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The State of California will use federal “COVID relief” money to pay all of the back rent owed to landlords by qualifying residents during the coronavirus pandemic — plus electricity and water bills that may have gone unpaid.
The state enjoys a $75.7 billion budget surplus — before counting the $26.6 billion it has received from the federal government.
“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
President Joe Biden signed a $1.9 trillion relief bill earlier this year, ostensibly because states like California needed help — but the state is awash in cash, thanks to an economic recovery that began under President Donald Trump and earlier relief bills.
California still has the highest debt of any state, with roughly $363 billion in estimated liabilities in 2019, according to Forbes.
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.
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.
State legislators are also planning to extend a moratorium on evictions past the current June 30 expiration date.
One of the problems the state may face in distributing the money is a lack of applicants. Recently, the San Diego Union-Tribune reported that hundreds of millions of dollars available for local rent assistance had gone unspent because people were not applying for the aid.
The problem is not lack of public awareness; rather, critics have blamed slow bureaucracy, cumbersome rules, and the apparent fact that people seem to have found a way to pay the rent using other relief.
“One theory among local economists is that public officials overshot the need for rental assistance. With several rounds of pandemic-related stimulus money, renters may have found a way to pay rent despite job uncertainty,” the paper reported.