“Christopher Sanchez, a policy advocate at the Western Center on Law & Poverty, said the California Legislature has advocated for policies that would help undocumented immigrants during and prior to the pandemic.”
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“Christopher Sanchez, a policy advocate at the Western Center on Law & Poverty, said the California Legislature has advocated for policies that would help undocumented immigrants during and prior to the pandemic.”
“The state stimulus will provide needed help to the poorest Californians, but more assistance is required, said Courtney McKinney, a spokeswoman for the Western Center on Law and Poverty.
“Any money to help people stay afloat is needed right now,” McKinney said, adding that “it’s good news, but there is still much more needed.” In particular, she said, her group is supporting legislation that would provide food assistance regardless of immigration status.”
“Christopher Sanchez, a policy advocate at the Western Center on Law & Poverty, said the COVID-19 crisis has exacerbated inequities for California’s undocumented communities, many whom live paycheck-to-paycheck and lost jobs at unequal rates during the pandemic-induced recession.
“The governor’s proposal is absolutely a great step in the right direction for undocumented families,” Sanchez said. “However, we know that there are going to be individuals who are left out.”
Governor Newsom has released his proposed 2021-22 state budget. Due to a strong, unanticipated influx of General Fund revenue, Newsom proposes to spend billions of dollars on a one-time basis to address the immediate needs of tenants, landlords, businesses, schools and others in the midst of the pandemic. The budget follows the outlines of the 2020-21 budget agreement, which largely avoided the draconian cuts to education, health and public benefit programs that characterized many past budgets during economic downturns. This proposed budget, while not austere, is conservative both in terms of its long term economic outlook and ambition to meet existing needs of millions of Californians.
Though the budget avoids deep cuts and proposes immediate action to bolster spending, the Governor assumes slower growth in revenue in future years, resulting in significant deficits beginning in 2022-23, which could result in lower spending in the future. In short, the 2022-23 state budget and beyond will either require deep cuts or substantial new revenues to maintain current spending levels.
BACKGROUND
The 2020-21 budget assumed that there would be a substantial loss of state General Funds due to the economic crisis brought on by the COVID-19 pandemic. The budget was passed using half of the Prop 2 Budget Stabilization reserves (aka Rainy Day Fund) and by assuming that the state would receive $14 billion from the federal government in the form of COVID relief by September 2020. Without that funding, the “trigger” mechanism would institute $14 billion in budget cuts.
Despite the fact that federal COVID relief did not arrive in September as projected, budget cuts have not been implemented. In late December, the federal government approved additional COVID relief, but much-needed funding for state and local governments was not included. The state did receive billions to address some COVID related costs, and to fund transportation, education and rental assistance. But in general, those funds cannot be used to fill holes in state budgets.
Fortunately, the deep recession did not result in the massive loss of state General Fund revenue that was predicted. Throughout the second half of 2020, state revenue coffers exceeded estimates by billions of dollars. This counterintuitive outcome reflects the growing impact of income inequality in California, where despite double digit unemployment, tax receipts continue to climb because the incomes of the wealthy are growing — most of the lost jobs were in low wage employment. Additionally, many of those who lost jobs received unemployment insurance that was supplemented by the federal CARES Act. Higher income workers largely did not suffer job losses, and many online enterprises saw substantial increases in profits leading to higher tax payments to the state.
Additionally, anticipated higher caseloads for health and human service programs did not materialize, resulting in lower state spending in the 2020-21 budget. By late November, the non-partisan Legislative Analyst Office projected a $26 billion surplus for the state. The Governor’s budget, however, is cautious, and pegs the surplus at $15 billion. But starting with the 2022-23 budget, the Governor projects that revenue will be more than $6 billion short of estimated expenses, and by the 2024-25 budget, the deficit could grow to $11 billion if no adjustments to spending or revenue are made.
COVID-19
The Governor is calling for “early action” by the Legislature on a package of assistance to respond to the COVID crisis. Among the items in the package are:
While this spending is welcome, it does not come close to meeting the needs of struggling Californians. Increased cash payments to the poorest Californians are needed now and should not be limited to those who have earnings from work. More state assistance is needed to ensure tenants are not saddled with debt that will decimate their credit and drive them further into poverty. The greatest public health crisis in memory is the time to provide health care for all.
FINANCIAL SECURITY
CalWORKs
The budget proposes a 1.5% increase in CalWORKs grants to begin October 1, 2021. The increase will bring the grant for a family of three to 49% of the federal poverty level or a maximum grant of $891 a month. This is similar to a proposed increase from last year’s budget that was dropped when the pandemic started. This funding is provided from the Child Poverty subaccount.
Overall spending on CalWORKs is declining to account for lower than anticipated caseload. The 2020-21 budget assumed the caseload would rise by more than 200,000 families. However, the increase was far more modest, resulting in an increase of about 50,000 cases. Thus, funding for the 2020-21 budget is proposed to be clawed back. Funding for 2021-22 is $600 million lower than the current year but a caseload increase to 480,000 families is funded in the budget.
SSI/SSP
There is no SSP grant adjustment in the Governor’s budget. The budget describes the passing through of federal COLAs that are required under current federal law, but that is not an increase. Indeed, state spending for SSI is proposed to decline again, by an estimated $20 million. Yet again, as in past years, these “savings” are not re-invested into the program to benefit recipients who still have not had grant cuts restored from the last recession. The ongoing failure to address these cuts is unreasonable and unjust.
$2.4 Billion in Earned Income Tax Credit Assistance
The Governor is proposing a one-time $600 increase in state Earned Income Tax Credit (CalEITC) payments to families that receive CalEITC. With so many people in California struggling, and with many working families losing jobs or income from work, putting cash in people’s pockets is good for people experiencing poverty and good for the state economy. The Legislature may wish to consider increasing the size of the payments or providing more cash assistance to the lowest income families.
The Governor’s proposal will benefit more than four million California families, but it leaves out several million California households who do not have earnings from work. This includes CalWORKs families, virtually all SSI recipients, immigrants with neither SSNs or ITINs, people on General Assistance and many others who are unemployed. The Legislature should consider ways to provide assistance to all low income families and individuals.
Food Security
Higher Education
Child Support
Miscellaneous
The proposal includes $35 million one-time General Fund to support micro-grants of up to $10,000 seed funding. These grants are for underserved groups, including undocumented immigrants, to start small businesses.
ACCESS TO JUSTICE/ FINES & FEES
Online Traffic Court Adjudication Pilot
The Governor is proposing again to expand the traffic court online adjudication pilot program statewide. This pilot allows people to pay traffic tickets online rather than make an appearance in court. People with low incomes are given a minimum reduction of 50% of the fines, fees and assessments due to the court. It also allows them to get on a payment plan not to exceed $25 a month.
The proposal allots $12.3 million General Fund, increasing the total to $58.4 million ongoing General Fund by 2024-25, to expand the program statewide, and to include non-traffic infractions.
The Legislature chose not to move forward with the proposal last year and instead used the funding provided for the pilot to reduce criminal fees. Advocates also expressed concern about the design of the pilot and were seeking changes that would expand discounts to people with low incomes.
HEALTH CARE
The Governor’s proposal takes a baseline approach to health care with no major expansions, including no proposal to expand Medi-Cal to undocumented elders or eliminate the harmful Medi-Cal assets test. The proposal resumes the California Advancing and Innovating Medi-Cal initiative (CalAIM), which was put on hold due to the pandemic; expands Continuous Glucose Monitoring systems; extends suspension of Medi-Cal benefits and supplemental provider rates for 12 months; proposes one-time funding for behavioral health services, particularly for school-aged children; and takes further steps to implement the Master Plan on Aging.
Medi-Cal
Other Health Proposals
HOUSING
The Governor’s budget proposal includes important investments to address California’s existing housing crisis at a time when the COVID-19 pandemic is making the crisis worse for low-wage workers and communities of color. The proposal builds on recent efforts to provide stability to at-risk households and invest in programs that will aid economic recovery, and increase the supply and production of very low, low, and moderate income housing. In total, the Governor proposes more than $8 billion in housing resources.
Preventing Evictions and Foreclosures
Last August, the Legislature enacted AB 3088 to create strong statewide eviction protections for tenants unable to pay rent due to hardship caused by COVID-19. The bill extended rental protections to January 31st, 2021 to forestall an incoming wave of evictions. The administration is seeking an immediate extension of AB 3088 beyond January 31, 2021 to allow the state to use federal resources to assist those with arrears, rent, and utilities so families and individuals with low incomes stay housed. The budget includes $11.7 million one-time General Funds for trial courts to process the anticipated increase in unlawful detainer and small claims filings resulting from AB 3088.
The Governor is relying on the federal COVID-19 relief bill that was enacted in late December, which will allocate $2.6 billion in rental relief funds to California. Rental assistance will be dispersed between the state and local governments with an estimated $1.4 billion going to the state and $1.2 billion to local jurisdictions with populations over 200,000. The federal program includes eligibility parameters related to eligible use of funds as well as income parameters, with the primary focus of the rental assistance to support individuals and households with less than 80% Area Median Income (AMI), with a priority for individuals and households with less than 50% AMI.
National Mortgage Settlement Program
In the 2020-2021 budget, the California Housing Finance Authority allocated $331 million in National Mortgage Settlement funds to prevent foreclosures and evictions. Last year, the Judicial Council provided $31 million of those funds to local legal service organizations, with the California Housing Finance Authority (CalHFA) recently providing the remaining amount to 90 certified housing counselors throughout California. CalHFA plans to continue to provide mortgage assistance in 2021-22.
Anti-Discrimination
The Budget proposes $2 million General Fund dollars for the Department of Fair Employment and Housing to prosecute violations of anti-housing discrimination laws and to conduct surveys and education and outreach campaigns.
Low-Income Housing Tax Credits
The budget proposes a third round of $500 million in tax credits to reduce funding gaps in affordable housing units. These tax credits will be administered by the California Debt Limit Allocation Committee, the Tax Credit Allocation Committee, and the California Business Consumer Services and Housing Agency.
Excess State Land Development
The Governor is proposing statutory changes to allow market-rate and commercial development on excess state land.
Construction Apprenticeships
In an effort to align housing development with workforce development, the budget proposes $8.5 million General Fund to expend access to state-approved construction apprenticeships and pre-apprenticeships that will result in approximately 650 jobs.
Infill Infrastructure Grant Program
$500 million in General Fund dollars is included to create jobs and increase long-term housing development to further a more equitable housing supply in a post-COVID-19 housing market. This includes $250 million in the current fiscal year and $250 million in fiscal year 2021-22.
Expanded Facilities to Support Housing
To further the goal of ending homelessness in California, the Governor’s budget includes $250 million for the acquisition and/or rehabilitation of Adult Residential Facilities (ARF) and Residential Care Facilities for the Elderly (RCFE). These funds will support physical upgrades and capital improvements.
Project Homekey
To accelerate the work on providing permanent housing for people experiencing homelessness and stop the spread of COVID-19 among this vulnerable population, the Governor is allocating $750 million to extend the program. $250 million is allotted for the current year (2020-21), and $500 million for fiscal year 2021-22. This will be administered by the Department of Housing and Community Development.
2020 has been an unusual year, and the California legislative session was no exception — everyone from legislators to advocates had to adjust to the year’s challenges. Western Center started the year with 38 bills, but due to COVID-19, the Legislature significantly narrowed the number of bills. Even so, our advocates worked tirelessly to make sure people with low incomes are protected in California law, both during the pandemic and after it’s over. Here is a roundup of our sponsored and co-sponsored bills – those that passed, and some we will bring back next year.
Bills signed
ACCESS TO JUSTICE & PUBLIC BENEFITS
*Budget Bills we supported in coalition:
HEALTH
HOUSING
A few bills that didn’t pass this year, but will be back in 2021
“Things like the earned income tax credit put real money in people’s pocket,” said Mike Herald, director of policy advoasscacy at the Western Center on Law and Poverty.”
“These tax credits can be essential and invaluable to making ends meet,” said Mike Herald, policy advocacy director at the Western Center on Law & Poverty. “These have real impacts on people, and they really do reduce poverty among families.”
On Monday, June 15th, the California Legislature met the state constitutional deadline for passing the 2020-21 budget by approving a new state budget. At this time, it is unclear if the Governor will support the budget, as no deal has been announced.
The Legislature approved this budget to uphold its constitutional duty, but it is not the final version. The COVID-19 pandemic has caused unprecedented economic and public health uncertainty, and it has highlighted and exacerbated every existing inequity the state has failed to address. On top of the pandemic, social unrest calling for justice and equality for Black people has created a demand for leaders at every level to do things differently to dismantle entrenched white supremacy. If the Governor and Legislature simply ram through a budget deal, it will disproportionately harm Black people and other communities of color – as the economics of this state always do.
Forthcoming actions on this budget by the Legislature and Governor must take into account the needs of ALL Californians. The state’s economics must change — that includes increasing revenue through taxes on extreme wealth, and not making cuts to the programs millions of Californians rely on.
The budget approved by the Legislature rejects the vast majority of cuts proposed in the Governor’s May Revision budget, and includes several program expansions sought by advocates. The Legislature’s budget includes a trigger mechanism that is substantially different than the one proposed by the Governor. The trigger approved by the Legislature would not take effect until October 1, 2020, and will be “triggered” if the U.S. Senate and President fail to approve the $14 billion in assistance to states that the House of Representatives approved last month, on a bi-partisan basis.
To bring the budget into balance if federal leaders fail to deliver additional funding, the Legislature’s trigger would utilize reserve funding, deferrals of school funding, delays in previously approved spending, and state employee compensation reductions. It would not include most cuts to health programs, CalWORKs, SSI, IHSS, or programs for elders, which were proposed by the Governor. More details are available here.
The Legislature’s budget does include some program corrections, restorations, and expansions — notably, it ends the exclusion of immigrant workers with Individual Tax I.D. Numbers (ITINs) for the state Earned Income Tax Credit (CalEITC), restores the CalWORKs lifetime limit for adults to 60 months, provides another $350 million for homeless programs, and provides COVID-19 inspired CalFresh program simplifications and out-of-office technology advancements. All of these proposed changes are subject to ongoing negotiations, and until a “deal” is announced, we won’t know if they are in the final budget.
For health care, Western Center supports the Legislative budget’s rejection of cuts proposed in the Governor’s May Revision. The Legislature’s budget protects the health of California’s elders and communities of color in several ways. It does not reinstate the senior penalty by raising the Medi-Cal Aged & Disabled income limit, per last year’s budget. It rejects Medi-Cal benefit cuts and limits estate recovery, which disproportionately seizes homes from Black, Latinx, and API families. It also restores funding for the Black Infant Health program and for health navigators, and expands Medi-Cal to elders regardless of immigration status, though, Western Center would like to see that implemented sooner.
The Legislature’s budget recognizes the need to address the state’s homelessness crisis for unhoused community members, while also preventing additional homelessness. The budget allocates resources for traditional interventions, as well as funds to increase permanent housing options through the expansion of the low income housing tax credit, acquisition of hotels and motels which may appropriately serve as longer-term housing resources, and funds for the provision of legal assistance to low-income households that may be threatened with displacement or eviction. Given the magnitude of California’s housing challenges, which are compounded by the COVID-19 pandemic and ensuing responses, we look forward to building on this foundation.