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California to Spend Billions Paying Off All Overdue Rent Accumulated During Pandemic

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In May, California Gov. Gavin Newsom announced the $100 billion “California Comeback Plan,” which not only extends the moratorium on rental evictions but also promises to pay off all the back rent — and utilities — for millions of renters who fell behind during the pandemic.

And despite the moratorium scheduled to end at the end of the month, Newsom is considering an extension to prevent renters from being evicted after June 30.

The total cost? A staggering $5.2 billion.

National Equity Atlas reported 758,000 California households were behind on rent the week ending May 24, with each household owing approximately $4,700. Newsom apparently wants the California taxpayer to help in keeping these renters in their apartments while paying off their debt.

Government Breaks Law of Supply and Demand

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In normal economic times, as renters fell behind on rent and were evicted, their rental units would come onto the market to be made available for others. Supply and demand were more balanced, with additional units being built to handle new residents.

However, due to the government’s actions, a full 15 percent of California’s approximately 5 million rental units are behind on payments but remain off the market, driving up prices for everyone.

RENTCafé reports the average rent paid for a one-bedroom, 792-square-foot apartment in Los Angeles is a whopping $2,376. Essentially, the government’s actions affect every Californian with both higher rent and a higher tax bill.

Sacramento Tries to Solve All the Wrong Problems

The state Legislature refuses to follow the lead of more than half the states that have chosen to end the $300 federal pandemic-related unemployment benefit early.

Should California start allowing the eviction of renters who cannot pay?

As a result, unemployed people in California can receive up to $750 per week — $39,000 annually — not counting food assistance or medical benefits.

President Joe Biden extended the bonus through the week ending on Sept. 6 of this year

For many, this is quite an incentive not to work — especially if they don’t have to worry about rent or utilities.

It is therefore no surprise that California’s unemployment rate stands at 7.9 percent — more than 2 percentage points higher than the national rate.

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“Some housing advocates are asking the state to keep the eviction ban in place until the unemployment rate among low-wage workers has dropped to pre-pandemic levels,” CBS News reported.

“We’re cautiously optimistic,” said Francisco Duenas, executive director of Housing Now California. “We definitely need these protections as part of our recovery.”

The question remains how the state can get the unemployment rate among low-wage workers down to pre-pandemic levels when it is so strongly incentivizing these same workers to stay at home.

Thirty-five years ago, a former California governor, then-President Ronald Reagan, said, “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.”

Newsom could do a lot worse than to heed a little wisdom from his predecessor.

This article appeared originally on The Western Journal.

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