BIPOC, LMI Communities set to bear the brunt of deep cuts to climate change, affordable housing programs.
SAN FRANCISCO — In response to California Gov. Gavin Newsom’s 2024 proposed budget announcement Wednesday, Rise Economy Chief Executive Officer Paulina Gonzalez-Brito released the following statement:
While acknowledging the challenges posed by California’s potential $37.9 billion deficit, we are deeply concerned with Gov. Newsom’s plan to close this financial shortfall, which outlines plans to divert billions of dollars away from vital affordable housing and climate change programs.
The proposed $3 billion in cuts from climate programs and $1.2 billion in cuts from housing programs are likely to have a significant impact on all Californians. However, as it often happens, low-income and Black, Indigenous and People of Color (BIPOC) communities will be hit hardest.
Climate change already disproportionately affects low-income and BIPOC communities. A study published in the ‘Journal of Exposure Science & Environmental Epidemiology’ found communities that were previously redlined have a higher concentration of oil and gas wells in their neighborhoods compared to predominantly white neighborhoods. This has led to a host of negative health outcomes for these communities. Adding to that, California is already facing a severe housing crisis due in part to private equity companies’ consolidation of available housing stock — fueling displacement statewide.
Diverting billions of dollars away will only make these problems worse.
Rather than blanket cuts to these programs, we encourage Gov. Newsom and the state legislature to consider alternatives to addressing the state’s budget shortfall. One such solution is a state-level Community Reinvestment Act (CRA) that would discourage financing activities that fuel climate change and also establish a reinvestment obligation for credit unions, independent mortgage companies, state-chartered banks and financial technology companies. Based on our recent Community Benefits Agreements, banks have agreed to reinvest an average of four percent of their total deposits annually. Using this figure, state-chartered banks and credit unions alone have the potential to reinvest upward of $15.3 billion per year for affordable housing and economic development.
We understand the give-and-take that will be required to close the projected deficit. However, the budget cannot be balanced solely at the expense of the economic well-being of low-income and BIPOC communities. By looking toward innovative policy that helps address systemic inequities, California can build a more resilient future for all its residents. Rise Economy looks forward to working with Gov. Newsom and lawmakers to ensure that we can address budgetary shortfalls without taking away from those who are already struggling.