Western Center’s Director of Policy Advocacy, Mike Herald, was on KPFA radio to discuss Governor Newsom’s March 9th State of the State Address.
(Interview begins at 9 min 25 seconds)
Western Center’s Director of Policy Advocacy, Mike Herald, was on KPFA radio to discuss Governor Newsom’s March 9th State of the State Address.
(Interview begins at 9 min 25 seconds)
“It’s all very frustrating, since with the fifth largest economy in the world, these things are fixable. The money is there,” said Courtney McKinney, spokesperson for the Western Center on Law and Poverty. “It is a question of priorities — whether or not millions of people being plunged into poverty is seen as enough of a destabilizer to encourage the wealthy, business and political class in California to put money into addressing poverty and the trappings of poor environment in smart, sensible ways. Easier said than done.”
“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.
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.
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.
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.
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.
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.
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.
Other Health Proposals
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.
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.
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.
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.
“Madeline Howard, senior attorney with the Western Center on Law and Poverty, also welcomed the idea of cash assistance as a support for renters.
“We need that; $600 is a start, but it’s really only a start,” she said. “Six hundred dollars in California dollars — what is that, a week of rent?”
***Western Center is part of the Debt Free Justice Coalition, which worked to achieve the historic, first in the country victory to end state law authorizing specified criminal justice fees, resulting in the repeal of 23 criminal justice fees and expunging an estimated $16 Billion in outstanding debt.***
FOR IMMEDIATE RELEASE
SACRAMENTO, CA—Last Friday, Governor Gavin Newsom signed AB 1869, making California the first state in the country to repeal administrative fees in the criminal system. This historic reform will reduce the harm caused by court-imposed debt and strengthen the economic security of low-income communities of color.
AB 1869 permanently ends the assessment and collection of 23 administrative fees in the criminal system effective July 1, 2021. The bill also writes off all outstanding fee debt. The Policy Advocacy Clinic at Berkeley Law estimates that AB 1869 will relieve Californians of over $16 billion in outstanding criminal fee debt, the vast majority of which is uncollectible because people cannot afford to pay.
According to Senate Budget Chair Senator Holly J. Mitchell (D-Los Angeles): “For too long, the imposition of fees by our courts has taken away much-needed resources from people and perpetuated historic forms of racialized wealth extraction. By eliminating these criminal administrative fees, we can put money back in the pockets of Black and Latinx people and invest in the public health and safety of all communities.”
Currently, California law permits counties to charge people administrative fees related to their legal representation, probation, and incarceration. These fees often add up to thousands of dollars for a single person and pose significant barriers to reentry. Unpaid fees can be enforced via wage garnishment, bank levy, and tax refund intercept.
“As a public defender, it is painful to watch clients be saddled with fees, knowing that they won’t be able to pay,” said San Francisco Public Defender Mano Raju, whose office is part of Debt Free Justice California. “The criminal legal system disrupts people’s lives and families in so many ways that adding financial penalties sets people up for failure when we should be setting them up for future success. By eliminating fees, we’re paving the way to more resilient communities.”
Angelique Evans, an organizer with A New Way of Life, shared her experience: “Almost immediately after being released from prison, Los Angeles County told me that I owed over $3,000 in administrative fees. As a mother, I wanted to prioritize taking care of my son and getting back on my feet. The fees held me back, both emotionally and financially. This bill will allow people returning home to focus on what matters most—rebuilding our families and lives.”
AB 1869 builds on years of organizing and advocacy by Debt Free Justice California. Research by the coalition shows that imposing fees on people in the criminal system is high pain because it leaves many with insurmountable debt, and low gain because counties net little, if any, revenue from these fees. Due to over-policing and racial bias in the system, the burden of fees falls disproportionately on Black and Latinx communities.
Out of concern for racial and economic justice, legality, and costs, four counties—San Francisco, Alameda, Contra Costa, and Los Angeles stopped charging some discretionary fees over the last few years. AB 1869 brings debt-free justice to all Californians across the state.
Jhumpa Bhattacharya, Vice President of the Insight Center for Community and Economic Development and member of Debt Free Justice California, said: “We joined together as a coalition to think bigger, broader, and more critically about how anti-Blackness, xenophobia and sexism underpin the rules of our economy, the criminal system and policing. The imposition of criminal fees was not simply a matter of good or bad fiscal policy, but a reflection of multiple systems of entrenched racism that have led to targeted policing and over-incarceration of Black and Brown communities, consequently widening racial and gender wealth inequality.”
The passage of AB 1869 will help California begin the process of reinvesting in communities and disinvesting from our carceral system.
Jhumpa Bhattacharya, Vice President of Programs and Strategy Clinical Supervising Attorney, Insight Center for Community Economic Development, 510-466-1711, jhumpa[at]insightcced.org
Stephanie Campos-Bui, UC Berkeley School of Law Policy Advocacy Clinic, 760-349-6631, scamposbui[at]law.berkeley.edu
Debt Free Justice California is a multi-regional, California-based coalition focused on putting a stop to the unfair ways the criminal system drains wealth from vulnerable communities. The coalition is comprised of legal advocates, policy experts, and most importantly, movement building organizations led by impacted people. For more information, visit: https://ebclc.org/cadebtjustice/about/.
“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.”
“Mike Herald, director of policy advocacy for the Western Center on Law and Poverty, said the bills would have raised an estimated $23 billion, funds he said are needed to prevent widespread suffering, on top of the chaos already wrought by the pandemic.
“These matters would prevent devastating cuts to things like the K-12 system, to child care, Medi-Cal benefits, in-home supportive services, welfare,” Herald said. “Recessions often cause us to cut when we probably need to be paying out the benefits at the highest level.”
“We don’t think that the science and public health would affirm the idea that we should be evicting people from their homes during the COVID crisis,” said Mike Herald, director of policy advocacy for the Western Center on Law and Poverty.”
“Mike Herald, director of policy advocacy for the Western Center on Law & Poverty, a legal aid organization that was involved in bill negotiations, said he would be watching in the coming weeks to make sure landlords don’t look for ways to get around the law. He said the governor and Legislature must figure out a way to address the financial fallout of widespread nonpayment of rent next year.
“This staves off the worst of the potential crisis that could have come, but it does still leave off some very big issues,” he said.”