CA Budget Includes Ambitious Cost-of-Living Refund for Families

On Thursday, Governor Newsom rolled out his revised budget proposal, which included a Cost-of-Living Refund for Californians -- an expanded and modernized state Earned Income Tax Credit (CalEITC), which would put money back in the pockets of working families that need it the most. Compared to his initial proposal in January, his newly-announced plan would increase the overall size of the CalEITC by $200 million, and double his previously proposed credit boost for families with young children.

The Governor’s ambitious proposal, which must be voted on by June 15th, would:

  • Help about 3 million California households face the rising costs of living and housing (up from 1.8 million households in 2018), and tripling the amount of benefits to $1.2 billion

  • Create a new CalEITC refund boost of $1,000 for families with children under 6

  • Make the refund monthly, so families have this critical money when they need it

  • Greatly expand those who are eligible by raising the maximum qualifying income to $30,000

  • Particularly benefit women and communities of color, who traditionally work lower-wage jobs

“People who are working need to be able earn enough to make ends meet and feed their families,” said Adam Ruben, director for Economic Security Project Action. “States need to raise the minimum wage and hand-in-hand with that expand the Earned Income Tax Credit.”

To learn more about the Cost-of-Living Refund, backed by Economic Security Project Action, go here.

San Diego Tribune Editorial: Gov. Newsom’s tax plan has history of helping poor at little cost (5/9/19)

This is why Gov. Gavin Newsom’s plan to increase the state Earned Income Tax Credit for families with children under the age of 6 sounds like a winner. Ever since the Census Bureau introduced a measure of poverty that included the cost of living as well as income, California has been found to have the highest percentage of impoverished residents of any state.

Sacramento Bee: Taking from the rich and giving it to you: Democrats have ‘Robin Hood’ tax plans this year (5/6/19)

Newsom would greatly expand who is eligible for California’s credit. He’d raise the maximum qualifying income to $30,000, create a new $500 credit for qualifying families with children under age 6 and increase the amount of money Californians can receive from the benefit, according to his budget proposal.

In 2017, 1.5 million California taxpayers received $348 million from the earned income tax credit, according to the analyst’s office.

Newsom’s proposal would make about 3 million households eligible for the benefit and potentially raise state spending by about $1 billion.

He’s also proposing a change in how beneficiaries receive the money, allowing them to enroll for monthly payments. That means a family qualifying for $2,500 credit could choose to claim it by getting a couple hundred dollars a month.

That part has advocates for low-income Californians particularly excited.

“As we know families are often seeing budget shortfalls every month, so receiving a lump at the end of the year doesn’t do as much good as regular payments,” said Teri Olle, the Economic Security Project’s California campaign director.

Mercury News: Here’s what’s new in California Gov. Gavin Newsom’s state budget (5/9/19)

Newsom’s budget proposes doubling the Earned Income Tax Credit, which he called “one of the most effective anti-poverty measures in our nation’s history.” His May proposal would double the Cal-EITC Cost-of-Living Refund, which helps economically distressed families with the costs of food, rent and child care for families with young kids proposed in January from $500 to $1,000.

LA Times: Gov. Gavin Newsom wants to double spending on homelessness — to $1 billion (5/9/19)

Newsom is proposing a mix of measures to help low-income Californians, but perhaps none is more ambitious than his call, reflected in the revised budget, to expand the size of the state's earned income tax credit to $1.2 billion — triple its current size and more than was proposed in January. If lawmakers approve the plan, those families with children would be eligible for a new $1,000 cash payment.

The Hill: Calif. governor proposes $1 billion to combat homelessness (5/9/19)

Newsom also proposed tripling the size of the earned income tax credit to $1.2 billion, more than $200 million higher than his initial ask in January. If approved by the legislature, that would mean low-income families with young children would be eligible to receive up to $1,000 in tax credits from the state.

Politico: Newsom to unveil May budget Thursday with focus on low-income families (5/7/19)

It also doubles to 3 million the total California households eligible for the state's earned income tax credit, worth $1,554 for one-child families in tax year 2018, $2,559 for two-child families and $2,879 for families with three kids.

"The cost crisis is the foundation economic and quality-of-life challenge that California families face," Newsom said in prepared remarks ahead of his early budget announcement Tuesday. "Young families — parents, in particular — feel these pressures acutely."

KUSI: Gov. Newsom released his revised version of the state’s budget (5/9/19)

Sen. Toni Atkins, D-San Diego, lauded Newsom for the revised budget’s gains on its predecessor. Atkins, the Senate president pro-tem, also expressed confidence that the state Legislature would finalize a budget “that will make a real difference for Californians.”

“The May budget revision reflects California’s fiscal strength, increases our prudent reserves, and makes important investments for the future,” Atkins said. “I am particularly pleased to see more funding for K-12 education and increases for the Earned Income Tax Credit to help even more working Californians.”