Gov. Newsom’s Plan to Use Federal Funds to Cover Unpaid Rent for Low-Income Tenants

In January of this year, at the behest of California Gov. Gavin Newsom, the California legislature passed a second eviction protection plan extending the eviction moratorium until June.

The Globe reported:

The new legislation carries over much of the current eviction moratorium but with a few key differences in favor of landlords. Starting February 1st, tenants can qualify for protections as long as they pay 25% of the rent each month or pay it in a lump sum payment by June 30th. Like before, tenants can only qualify for this as long as they sign paperwork attesting that they are facing financial hardships due to the COVID-19 pandemic. If not paid, landlords can sue to get the money back in court but cannot sue for eviction.

Flash forward to June 21, 2021 and the looming deadline, when Gov. Gavin Newsom announced Monday, “California is planning rent forgiveness on a scale never seen before in the United States.”

“California is planning rent forgiveness on a scale never seen before in the United States.”https://t.co/yhggZmlgnT

— Gavin Newsom (@GavinNewsom) June 22, 2021

The state Legislature is planning to further extend the moratorium on evictions beyond the June 30th expiration.

The New York Times reported Monday:

A $5.2 billion program in final negotiations at the State Legislature would pay 100 percent of unpaid rent that lower-income Californians incurred during the pandemic and would be financed entirely by federal money. The state is also proposing to set aside $2 billion to pay for unpaid water and electricity bills.

When California became the first state to shut down its economy last year, Gov. Gavin Newsom predicted dire shortfalls in the state’s budget. But a year later, the state finds itself with so much money that it is poised to not only cover 100 percent of unpaid rent for low-income tenants, but also to give an additional $12 billion back to taxpayers, by sending state stimulus checks of at least $600 to millions of middle-class Californians.

The state’s separate rental relief program would be available to residents who earn no more than 80 percent of the median income in their area and who can show pandemic-related financial hardship. In San Francisco, a family of four would have to earn less than $146,350 to qualify.

For each tenant currently under COVID-19 eviction protection, landlords were able choose to either receive 80% of the unpaid rent from the state as long as they agree to forgive the other 20% and pledge not to evict the tenant for actions made until June 30th, or they could opt for 25% from the state to protect all tenants from being evicted but then can pursue eviction after June 30th, the Globe reported.

After the governor’s announcement, reactions were mixed. One reply on the governor’s Twitter feed said, “You know a better solution would have been to let those people work. Just saying.”

You know a better solution would have been to let those people work. Just saying

— G – Man (@gstagner) June 22, 2021

Another said, “In other words, CA Gov. Gavin Newsom plans to buy recall votes using taxpayers’ dollars. Didn’t Newsom’s rent/eviction moratorium decree effectively violate the 5th Amendment in the U.S. Constitution?”

While California has a $75.7 billion budget surplus, the state also has more than $300 billion in debt, and  unfunded pension and retiree health care debt estimated at over $1 trillion. The federal funding infusions help, but as Joel Pollak at Breitbart notes, “Still, Governor Gavin Newsom, facing a recall election, has promised more stimulus checks of $600 for two-thirds of Californians, and the state legislature is about to provide even more money.”

California landlord? Texas must be looking pretty tempting by now. It’s hard and expensive to book a truck to book … outa California.

— zev (@tikikiwi) June 22, 2021