California would pay 100% of missing rent for some tenants under budget plan

Gov. Gavin Newsom wants to set aside $7.2 billion to help low-income tenants financially affected by the COVID-19 pandemic cover all of their outstanding rent and utility payments as part of a $100 billion economic recovery plan he announced Monday.

The proposal expands on a rent relief package Newsom signed earlier this year. That program offers tenants relief on 80% of what they owe and requires landlords to forgive the remaining debt.

California tax collections exceeded Newsom's projections this year, enabling the governor to propose additional relief.

The plan is part of a larger fiscal blueprint Newsosm will formally unveil Friday that includes an unprecedented $75 billion surplus. State finance officials said they also anticipated another $26 billion in federal aid to help Californians hardest hit by COVID-19 recover from a year of economic ruin.

Newsom said $5.2 billion would help struggling Californians both back-fill their rent and make future payments. Another $2 billion would cover utility bills and tenant legal services.

"We recognize the acuity of stress associated with back rent, and we recognize the acuity of stress as it relates to gas water and electric bills," Newsom said during a press conference. "We think it's really important to send a powerful message today about the importance of being able to find relief and access these critical funds so we can keep people housed, we can keep people warm, safe and make sure they are getting the kinds of resources they deserve during this very challenging period of time."

The announcement earned applause from both landlord associations and tenant advocates, who spent the last year in tense negotiations over rent relief agreements and eviction moratorium deadlines.

"This is certainly welcome news, and we applaud Gov. Newsom for his commitment to making rental housing providers whole," said Tom Bannon, chief executive officer of the California Apartment Association. "Many of our members have provided housing for more than a year without compensation. We thank the governor for understanding the difficulties that both tenants and rental property owners have endured during the pandemic."

Newsom signed a law in January to extend an eviction moratorium for low-income Californians. To receive these protections, renters had to pay at least 25% of their rent, either monthly or in a lump sum. Landlords were also eligible for subsidies to cover up to 80% of unpaid rent using billions in federal assistance, as long as they agreed to forgive the other 20% and abstain from evicting tenants.

Assemblyman David Chiu, the San Francisco Democrat who wrote the law, called Newsom's latest announcement to cover the remaining rent a "game changer for so many California families." He also requested additional protections beyond the June 30 moratorium sunset.

"I look forward to the conversations that we will have on this topic in the coming weeks," Chiu said in a prepared statement. "We must ensure that adequate eviction protections are in place beyond June 30 and the level of relief a tenant receives is not determined by the participation of their landlord. All renters should receive the same level of rent relief."

Newsom said it's unclear how much rent debt Californians have accumulated during the pandemic, which is why his administration set aside $5.2 billion to be able to cover the "worst case scenario" outlined in some of the more dire projections.

"We believe roughly within margin, the $5.2 billion should do it," he said, adding that the allotment is out of an "abundance of caution."

The Federal Reserve Bank of Philadelphia initially projected in October 2020 that California renters owed up to $1.7 billion, though that number has likely increased in the last seven months.