Legislature faces difficult politics of plenty

After a four-month sabbatical, state legislators returned to Sacramento Monday for a brand new session that might be dominated by a number of seemingly contradictory components.

On the unfavorable facet, California is as soon as once more coping with a surge of COVID-19, this one brought on by a very virulent variant known as Omicron, that creates thorny points, reminiscent of whether or not public faculties serving 6 million youngsters can stay open. Californians’ angst over the pandemic’s impacts is magnified by rising public fears over crime, notably homicides and different violent crime.

Crime and illness threaten an economic system that’s nonetheless struggling to recuperate from earlier pandemic surges, which erased greater than two million jobs and shuttered numerous small companies, notably eating places. Whereas employment is slowly rising, the state nonetheless has the nation’s highest unemployment rate, 6.9% in November.

As hundreds of thousands of Californians on the decrease rungs of the financial ladder nonetheless really feel the revenue impacts of pandemic, in addition they should deal with a pointy improve within the state’s already excessive prices of dwelling. Rising costs of requirements, reminiscent of hire and gasoline, worsen the state’s financial divide and its unenviable standing of getting the nation’s highest poverty price.

Conversely, nevertheless, these occupying the ladder’s larger rungs have been prospering. Federal financial insurance policies, particularly low rates of interest, have inflated values of their income-producing belongings, reminiscent of shares, and the state has been seeing tens of billions of {dollars} in further revenue tax revenues.

These conflicting tendencies set the stage for a momentous debate over how the cornucopia of tax cash might be spent. Ought to California now take big steps towards the creation of a Western European-style array of revenue subsidies and social companies, a lot favored by these on the left wing of the dominant Democratic Occasion? Or ought to it undertake the extra conservative method of diverting a lot of the windfall into reserves and/or spending it for one-time functions, reminiscent of paying down debt or public works initiatives?

Gov. Gavin Newsom anticipates what he known as an “historic” surplus as revenues proceed to flood the state treasury, up to now an extra $10 billion midway by means of the 2021-22 fiscal 12 months. The state funds has already topped a quarter-trillion {dollars} and the Legislature’s funds advisor, Gabe Petek, estimates that the state can have another $31 billion surplus for the 2022-23 funds.

Newsom will unveil his proposed funds subsequent week and has already dropped some hints about his priorities, reminiscent of extra money to fight crime and clear up homeless encampments. Legislative leaders wish to prioritize help to low-income Californians who’re struggling essentially the most from the pandemic, each medically and financially.

“It’s attention-grabbing the economic system continues to do nicely (however) individuals don’t really feel it,” Meeting Price range Committee chairman Phil Ting says. “And so I believe we now have to get a way of precisely the place the ache factors are, and what (are) the very best methods to assist them out.”

Senate President Professional Tem Toni Atkins has proposed to spend the windfall on “those that want it most — the center class and households struggling to get by.” Specifics would come with inexpensive housing and funds to important staff.

The Gann Restrict, a measure adopted by voters in 1979, restricts how unanticipated revenues might be spent, reminiscent of schooling, public works and rebates to taxpayers. The latter may very well be met by reprising final 12 months’s money funds to these beneath sure revenue thresholds.

Legislators are already being deluged with recommendations and calls for on learn how to spend the funds windfall and it’s not possible to fulfill all of them. The politics of loads might be simply as troublesome because the politics of poverty.