The economic well-being of hundreds of thousands of working Californians hangs in the balance as California’s Budget Conference Committee meets to work out their disagreements for the 2017-2018 budget before final negotiations with Governor Brown. This legislative budget will get us one step closer to determining whether California’s Earned Income Tax Credit (CalEITC) will support self-employed, “gig-economy” workers. Both houses have luckily already agreed that outreach dollars again are needed to build awareness of the CalEITC among the very low-income workers living in poverty and just trying every day to make ends meet.

The CalEITC is a refundable state tax credit that increases the economic security of working families, who can receive as much as $2,706 from the program, depending on their income, in addition to the income boost they receive from the federal EITC.

Although recent estimates indicate roughly 35 percent of America’s workforce has self-employment income, approximately 55 million people,[1] self-employment income is not currently counted in determining eligibility for the CalEITC. California is an outlier here; neither the federal government nor any other state EITC program excludes self-employed workers and entrepreneurs from claiming an earned income tax credit (EITC). Childcare workers, handy-persons, Uber/Lyft drivers, tutors, small farmers, landscape workers, entrepreneurs and other self-employed workers can be greatly helped by CalEITC. Receiving a tax credit from EITC can literally lift people out of poverty; In 2015, the federal EITC alone pulled about 6.5 million people out of poverty, including about 3.3 million children.[2]

Outreach for CalEITC is also critically important. A survey conducted by the California Budget and Policy Center found that fewer than 1 in 5 people who were likely eligible for the CalEITC had even heard of the credit. What’s more, many households who qualify for CalEITC do not earn enough to be required to file federal taxes. This means they may be missing out on thousands of dollars they would receive from the federal EITC program, in addition to the CalEITC.

Fortunately, the Assembly version of the budget includes expansion to all self-employed Californians and a slight increase on overall income eligibility up to $22,300. Both Assembly and Senate proposals include $2 million for outreach, holding steady to last year’s level, although more funding for outreach and for free tax-preparation assistance is needed. (We and our partners advocate an increase to $9 million). The Senate should adopt the Assembly version of the CalEITC program budget that includes funding for a reasonable EITC expansion and includes the self-employed.

The money we spend on CalEITC will pay dividends as Californians invest this money in their children, their savings and their local economy. Most will also receive the Federal EITC, which will put thousands more dollars into their pockets and into California’s local economy. What the Conference Committee chooses will decide whether some Californians have enough money to make it through the year or not.