Over the next two weeks, the Governor and Legislature will determine how to spend the state’s $38 billion dollar surplus (closer to $76 billion if you include constitutionally mandated spending). The Governor has requested nearly 400 new spending proposals, many of them one-time investments to be spent over several years. There are many worthy proposals in the Governor’s budget — most demonstrably, a $12 billion commitment to reduce homelessness.
California is one of the wealthiest places on earth. We have more billionaires than any other state and our per capita income ranks 6th among states at over $71,000 a year. California residents, by far, pay the most in federal income taxes, exceeding New York by roughly $90 billion annually. We have a highly progressive state tax structure that asks those with the most to pay more. This wealth provides the largest budget of any state in the nation. But for all its wealth, California has a dark side.
More than one in six children lives in poverty in California. 450,000 California children are estimated to live in households that earn less than half of the abysmally low federal poverty level. This is often referred to as deep poverty. Research shows that children who live in deep poverty experience a form of toxic stress that slows normal brain development, results in lower educational achievement, higher risk of chronic health conditions, and lower earnings as adults.
For decades, California has provided sub-meager grant levels to people who are disabled (Supplemental Security Income (SSI), families with kids (CalWORKs), and indigent single adults (General Relief). For years, CalWORKs grants were worth less than 40 percent of the federal poverty level, at around $700 a month. That’s a program for kids and families living deep poverty, where the family income is less than 50 percent of the poverty level. Due to ridiculously low CalWORKs grants, these families are housing unstable, and must occasionally use homeless services.
Former Senator Holly Mitchell led the effort to increase CalWORKs grant and succeeded when Governor Brown committed to a three-step increase to prevent children on CalWORKs from living in deep poverty. Though Governor Newsom did provide the second of the promised increases, his current budget doesn’t finish the job. It provides an increase that falls short of eliminating deep poverty among children.
To his credit, Governor Newsom gets it. In addition to following through on the second of the CalWORKs grant increases in his first budget, one of his first acts as governor was a refundable $1,000 child tax credit for families in poverty, paid for by closing corporate tax loopholes. Legislators and advocates believed that the dream of ending childhood deep poverty in California would finally happen in the 2020-21 budget, but then COVID hit. Millions of people lost jobs and the state’s revenues plummeted. California could no longer afford to end deep childhood poverty, or so we thought.
As it turns out, the state’s revenues quickly rebounded, since billionaires made so much money during the pandemic. California ended up with the largest surplus in its history.
Even so, Governor Newsom did not include funding to end childhood deep poverty in his 2021 May budget announcement, instead offering a modest, insufficient grant increase for CalWORKs. It is simply unacceptable that one of the richest places on earth will continue to allow children to live in abject poverty.
Similarly, the Governor offered a modest $10 a month increase to SSI recipients who are blind, aged and disabled. Over the past decade, the standard of living for SSI recipients has degraded due to the elimination of state cost of living adjustments and the resistance by successive governors to restore cuts made during the Schwarzenegger and early Brown administrations. California saved over $10 billion with those cuts and kept them in effect even when the state was running substantial surpluses with large reserves.
Against this backdrop, Senate Budget sub-committee #3 considered the Governor’s 2021-22 SSI proposal. The empathetic new chair, Senator Susan Talamantes Eggman, noted that the proposal leaves SSI recipients below the poverty level, and that she is helping a friend living on SSI just to make it month to month. Single, indigent adults leaving the criminal legal system have it even worse, with paltry assistance upon release and $221 in General Relief they can use for housing. In fact, 70% of Californians experiencing homelessness have a history of incarceration. It’s all a recipe for instability.
Governor Newsom really wants to do something about homelessness, which is good, but it doesn’t matter how much we spend on housing and services if we don’t slow the stream of people losing their housing due to poverty. California is using austerity tactics on people in poverty, getting the same results over and over again. Now we’re funding a $12 billion emergency program to fix the carnage. If we want to end homelessness, we must give people the money they need to stay stably and safely housed.
State governments are afraid to provide benefits it may have to cut down the road and believe that a way to save money is to deny adequate levels of assistance. What legislators fail to see is that the reluctance to spend money upfront causes enormous downstream costs. Homeless services, child welfare, emergency food, and foster care are not free, but require funding at ever increasing amounts. If we simply invested to keep people housed and healthy from the get-go, rather than forcing them to live in a constant state of toxic stress caused by extreme poverty, we might not have that problem.
In the next couple of weeks leading up to the budget deadline, the Legislature has a chance to end this shameful chapter in our history by using this year’s surplus to reverse toxic trends that reinforce poverty. Grants for SSI and CalWORKs should be substantially raised so no one is homeless, and the same level of benefits should be provided to people coming out of the criminal legal system and those on General Relief.
This is California, the 5th largest economy in the world. We can and must do better.
