California’s poor need more of budget surplus, advocates say

California Lawmakers and Gov. Gavin Newsom are in a fierce debate about several-hundred dollar gas rebates as budget negotiations approach the June 30 deadline.

But with one-third of Californians living in or near poverty and one-time pandemic relief payments largely in the past, advocates say leaders must use the state’s record surpluses to create more support for low-income residents.

That was the message Tuesday at the inaugural meeting of the legislature’s new Select Committee on Poverty and Economic Inclusion. Assembly Speaker Anthony Rendon (D-Lakewood), who announced the panel’s formation in February, said it was meant to address “the growing divide in prosperity across California.”

The state boasts an array of safety net programs, like CalWORKs and CalFresh, which have lowered the poverty rate. But much of California’s one-time assistance during the pandemic has disappeared.

Panelists repeatedly reminded legislators that the most effective means of lifting Californians out of poverty is through direct cash assistance. The Golden State Stimulus provided direct relief to low-income residents during the pandemic in the form of $600 and $1,200 payments.

The pandemic-triggered expansion of the Federal Child Tax Credit, according to California Budget Policy Center executive directory Chris Hoene, benefited 8 million California children. The effect was clear, he said — fewer households struggled to pay expenses, and food insufficiency entered a downturn.

But the tax credit expansion is over. For Hoene, ensuring economic mobility means re-investing in these pandemic-era relief programs — it’s “a matter of political will,” he said.

“These one time and temporary expansions help the state avoid larger and harmful economic effects of the pandemic. But these vital public supports are now passed or have been allowed to sunset and as a result, the number of Californians in poverty will likely be higher this year than during the worst [periods] of the pandemic.”

Legislators and Gov. Newsom are in the home stretch of negotiations, working toward a June 30 deadline. The new fiscal year begins July 1. On June 13, the legislature passed a sweeping budget bill with some significant differences from the proposal Newsom released in the spring. A record budget surplus has led many Californians to wonder where the extra money is going — especially when California has the highest poverty rate in the country.

“My hope for this committee is that we really talk about poverty for what it is,” said Michael Tubbs, former mayor of Stockton and Newsom’s Special Advisor for Economic Mobility and Opportunity. “It’s a policy choice. It’s something that’s avoidable, it’s something that’s actually against our best interests. I’m hoping to put to rest the lies we tell about people who live in poverty — that people are in poverty because they choose to be in poverty.”

‘Vestiges of slavery’

Tuesday’s panelists also drew attention to baby bonds. An economic mobility tool that’s been piloted in various states, it involves state governments establishing savings accounts for newborn children in low-income families. The accounts grow over time, and are meant to reduce economic and racial disparities.

One estimate says children who had been enrolled in a baby bonds program for their whole lives would wind up with over $40,000 by age 18.

A first attempt at baby bonds is moving through the California legislature in the form of the Hope Act. It would create trust funds for low-income children who lost a parent to COVID-19. The bill, SB-854, has already passed out of the Senate Governance and Finance, Human Services and Appropriations Committees.

“We could do this in California, and in fact really lead the way for the federal government to understand that this is a true investment,” said Shimica Gaskin, president of GRACE/End Child Poverty CA. †[The bill is] getting really at the vestiges of slavery in terms of the wealth inequality that has been imposed upon young people.”

Gaskin stressed that although advocacy for programs like baby bonds can happen on an activist level, the fight necessitates action from the government.

“The fight to end poverty cannot solely rest on the people who are impacted,” she said. “As our communities continue to advocate, we need our state leaders who hold the power to take their share of the responsibility and carry out full anti poverty solutions for all Californians.”

Another program that advocates want reformed is California Work Opportunity and Responsibility to Kids, or CalWORKs. It gives cash aid and services to eligible households with children, with the stipulation that adults in the program are working. Mike Herald, director of policy advocacy for the Western Center on Law and Poverty, said CalWORKs was originally based in the belief that if the government didn’t force people to work, they wouldn’t know “what was good for them.”

The program has been reformed over the years, Herald said, but tens of thousands of families are still sanctioned from the system due to the work requirement.

“if you don’t meet the work requirements that the government is imposing on you, we punish you,” Herald said. “And the way that we punish you is we cut the amount of money that you have to live on.”

Moreover, Herald noted, there’s a 5% reduction of funds that California gets from the federal government if the work requirement rate falls below a certain threshold.

“We need to jump the work participation rate focus,” he said. “We need to get away from this penalty apparatus.”

Isaac Bryan (D-Baldwin Hills) chairs the Select Committee. In his opening statement on Tuesday, he placed special emphasis on the discrepancy between California’s overall wealth and its high rates of poverty.

“These stark differences are hard to tolerate in the fifth largest economy in the world,” he said, “in a state with more millionaires, billionaires than anybody else. And right now in a state with a hundred billion dollar surplus — a number that’s unfathomable unless you work in California’s government.”

This story was originally published June 22, 2022 2:56 PM.

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