California’s Self-Imposed Affordability Crisis Continues Unabated as Residents Struggle

Everyone is talking about it, but is anyone doing anything? California has an affordability crisis. This is no surprise to anyone in this state who pays bills, taxes, fills up their gas tank, or buys groceries. While America as a whole faces tough inflationary times, California is outpacing the rest of the country in cost-of-living increases. Our day-to-day lives are affected far more by actions and decisions in our state capitol than by those in Washington, D.C.

Case in point: California’s average gasoline price is $6.39, the highest in the nation. This is due to California’s exorbitant state gasoline taxes and regulations. Federal policy decisions do not make our gas prices $2 higher than the national average; Sacramento does. The Governor refuses to make any meaningful change to state policy to lower the cost of gas and has only ever offered piecemeal and temporary relief, such as allowing the use of the cheaper winter blend. For years now, Republicans in Sacramento have proposed meaningful change; for example, I have repeatedly introduced legislation that would temporarily suspend the state gasoline tax and halt annual increases. However, each attempt has been unanimously blocked by the Democratic supermajority.

Beyond the highest fuel rates, we also have the highest state income tax in the nation at 13.3% (and an additional 1.1% on wage income), totaling 14.4%. California also has the 7th-highest sales tax of any state.

The only area where California ranks lower is property taxes, where the rate stands at 0.7% and ranks 32nd among all 50 states. This isn’t a result of good governance from Sacramento, but of Proposition 13, passed by voters in 1978, which restricts the State Legislature from increasing property taxes. Subsequent attempts to repeal Prop 13 have failed every time. Be assured that if Prop 13 is ever repealed, the California exodus of homeowners fleeing to other states will be even greater than what we have seen over the past decade.

California’s affordability crisis can be traced to a number of misguided state policies; however, none better illustrates how Sacramento can drive up the cost of living than the 1970 California Environmental Quality Act (CEQA). After over 50 years, this policy is now little more than an intentional obstacle to new housing construction, development and a key contributor to California’s current housing shortage and the high cost of property. Amongst other unnecessary mandates, the law requires duplicative environmental reviews and public disclosure for all new development projects. The policy has been nothing short of disastrous for anyone trying to build just about any new development or home in the state. A project that would take months in Arizona or Nevada would take years and tens of thousands of additional dollars in California.

CEQA has become a tool for anyone with a grievance against a project to file frivolous lawsuits with the sole intent of imposing delays and increasing litigation costs until a project is financially infeasible. Environmental activist groups regularly abuse this process by stalling a housing project for years, even decades, over an arbitrary concern. An entire ecosystem of professional CEQA advocates – trial lawyers, environmentalists, labor groups – now live off the thousands of annual lawsuits and legal actions that have resulted in costs being passed on to homebuyers, estimated to add an average of $75,000 per new home.  When the government interferes in the homebuilding process, prices increase, demand slows and eventually we have a housing crisis. It is simple arithmetic. 

It is indisputable that CEQA hinders the ability of builders to create affordable housing and even the supermajority party agrees. Every legislative session, I see dozens of Democrat led bills that create exemptions or loopholes here and there within CEQA. For example,  AB 130 and SB 131 from last year loosened CEQA regulations on narrowly defined infill housing, advanced manufacturing, wildfire mitigation, and the costly and wasteful high-speed rail project. These exemptions conveniently benefit the districts of the bills’ authors, letting them chalk up a policy win for re-election while leaving the rest of the state without the relief it needs.

This November, we have an opportunity to reduce the strain that CEQA has placed on homebuilders. Although not perfect, Prop 45 is crucial to expedite the tedious, lengthy environmental review process for building homes across California and to resolve lawsuits challenging project approvals. This would not only apply to housing projects, but also to water infrastructure projects, hospitals and schools, allowing for the cities and counties to be better served. Cutting the red tape and bureaucracy that has slowed down the approvals process for these major infrastructure projects will provide incentives to add to the demand of housing and over time ease the burden on California’s high cost of living.

To add more of a burden to taxpayers and citizens in the state, California has been a magnet for illegal immigration because our state rewards those who have broken the law to enter our country. Illegal immigrants are offered taxpayer-funded medical benefits, social services, and educational opportunities, often provided with translation services in the individual’s preferred language, also paid for with tax dollars. Immigration enforcement questions aside, this unquestionably adds hundreds  of millions of dollars to the state budget deficit 

The high inflation we are experiencing has increased the cost of living, the cost of doing business, and the cost of just about everything in our lives in California, and no doubt some of that comes from bad decisions made in Washington, D.C.

But the Democrats in Sacramento want to make you think that Washington is solely to blame for all of our financial woes. This couldn’t be further from the truth. California is at a crossroads. Voters can keep kicking the can down the road and vote for the same leadership that has put us in this position for the last two decades, or they can choose a different path and begin the slow road to recovery for the Golden State.