Governor’s Revised Budget Avoids Drastic Cuts but Misses Opportunities
May 11, 2017
Los Angeles, CA – Pete Manzo, President and CEO of United Ways of California made the following statement regarding Governor Jerry Brown’s Revised State Budget:
Today, Gov. Jerry Brown released his revised $183 billion budget, keeping close to his original January budget. This May Revise unfortunately, misses key opportunities to help move California’s children and families toward a more stable life while keeping on a track of fiscal responsibility.
We appreciate that Gov. Brown restored the $500 million cut made to child care in his January proposal, avoiding a reduction in access to child care for thousands of Californians. He also increased full-day state preschool funding by $7.9 million for an additional 2,959 annual preschool slots. The overall budget for schools in California was increased by $1.4 billion—which is dearly needed to help make the next generation of Californians competitive in the job market.
The governor continued the California Earned Income Tax Credit (Cal EITC) program for California's poorest working families, acknowledging that “Cal EITC is an Important program for poor working families.” We agree. The program puts extra money into the hands of Californians to pay off debts, fix broken vehicles to get to work, buy clothing for kids, and start a savings accounts to plan for the future.
But the current credit does not apply to an ever-growing segment of the population – the self-employed, who file taxes through Form 1099 and Schedule C. These working Californians are represented in the rapidly rising “gig” economy of childcare workers, handy-persons, Uber/Lyft drivers, tutors, small farmers, landscape workers, and other entrepreneurs. This is a critical population to include for the Cal EITC, because from 2000 to 2011, 99% of the total increase in employment was from the self-employed.1 To help all low-income workers, the self-employed must be included; to do otherwise is unfair and short-sighted.
Due to their extremely low income limit for the Cal EITC - under $14,161 for parents with two or more children - those eligible for Cal EITC are not required to file tax returns necessary to claim the credit. This population struggles every day to get by and are harder to reach and far less likely to apply for the credit. Therefore, the state should expand funds for outreach to these Californians. The state can afford more outreach, and it would be money well spent, because for every Cal EITC claim we will be bringing in federal dollars from the federal EITC to benefit families, communities and our economy. Lastly, as promised in the original bill, the state should consider raising the income eligibility levels towards the federal income limits.
Another missed opportunity in the budget is the use of new Proposition 56 funds to supplant existing dollars in Medi-Cal instead of making significant improvements as the voters wanted. Some of these funds should be used to address the well-known and recognized crisis in our Denti-Cal program by increasing our drastically low Denti-Cal provider rates. Less than 38% of Denti-Cal eligible children received dental care in 2014, and both dentists and patients have described the system as broken, dysfunctional, and an outright crisis, according to the 2016 Little Hoover Commission report.
The governor should also make new investments in children’s critical health care needs, and restore other benefits previously cut from Medi-Cal during the Great Recession. It is clear that the intent of Prop 56 was to enhance health care services to the poorest Californians, not to backfill funding at the status quo.
Fiscal prudence is vital, but giving more low-income workers access to Cal EITC, and providing low-income children and their families greater access to dental and health care by increasing provider rates are smart investments we can afford.
We look forward to working with the legislature and Governor Brown to keep moving California forward as the land of opportunity it can continue to be.
United Ways of California improves health, education and financial stability results for low-income California families by coordinating the statewide advocacy and community impact work of 34 California United Ways. California’s United Ways know that success in any one of these areas is affected by progress or lack thereof in the others.
Peter Manzo, President & CEO
Judy Darnell, Vice President of Public Policy