spend money in ways that bolster the economy — whether that’s going out to eat or attending a Barbenheimer double feature.
3 …But CA budget remains in a crunch
Speaking of the economy — in the last few months, the country’s economic growth has exceeded expectations, but that doesn’t do much to relieve California’s strained budget for the 2023-24 fiscal year, state officials told me.
On Thursday, the U.S. Commerce Department released its latest numbers, which show that from April through June, the country’s gross domestic product — the total output of goods and services provided — increased by 2.4%. As Assembly budget advisor Jason Sisney points out, this is much better than the national 0.1% decrease that the California Finance Department predicted back in April for the same time period.
But this doesn’t mean California lawmakers will go on a spending spree anytime soon. For one thing, they already passed the 2023-24 budget agreement in June. H.D. Palmer, a deputy director at the Finance Department, told me that Thursday’s numbers will mostly come into play this fall when the department updates its economic forecast, which the governor will then use to start the budgeting process for the next fiscal year.
Assemblymember Phil Ting, a Democrat from San Francisco and chairperson of his chamber’s budget committee, told me that the GDP rate is also just one of many data points the committee considers — and to not “overly fixate on this statistic.”
- Ting: “We’ll be keeping an eye out to see if economic conditions stay flat or continue to get worse. I think we’ve been looking at it very conservatively and just assume that the next few budgets will probably present challenges for our state.”
What will play an outsized role is the delayed tax revenue the state initially expected in the spring. A reminder: Because of last year’s winter storms, the IRS extended the deadline for Californians to file their 2022 income tax returns from April to October. This delay in revenue (once it arrives, the Finance Department anticipates a total of about $42 billion) is the big floating question mark.
- Palmer: “Certainly a stronger economy is going to mean a stronger budget situation with the state. But… I don’t want to have people led to believe that all of a sudden our revenue problems have been erased. They aren’t.”
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CalMatters Commentary
In California’s 173-year history, only three sitting lieutenant governors have been elected governor, writes veteran Democratic strategist Garry South.
California’s housing crisis, explained: CalMatters has detailed looks at why housing is so expensive in California and why homelessness is so persistent. Now, there’s a lesson-plan-ready version of these explainers and other information — especially made for teachers, libraries and community groups — as part of the CalMatters for Learning initiative, with Spanish translations.
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