Ten months after California voters rejected a rent control ballot initiative by more than 2.3 million votes – 59 percent to 41 percent – the state is on the brink of enacting a rent control measure approved by the Legislature and backed by Gov. Gavin Newsom.

Proposition 10 failed last year after two political action committees backed by apartment owners, real estate agents and others in the rental business paid for tens of millions of dollars in TV ads that depicted the measure as being a threat to seniors – a tactic that was effective but criticized as manipulative. This view that they didn’t lose a fair fight is one reason that Prop. 10’s main backer – the AIDS Healthcare Foundation – and other advocates plan a 2020 ballot measure on rent control.

This belief that rent control was a political winner despite Prop. 10’s result was also on display in Sacramento with Assembly Bill 1482. Assemblyman David Chiu, D-San Francisco, and other Democrats barely acknowledged Republican complaints that the bill amounted to an end run around the will of voters. Instead, they said Californians demanded relief from soaring rent.

Newsom opposed concessions made by bill author

But Chiu was worried enough about winning support for AB1482 that he weakened some of its provisions to get business groups to remain neutral on the bill. This led to an unusual scenario over the last month in which a high-profile, controversial measure actually was strengthened – not weakened – as final votes neared. That came after Newsom and his staff told Chiu he shouldn’t have compromised.

The Assembly passed AB1482 on the strength of 48 Democratic vote. It was opposed by a bipartisan group of 26 members. It passed the Senate 25-10 on a close to party-line vote.

The version that reached Newsom’s desk this week limits most annual rent increases to 5 percent plus inflation, with the law sunsetting in 2029. It doesn’t supersede local rent control laws in place in Los Angeles and about 20 other cities in the Golden State, with many in the Bay Area. Apartments built within the last 15 years are not covered. Nor are rented-out single-family homes – with the exception of those owned by investment groups or corporations. 

The passage of the rent control measure comes amid evidence that despite three years of new laws meant to ease the housing crisis, homebuilding in the state is actually declining in 2019. Capitol watchers said now at least lawmakers who backed it can tell their constituents they got something big done on housing.

Will California again be a national trendsetter?

But the steady advance of AB1482 was also treated as a national story by the New York Times and many other major news outlets because of California’s long history as a national trendsetter.

Cea Weaver, campaign coordinator of Housing Justice for All, told the Times that the bill’s likely enactment could be a game-changer. “Any victory helps to build a groundswell,” Weaver said. “There is a younger generation of people who see themselves as permanent renters, and they’re demanding that our public policy catches up to that economic reality.”

California became the second state after Oregon to adopt statewide rent control. Chiu’s bill was modeled on one that Oregon lawmakers enacted in February.

Many economists believe rent control ends up being counterproductive because it discourages construction and adequate maintenance, among other problems.

In 1992, when the American Economic Association surveyed its members on the topic, 93 percent agreed that “a ceiling on rents reduces the quality and quantity of housing.”

A measure backed by the California Teachers Association would extend Prop. 30’s higher tax rates on the wealthiest Californians until 2030, with an estimated $7.5 billion each year going to public schools and community colleges.

 

Another measure, this one by the California Hospital Association and the Service Employees International Union-United Healthcare Workers West, makes those higher tax rates permanent and sends half the annual estimated $10 billion to public schools, colleges and universities, 40 percent to Medi-Cal for low-income health care and 10 percent for early childhood development programs. It also imposes a new, higher tax rate on those who make more than $1 million annually. …

 

[Negotiators] for the teachers group and the hospital association have been talking about a third option, which would extend Prop. 30’s higher tax rates and split the money between schools and health programs. That measure is awaiting approval from the state Attorney General’s Office, and a decision about whether to aim that initiative for the ballot won’t be made until later this month. …

 

“We’d prefer one measure, especially on a crowded ballot,” said Gale Kaufman, a political consultant working on the teachers’ measure. “My instincts say less is better always, but it’s difficult to have any hard and fast rules.”

The focus isn’t just on income tax ballot measures, though they have gotten the most early attention. The Chronicle notes that the Making Poverty History initiative “would add a surcharge to the tax bill for land and buildings with an assessed value of $3 million or more. The $6 billion raised annually would go toward programs to reduce poverty in the state, including prenatal services, expanded child care, tax credits and job training grants.”

Steyer follows Schwarzenegger strategy

Tom Steyer, the billionaire environmentalist who is exploring a 2018 run for governor, also is looking to make a political name for himself with a ballot measure, as Arnold Schwarzenegger did in 2002 with Proposition 49, a successful ballot measure funding after-school programs, a year before the recall election that ousted Gov. Gray Davis.

Steyer is behind the Save Lives California campaign, which would use a $2-a-pack tax on cigarettes to shore up state Medi-Cal funding and to pay for health-promotion and anti-smoking programs.

A previous ballot measure that successfully raised cigarette taxes was also sponsored by a non-politician believed to be interested in running for governor. Championed by Hollywood producer-director-actor Rob Reiner, Proposition 10 added a 50-cent levy on a pack of cigarettes, with proceeds used mostly to fund early childhood education programs.

But Reiner, unlike Schwarzenegger, never ran for state office.