Reparations to Black Californians could cost over $800bn, economists tell state | California

It could cost California more than $800bn to compensate Black residents for generations of over-policing, disproportionate incarceration and housing discrimination, economists have told a state panel considering reparations.

The preliminary estimate is more than 2.5 times California’s $300bn annual budget, and does not include a recommended $1m per older Black resident for health disparities that have shortened their average life span. Nor does the figure count compensating people for property unjustly taken by the government or devaluing Black businesses, two other harms the taskforce says the state perpetuated.

Black residents may not receive cash payments anytime soon, if ever, because the state may never adopt the economists’ calculations. The reparations taskforce is scheduled to discuss the numbers on Wednesday and can vote to adopt the suggestions or come up with its own figures. The proposed number comes from a consulting team of five economists and policy experts.

“We’ve got to go in with an open mind and come up with some creative ways to deal with this,” said assembly member Reggie Jones-Sawyer, one of two lawmakers on the taskforce responsible for mustering support from state legislators and the California governor, Gavin Newsom, before any reparations could become reality.

In an interview before the meeting, Jones-Sawyer said he needed to consult budget analysts, other legislators and the governor’s office before deciding whether the scale of payments is feasible.

The estimates for policing and disproportionate incarceration and housing discrimination are not new. The figures came up in a September presentation as the consulting team sought guidance on whether to use a national or California-specific model to calculate damages.

But the taskforce must now settle on a cash amount as it nears a 1 July deadline to recommend to lawmakers how California can atone for its role in perpetuating racist systems that continue to undermine Black people.

For those who support reparations, the staggering $800bn amount economists suggest underscores the long-lasting harm Black Americans have endured, even in a state that never officially endorsed slavery.

Critics pin their opposition partly on the fact that California was never a slave state and say current taxpayers should not be responsible for damage linked to events that germinated hundreds of years ago.

Taskforce recommendations are just the start because ultimate authority rests with the state assembly, senate and the governor.

“That’s going to be the real hurdle,” said California senator Steven Bradford, who sits on the panel. “How do you compensate for hundreds of years of harm, even 150 years post-slavery?”

Financial redress is just one part of the package being considered. Other proposals include paying incarcerated inmates market value for their labor, establishing free wellness centers and planting more trees in Black communities, banning cash bail and adopting a K-12 Black studies curriculum.

Newsom signed legislation in 2020 creating the reparations taskforce after national protests over the death of George Floyd, a Black man, at the hands of Minneapolis police. While federal initiatives have stalled, cities, counties and other institutions have stepped in.

An advisory committee in San Francisco has recommended $5m payouts, as well as guaranteed income of at least $97,000 and personal debt forgiveness for qualifying individuals. Supervisors expressed general support, but stopped short of endorsing specific proposals. They will take up the issue later this year.

The statewide estimate includes $246bn to compensate eligible Black Californians whose neighborhoods were subjected to aggressive policing and prosecution of Black people in the “war on drugs” from 1970 to 2020. That would translate to nearly $125,000 for every person who qualifies.

The numbers are approximate, based on modeling and population estimates. The economists also included $569bn to make up for the discriminatory practice of redlining in housing loans. Such compensation would amount to about $223,000 per eligible resident who lived in California from 1933 to 1977. The aggregate is considered a maximum and assumes all 2.5 million people who identify as Black in California would be eligible.

Redlining officially began in the 1930s when the federal government started backing mortgages to support home-buying, but excluded majority Black neighborhoods by marking them red on internal maps. The racial gap in homeownership persists today, and Black-owned homes are frequently undervalued. Redlining officially ended in 1977, but the practice persisted.

Monetary redress will be available to people who meet residency and other requirements. They must also be descendants of enslaved and freed Black people in the US as of the 19th century, which leaves out Black immigrants.

In their report, the consultants suggest the state taskforce “err on the side of generosity” and consider a down payment with more money to come as more evidence becomes available.

“It should be communicated to the public that the substantial initial down-payment is the beginning of a conversation about historical injustices, not the end of it,” they said.