After 16 years, California Roads and Transit are No longer labeled ‘high risk’

Getting roadways and transit removed from the State of California watch list took 16 years

While Southern California drivers may not have noticed due to the plethora of potholes created by excessive rainfall, the state’s roads are no longer sounding alarm bells.

That’s because for the first time in 16 years, the state’s highways, freeways and transit systems are off the “high-risk list.”

On Thursday, the California State Auditor removed the designation, attributing the passing grade to progress in repaving freeways, adding on-ramp and off-ramp meters, fixing bridges and unclogging culverts that results in better drainage.

“The auditor’s findings are a testament to the substantial progress Caltrans, the California Transportation Commission and our partners have made as we work together to improve and rebuild our state’s critical transportation infrastructure,” said California Transportation Secretary Toks Omishakin in a prepared statement.

Omishakin attributes the improvements to SB 1, the 2017 law that increased the gasoline excise tax and funnels about $5.4 billion each year toward transportation improvements. It was the first increase in the gasoline tax in 23 years and established a steady transportation funding source.

Since the state first was declared “high risk” in 2007, trade groups and the state auditor have been making dire predictions about a crumbling transportation infrastructure. In 2013, the auditor said it would take $290 billion to improve the state’s highways, roads and transit systems by 2023.

“We were at a high risk for not having enough money to maintain our roads,” explained Lauren Wonder, Caltrans spokesperson, on Thursday, Aug. 24. “SB1 gave us the stable funding source, adjusted the gas tax for inflation and established an inspector general who monitored progress each year.”

Caltrans listed the following projects completed with SB1 dollars:

• Repaved 15,000 lane miles on the state highway system resulting in 99% of pavement in good or fair condition.

• Fixed 1,512 bridges — bypassing the goal of repairing 500 bridges that was set in SB1.

• Repaired 578,285 linear feet of culverts, a three-fold jump from before SB1 became law, and cleaned out 1.6 million linear feet of culverts. About 90% of state highway and freeway drainage systems are listed in good or fair condition.

“Culverts are where the storm water goes,” said Wonder. “If you don’t have the proper-sized culverts, you will have water backed up onto the highway.”

But potholes are still making drivers’ lives miserable.

The Los Angeles Bureau of Street Services reported receiving 19,279 requests from December 2022 through early April 2023 to fix potholes. In early spring, it had repaired 17,459 of them.

Besides roads, SB1 funding also reached LA Metro, which uses the tax dollars for a variety of capital projects.

SB1 has contributed to funding the Gold Line (now A Line) extension to Pomona; and is adding funding to use for designing and eventually constructing the West Santa Ana Branch light-rail (from downtown Los Angeles to Artesia) and for improvements on the G (Orange) Line in the San Fernando Valley.

In addition, the added gasoline tax is helping to fund a new 57 Freeway and 60 Freeway interchange in Diamond Bar and City of Industry, improving truck lanes on the 5 Freeway in the Santa Clarita Valley and upgrading the 71 Freeway in Pomona.

Now that the state is no longer officially “high risk,” what’s next?

“It just means we are not being watched as ‘high risk.’ But we are not going to take the pedal off the metal. Caltrans will still make sure the transportation infrastructure is in working order,” Wonder said.

Besides state funding, California also has received federal transportation dollars.

Click here to read the full article in the Press Enterprise

California Loses Nearly 700,000 Residents Since 2020

The California exodus is no surprise to most – except maybe Gov. Gavin Newsom under whose scurrilous control the 700,000 residents chose to leave for freer states

The California exodus to other states is even worse than we realized; the state’s population dropped by more than 500,000 people between April 2020 and July 2022, with the number of residents leaving surpassing those moving in by nearly 700,000 the Los Angeles Times reported.

This news isn’t new – the Globe has been reporting for several years about California’s exodus of businesses to economically friendlier states, and residents seeking economic freedom and liberty.

In 2021, the Globe reported that California ranked as one of the top Outbound migration states, along with four other blue Democrat-run states, while the top Inbound migration states were all red Republican states:

Top Outbound States

Illinois – 68%
Michigan – 63%
New Jersey – 63%
California – 60%
New York – 59%

Top Inbound States 

Arizona – 68%
South Carolina – 60%
Tennessee – 59%
North Carolina – 58%
Texas – 58%

Worth noting is that in 2018 California was one of the top Inbound destination states, according to  Allied Van Lines Company data. By 2020, only two years later, California’s inbound migration was 40%, while its outbound migration was nearly 60%, which leads us to California’s bleeding residents and businesses today.

“The primary reason for the exodus is the state’s high housing costs, but other reasons include the long commutes and the crowds, crime and pollution in the larger urban centers,” the LA Times said. “The increased ability to work remotely — and not having to live near a big city — has also been a factor.”

They forgot to include the hundreds of thousands of homeless populating LA, San Francisco, Sacramento, San Diego, and smaller cities, the highest taxes in the nation, a failing electricity grid and rolling blackouts, wildfire “season,” government ordered water shortages, half of the state’s small businesses closed from Covid, 76,000 prisoners let out of state prisons, California’s failing public schools ranked at the bottom of all of the states at number #48.

Last week, Utah’s Governor told California residents who are looking to join the recent population exodus into red, Republican-led states like Utah should stay in California. “We’re having the opposite problem, this last census confirmed that Utah was the fastest-growing state in the last ten years,” Utah Gov. Spencer Cox told reporters outside the White House after New Jersey Gov. Phil Murphy discussed ways he will encourage people to move to his state,” Fox News reported.

Gov. Spencer wasn’t being provocative – he explained that Utah doesn’t have the necessary housing and infrastructure yet to accommodate so many new residents.

What a nice problem to have.

Los Angeles and San Francisco counties lost the most residents. This is no surprise either as Los Angeles and San Francisco had the harshest, most draconian Covid restrictions, masking, lockdowns, school closures and vaccine mandates. Los Angeles and San Francisco counties also have the most crime.

In fact, San Francisco County and the State of California are still operating under Covid emergency orders – three years after declaring the Covid State of Emergency, or nearly 1,100 days later. San Francisco initially declared its emergency order in late February 2020 – ahead of Gov. Newsom’s March 4, 2020.

The San Francisco Department of Public Health (SFDPH) just announced Thursday that it will will finally end their COVID-19 public health emergency declaration at the end of the month, on the same day as Gov. Newsom’s vowed to end to the California Covid State of Emergency.

People can’t live like that – wondering if on any day the county public health or state Department of Public health tyrants would impose new masking mandates, or impose vaccine or booster mandates again. Or their children would be required to mask in school, as many schools districts threatened.

In late December 2021, the Globe reported: “with California Governor Gavin Newsom extending his emergency powers and a ‘State of Emergency,’ enforced mask mandates, vaccine mandates, and lockdowns for nearly two years, almost 400,000 Californians picked up and moved to red states opened for business and education – and no mask or vaccine mandates, according to the U.S. Census Bureau.”

“New Census Bureau population data show that California’s population decreased in 2021 by -367,299, or 1% of the population.”

Between 2020 and 2021, a total of 33 states saw population increases via inbound migration, while 17 states saw population decline via outbound migration. New York, California and Illinois suffered the largest population declines. Texas, Florida and Arizona enjoyed the largest numeric growth, and Idaho, Utah and Montana enjoyed the largest percentage growth.

Click here to read the full article in the California Globe

What California Taxpayers Need to Know About Unemployment Insurance

I sincerely hope that readers aren’t turned off by the title of this column. While most taxpayers aren’t directly responsible for paying unemployment insurance taxes, the truth is we all pay and, in California, we pay a great deal more than we should.

Last week I received an email from a dentist who operates a small dental office and is required to pay the unemployment insurance tax and, sadly, is paying much more than he should because our unemployment insurance program is insolvent. Like so many other measurements of California’s performance relative to other states, our businesses – both large and small – are paying a penalty for the incompetence of our elected officials and bureaucrats.

Here’s what taxpayers should know about unemployment insurance.

California’s unemployment insurance program (UI) is funded by a tax imposed on employers. The proceeds are deposited in the Unemployment Trust Fund of the U.S. Treasury Department. States may withdraw funds from their accounts to pay unemployment benefits.

Here’s the kicker: If a state’s trust fund does not have adequate funds to pay benefits, it must borrow money from the federal fund to satisfy unemployment claims. But if a state’s UI Fund is insolvent for more than two years, that tax rate increases each year. The tax can be hefty, as much as $420 per employee per year.

Like other states, California was slammed by the pandemic. Low unemployment quickly became unprecedented levels of high unemployment. While few dispute the need for workplace closures early in the pandemic, California was much slower in reopening than more freedom-oriented states like Texas and Florida. This had a direct impact on the further decimation of the UI fund.

That’s just one reason why, by the spring of 2020, California’s UI Fund was depleted and continued to fall further behind. This required even more borrowing from the federal government.

Even worse, California was suffering from a second epidemic: an epidemic of massive fraud in the administration of unemployment insurance claims. On Gov. Gavin Newsom’s watch, the Employment Development Department (EDD) failed to process a backlog of claims for hundreds of thousands of unemployed Californians while sending out as much as $30 billion in unemployment benefits for phony claims, including fraudulent claims paid to death row inmates.

Much too late, after several legislative hearings on the lack of oversight of EDD, there were modest corrective actions taken. But this was the epitome of closing the barn door after the horses bolted.

If anyone believes that the massive EDD fraud didn’t impact ordinary taxpayers, they couldn’t be more wrong. California’s employers are directly responsible for the cost of EDD providing benefits on fraudulent claims, which means that all of us must absorb the cost of this inexcusable lack of oversight.

Perhaps the most important thing for taxpayers to know about California’s unemployment insurance program is how insolvent it is. EDD itself projects that at year’s end the UI Fund’s total debt will exceed $19 billion. Moreover, the U.S. Department of Labor confirms that California’s debt problem is the worst of any state, with an accumulated debt that exceeds the debt of all other states combined.

Again, in the competition between states, it is notable that most other states have no outstanding debt because they used Covid relief funds from Washington to pay down their Ul loans. For example, Texas approved a $7.2 billion payment and has eliminated its UI debt entirely.

What about California? Because of its insolvency, it must pay $470 million in interest payments alone to the federal government. That’s nearly half a billion that could otherwise go to education, transportation, or public safety. Worse yet, this is an annually recurring expense.

Remember just last June when California had a $95 billion surplus? That would have been the time to increase the payments to the federal government to reduce our UI debt. But now, the LAO tells us we have a $25 billion deficit “problem.”

Click here to read the full article in the OC Register

Californians can’t catch a break as gas prices spike again

The ongoing heat wave is raising the risk of blackouts on top of perennial drought and fires. And now, after enduring record pump prices in June that were much higher than the national average, Californians face surging gasoline costs again at the end of the summer travel season when they typically fall.

Pump prices jumped 10 cents a gallon in a week in Los Angeles County and the Inland Empire and 13 cents in Orange County, according to auto club AAA. Record wholesale premiums signal they could rise even further. At the state level, retail prices average $5.34 a gallon on Friday, 4 cents more than the previous day.

The confluence of bad news highlights how vulnerable California’s energy systems are to supply disruptions. The state is an energy island, cut off from crude and fuel hubs in the Gulf Coast and Midwest by the Rocky Mountains. Regulators require a boutique grade of cleaner-burning fuel that few refineries are geared to produce outside of the state. As a result, fuel shortages take time to resolve and price spikes are far more common than elsewhere in the country.

Gasoline stockpiles on the US West Coast have fallen by 11% since the beginning of August amid a lack of imports to their lowest level in about seven years, data from the Energy Information Administration show. The California grade of gasoline known as Carbob also saw inventories drop to 8% below the five-year average for this time of year, according to the California Energy Commission.

Refiners in the state are running harder, but hot weather and a stressed power grid may be causing some problems. Excess heat challenges the water cooling system in refineries, and one way to handle it is to cut operation rates, said John Auers, managing director at RBN Energy.

“Heat, along with the way the power grid is being managed, can be contributing to the refinery issues,” Auers said in a phone interview. A string of incidents recently surfaced in Southern California and may have spooked traders in the spot market, which sets the basis for retail prices.

Click here to read the full article at the OC Register

Congress Just Passed the Inflation Reduction Act. It Will Hike Taxes on Some Middle-class Households.

It also spends billions on new green energy programs, and it lets the IRS hire 87,000 new agents.

Congressional Democrats have put the finishing touches on a questionable bet: that higher taxes will help tame rising prices, and that voters will reward the effort.

On Friday afternoon, the House of Representatives approved a $300 billion tax hike with a party-line vote, 220–207, sending the Inflation Reduction Act to President Joe Biden’s desk. It passed the Senate with a similar party-line vote on Sunday.

Despite the bill’s name, independent analysts have found it will have virtually no impact on inflation. In reality, it is a pared-down version of what Biden originally pitched as the “Build Back Better” plan—it leaves aside much of the original bill’s spending, but it maintains a huge corporate tax increase, huge spending on green energy initiatives, and a plan to swell the ranks of IRS agents. What was originally a roughly $4 trillion proposal that would have relied heavily on borrowing ended up being something of a rarity in Washington: a bill that will raise more revenue than it spends.

And where will it get that revenue? Quite possibly from you. Households earning as little as $50,000 annually are more likely to see a tax increase than a tax break from the legislation.

In the final hours before the House vote, the Joint Committee on Taxation (JCT) completed a breakdown of how the bill’s corporate tax increases would affect households at various income levels. The JTC, a nonpartisan number-crunching agency within Congress, found that households earning between $50,000 and $75,000 are more likely to see a tax increase than a tax decrease next year.

Higher-earning households are more likely to see tax increases, but households earning more than $1 million next year are actually far more likely than lower-earning households to get a tax break.

That fits with what The Tax Foundation, a tax policy think tank, found when it analyzed the bill. The Inflation Reduction Act will “would also reduce average after-tax incomes for taxpayers across every income quintile over the long run,” the Tax Foundation reported on Wednesday. Those tax increases will reduce long-term economic output by about 0.2 percent and could eliminate 29,000 jobs, the group found.

Democrats pushed the bill as a cost-cutting measure that would help Americans make ends meet, reduce the federal budget deficit, and help protect the environment.

“It makes a difference at the kitchen table,” Pelosi said at a press conference on Friday morning. “And at the board room table, corporations will now have to pay their fair share.”

If only those two things could be separated as cleanly as Pelosi implies. Tax increases on corporations get passed along from the board room table to the kitchen table in a variety of ways: lower pay for workers, higher prices for consumers, and smaller investment returns for shareholders.

As Reason has detailed a length in recent weeks, other aspects of the bill also leave much to be desired. It would dedicate about $300 billion of new revenue to reduce the long-term budget deficit, but that aspect of the bill is probably better understood as a plan to actually pay for about an eighth of the borrowing that Congress has approved since Biden took office. Meanwhile, giving the IRS a massive budget boost so it can hire 87,000 new agents likely means more tax audits aimed at the middle class, no matter what Democrats are currently claiming. The expanded subsidies for purchasing of health insurance via the Affordable Care Act’s marketplaces is likely to push inflation higher. And the bill’s aim to reduce carbon emissions to 40 percent below 2005 levels by 2031 may be plausible, but just barely.

Perhaps the only aspect of the Inflation Reduction Act that’s as bizarre as its name is the meta-analysis of the bill that’s been taking place in political media. Its passage is a “win” that “could give Democrats a boost heading into the midterms,” according to NPR. It “will help validate the Democrats’ monopoly on political power in Washington and hand Joe Biden a notable presidential legacy ahead of November’s midterm elections,” gushed CNN’s Stephen Collinson.

Time will tell, but this sounds like a reprise of the claims that were made after last year’s bipartisan infrastructure package—which, regardless of what you think about its merits, plainly hasn’t done much to reverse Biden’s flagging approval rating.

Click here to read the full article at Reason

A Win for Direct Democracy and Taxpayers in San Bernardino County

Entrenched politicians loathe the tools of direct democracy, which include the powers of initiative, referendum, and recall. Both at the state and local levels, they do everything they can to limit the exercise of those powers, including going to court to nullify what voters do at the ballot box.

That’s what happened with Measure K in San Bernardino, which amended the County Charter to impose a one-term limit on members of the Board of Supervisors and reduce their pay from more than $200,000 per year to $5,000 per month. The Red Brennan Group, which spearheaded Measure K, said it puts the Board of Supervisors’ salary on par with the median household income in the county, and that a one-term limit would incentivize elected officials to focus on serving the public rather than maneuvering for reelection.

Unsurprisingly, Measure K was extraordinarily popular with voters who passed it by a two-thirds majority (66.84%). But while the citizens of San Bernardino County were celebrating, the Board of Supervisors launched a counter-attack by filing a lawsuit to get Measure K nullified. The Red Brennan Group stepped up to defend their initiative and the Howard Jarvis Taxpayers Foundation sent a friend-of-the-court brief supporting the legality of the measure.

Along with their lawsuit challenging Measure K, the Board of Supervisors ran to their allies in Sacramento to change the law in a way that would undercut the initiative. Assembly Bill 428 would prohibit term limits of less than two terms for a County Board of Supervisors and further provided that a Board can set the pay of its own members. The Howard Jarvis Taxpayers Association objected to the bill and argued that it thwarted the will of the voters in San Bernardino. The author of the bill, Assemblyman Chad Mayes, I-Yucca Valley, denied that his bill would have that impact but his representations lacked credibility. Eventually, he relented and agreed to insert language into the bill that made clear it would “not affect any term limits that were legally in effect prior to January 1, 2022, in any county.”

Last week, an appeals court issued a tentative ruling in the lawsuit and sided with the voters, upholding Measure K’s one-term limit and the cut to the supervisors’ pay. The court also vindicated HJTF’s interpretation that the original version of AB 428 was an attempt to thwart the will of the voters in San Bernardino.

Noting that the amendment resolved any ambiguity, the court wrote, “Plainly, then, the Legislature did not contemplate that AB 428 would undo Measure K. To the contrary, it agreed with the Jarvis Association that the unamended version threatened Measure K, and thus it amended AB 428 so as to let Measure K stand.”

It’s satisfying to be recognized for the work HJTA does in defense of taxpayers, not only the hundreds of thousands of HJTA members, but all the California taxpayers whose interests are rarely represented by their elected officials.

Click here to read the full article in this the OC Register

California’s Budget Substance is as Bad as the Process

This column addresses budget issues frequently and, most recently, reported on how broken the budget process is. While the “budget bill” is constitutionally mandated to be enacted by June 15, it only passed by that date for one reason — so the legislators could continue to receive their paychecks.

Photo courtesy Franco Folini, flickr

Moreover, since the enactment of the budget, there have been two so-called “junior budget bills” amending the fake June 15th budget and around 30 so-called “budget trailer bills” directing the spending of billions in ways that the budget bill itself did not direct.

But it isn’t just the budget process that is wholly broken, the actual substance of the bill reveals perverse spending priorities. Let’s start with the size of this gargantuan budget. One veteran political reporter, who has followed state budgets since the 1960s, remembers when the budget was $3 billion. It has grown since then by 100-fold to a staggering $300 billion.

The old saying that the bigger they are, the harder they fall, can be applied to the California state budget. There remains a legitimate question whether massive new spending programs can be sustained when, not if, we have a major recession, as more and more economists and business leaders are predicting.

For taxpayers, priority number-one in this year’s budget was the long-promised gas tax relief. This is especially important since, on Friday, California’s gas tax went up by about three cents. That might not seem like a lot, but we already had the highest gas tax in the nation. So, while other states are providing immediate gas tax relief directly at the pump, California will not.

Rather than do the right thing and suspend the gas tax for a year — a quick, simple and low-cost solution recommended by Republicans—the governor and Democrats in the legislature agreed on a $9.5 billion tax rebate program which will attempt to target refunds based not on the amount of taxes paid, but on need and family size; and not now, but just before the November election.

Another example is Assembly Bill 208 that will create a new excise tax on lithium extraction. Why? Because lithium is crucially important for battery manufacturing and there is something of a gold rush on lithium occurring in the Salton Sea. The Legislature intends to get in on the action.

The Legislature’s plan would impose a tax of $400 to $800 per metric ton of lithium extracted in California. The industry says that could discourage investment and make locally sourced lithium more expensive than imports coming from half a world away. Currently, lithium is imported from countries including China, where the lithium industry has been tied to forced labor and environmental degradation.

Meanwhile, the California Energy Commission estimates that there is enough lithium in the Salton Sea to meet America’s lithium needs and up to 40% of the world’s demand. Further, it has been reported that the Salton Sea could produce the world’s “greenest” lithium and that the lithium industry has the potential of breathing economic life back into a region that faces high rates of unemployment and suffers health impacts from the drying sea.

Disincentivizing our local lithium industry through taxation is counter to California’s climate and labor values and bad for Riverside and Imperial counties, our state, the United States, and the world.

Space limitations prevent a full airing of all the silliness to be found in the state budget, but this one caught our eye. One of the post-budget “trailer” bills revealed Gov. Newsom’s obsession with poking at pro-business states like Texas and Florida. The bill would give special consideration to businesses seeking state “Go-Biz” grants if they’re relocating jobs away from a state that limits access to abortion or “permits discrimination” on the basis of sexual orientation, gender identity, or gender expression. Apparently, Newsom believes businesses will be more attracted to California for its woke purity than they are repelled by its high taxes and burdensome regulations.

Click here to read the full article in the Redlands Daily Facts

State Budget Deal: Most Californians Will Get Stimulus Payments

Most Californians would receive stimulus payments ranging from $200 to $350 per person under a budget deal that Gov. Gavin Newsom and state legislative leaders announced Sunday night.

Tax refunds under the agreement’s $17 billion “inflation relief package” would provide $350 to individuals making less than $75,000 per year. Couples making less than $150,000 who file their taxes together would receive $700. If families in those categories have at least one dependent, the deal calls for them to also receive another $350. That means families could receive up to $1,050.

The agreement also would provide checks, although in smaller amounts, to many people who make more money. The smallest payments are designated for individuals making up to $250,000, who would get $200. Couples filing jointly who make less than $500,000 will receive $400, plus an additional $200 for dependents.

Under the plan, the state would send people the money through direct deposits and debit cards beginning in October. The state’s Franchise Tax Board estimates all the money would be sent out by early next year, said H.D. Palmer, spokesperson for the state’s Department of Finance.

The state budget deal must be passed by the Legislature and signed by Newsom to become law, but a statement from legislative leaders, Senate President Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon, saying they’ve signed on to the deal indicates that will happen.

In addition to the tax refunds, the budget agreement would also suspend the 23-cent state sales tax on diesel for a year starting Oct. 1, Palmer said. Under the agreement, the state would provide local governments the revenue that would have come from the diesel tax, to avoid stalling local transportation projects.

The agreement also includes money to help Californians pay their rent and utility bills, the governor and legislative leaders said. It also adds $47 billion in infrastructure spending and $200 million for reproductive health care in the wake of the Supreme Court decision this past week overturning Roe v. Wade.

“In the face of growing economic uncertainty, this budget invests in California’s values while further filling the state’s budget reserves,” Newsom, Atkins and Rendon said in a written statement.

The announcement of the deal indicates Newsom’s proposal to send $400 payments to vehicle owners is dead. Newsom had initially made the proposal to provide targeted relief from high gas prices that his administration said could be sent out to Californians more quickly than payments to tax filers. But he failed to get lawmakers to sign onto the idea.

Click here to read the full article in the SF Chronicle

California Legislators Want to Help You Buy A House With Down Payment, ‘Shared Equity’

First-time buyers often rely on family gifts to afford the down payments on their homes. Now California Legislators want the government to fill the role of generous relative.

Lawmakers are proposing creating a billion-dollar fund in this year’s state budget that would provide California’s first-time buyers either all of the money they need for a down payment, or very close to it, in exchange for partial ownership stakes in those residences.

The proposal, put forward by state Senate President Pro Tem Toni Atkins, comes as skyrocketing property prices broaden the divide between those who own their homes and those who rent in California. In the past year, Golden State homeowners gained $141,000 in home equity, on average, the housing research firm CoreLogic reported last week, more than in any other state.

California’s rate of home ownership, at 56%, is second lowest in the country behind New York, according to the American Community Survey data from the census. 

Atkins said the California Dream for All program is aimed at creating opportunities for lower- and middle-income buyers in a rapidly rising market, including those who have faced racial and economic barriers to homeownership.

“The California Dream for All program will give more people the chance to break free from the cycle of renting,” Atkins said last month. “This has the ability to change people’s lives.”

The proposal is the subject of negotiations between the Legislature’s Democratic supermajority and Gov. Gavin Newsom, also a Democrat, on how to spend a projected budget surplus of $97.5 billion. The legislature passed a budget on Monday that includes the proposal, though negotiations with Newsom continue on a final overall spending plan. 

A spokesman for the governor declined to comment on the proposal, citing the ongoing negotiations. It was not included in the governor’s original budget nor in his May revised budget.

A multi-billion dollar fund

The housing proposal – which would call for issuing revenue bonds of $1 billion a year for 10 years to create the fund — is the largest in a slew of proposals intended to promote homeownership this year. The proposal also includes $50 million in the budget this year, and $150 million per year after that to pay for the administrative costs of the program and the interest costs of the revenue bonds.

The program envisions helping some 7,700 borrowers a year, according to estimates made by the program’s designers based on home price projections. A start date for the proposed program has not been indicated.

If approved, the program would begin issuing interest-free second mortgage loans covering up to 30% of a home’s purchase price, though lawmakers expect many of the loans would cover 17%, asking borrowers to include 3% of their own money or pair the loan with other first-time buyer programs.

The interest-free loans would be paid back into a state fund whenever the home was sold, or if a bigger mortgage was acquired in a cash-out refinancing. For instance, if the fund provided 20% toward the purchase price of the home, the fund would get back its initial investment, as well as a 20% share of any increase in the home’s value. 

The program would reinvest those proceeds, giving the fund the ability to make new loans for eligible participants, even if prices have risen significantly.

As long as home prices rise, the plan would create equity for people who otherwise would have remained renters. The program also would generate enough returns for the state to help future homebuyers. 

If prices fall, homeowners might still gain some equity and the fund would absorb the losses, program planners said.

Building generational wealth

The program is intended to build as much flexibility as possible. Buyers who have lived in historically low-income neighborhoods can receive priority for some of the funds and can use shared appreciation loans to buy in their current neighborhoods or buy homes elsewhere.

“We need to make sure that the state’s homeownership assistance program serves people in all parts of the state, including in its high cost areas,” said Micah Weinberg, chief executive of the nonprofit group California Forward, which oversaw drafting the proposal.

“We cannot wait until more housing is built for these communities to begin to build the generational wealth that they were locked out of and deeply deserve,” he said during a recent legislative hearing.

Click here to read the full article in CalMatters

At $6.09 a Gallon, Los Angeles Pays Record Gas Price Over US Average

Los Angeles drivers know they pay more for gasoline than the average US driver: It’s the price for cleaner air in a state that’s made being green part of its DNA.

What motorists in LA — a city famed for its car culture — may not realize is that the amount they pay over the national average soared to more than $1.80 a gallon in late March, the widest in at least 10 years, according to data from the AAA.

So far, at least, the cash squeeze at the pump isn’t crimping travel plans, even though each tank costs about $24 more. The Auto Club of Southern California predicts 2.6 million local residents will take to the highways this Memorial Day weekend. That’s up 5% from 2021 but about 7% below 2019, before the Covid-19 pandemic.

The cause for the spike in prices earlier this year was refinery outages, according to Patrick De Haan, head of petroleum analysis at GasBuddy, which tracks prices at 150,000 US gas stations.

While the local refinery issues have largely been resolved, prices nationally have kept on climbing. Regular gasoline rose to $6.09 a gallon in LA this week, according to the AAA, still almost $1.50 more than the national average of around $4.60.

The higher prices in California are partly the result of taxes and state programs to reduce greenhouse gases, like a rule requiring a less-polluting blend of fuel. These measures add about $1.30 to the cost of a gallon, according to the Western States Petroleum Association, a trade group.

California also imports both oil and refined products, which must be trucked in or brought by tanker.

“We don’t have pipelines coming in from Texas and other parts of the country,” said Kevin Slagle, a spokesman for the oil group. “We have to ship it in from around the world.”

Prices, including the extra amount LA drivers pay, could spike again in the summer when travel picks up and a planned increase in the state tax is due to take effect. At the same time, a Chevron Corp. refinery in the state is scheduled for maintenance, and a South Korean refinery that supplies the US West Coast had some units offline after a fire.

To offer drivers some relief, Governor Gavin Newsom, a Democrat who’s running for re-election this year, has proposed an $11 billion package that includes $400 refunds to personal car and truck owners, with a maximum of $800 for up to two vehicles.

Click here to read the full article in the Mercury News