Governor Newsom's proposed May Focuses Economic Relief for Car Owners; United Ways of California Urges Targeted Child Tax Credits, Relief, for Struggling Families, and 2-1-1 System Services

United Ways of California supports the financial scope of the Governor’s proposed May Revise investments, however, notes that relief that does not target families that are struggling the most to get by misses a critical opportunity to invest in data-driven interventions.  

(Los Angeles, CA) — Statement from Peter Manzo, President and CEO of the United Ways of California, (UWCA) regarding Governor Newsom’s proposed May Revise budget:

With California’s current revenue surplus exceeding $97 billion, Governor Newsom has an incredible opportunity to work with the California State Legislature to make targeted investment in what we know works to uplift California families, struggling with the rising cost of living. While we agree with the Governor that the economic realities so many Californians face require robust investments, we differ somewhat on the approach. We support the proposed $2.7 billion investment in rental relief and $1.4 billion proposed for helping Californians address past due utilities, as it is imperative that we keep as many families safely housed as possible. However, we also urge a refocusing of at least a portion of the $11.5 billion for car owners to instead be used via proven pathways for targeted assistance, drawing from our state’s experience with the Golden State Stimulus, California Earned Income Tax Credit (CalEITC), and Young Child Tax Credit. These credits hit the sweet spot - they are the most targeted and effective way to reduce poverty, help families deal with inflation, boost local economies, and improve lifelong results for children. 

Last year, in the midst of the historic public health and economic crisis, the expanded federal Child Tax Credit payments cut child poverty dramatically in California by over 33%. Now that the expanded federal Child Tax Credit has expired, 1.7 million Californian children are falling back into poverty or deep poverty. The takeaway from this is clear, California needs to step up to ensure that children and families on the brink of poverty are prioritized first. Relief based on household earnings and family size is one of the most effective and equitable ways to target these funds. We urge the Governor to ensure that investments like the ones outlined in the Senate Budget Plan and held within AB 2589 (Santiago) are included in the final budget deal negotiated in the coming 6 weeks. We have a rare opportunity to make a big down payment on future prosperity by expanding the CalEITC and Young Child Tax Credit, and the Governor and Legislator should include this in any economic relief. 

While we have concerns regarding portions of the relief investments outlined in the May Revise, we are very supportive of the Governor’s prioritization of the following tax credits:

• $55M Ongoing to Expand the Young Child Tax Credit to align with the federal Child Tax Credit earnings threshold (to include households with no earned income) while indexing for inflation, impacting 55,000 California families that currently cannot access the YCTC; 
• $10M Ongoing for Multi-year Investments into Free Tax Preparation and Outreach, so low-income households can access free-filing options and resources; and
• $20M Ongoing for a $1,000 Foster Youth Tax Credit, eligible individuals would include those who are currently age 18-25 and have experience in the foster care system at some point (while they were age 13 or older) and who otherwise qualify for the CalEITC. 

The United Way network is thrilled that the Governor continues to invest in the California Community Schools Partnership Program. The Governor’s proposed additional $1.5 billion brings the total amount for Community Schools in our state to nearly $4.5 billion, the largest in state and U.S. history. This integrated model for supporting children in receiving the services they need to thrive through local school-community collaboratives is the future of learning for our state. This investment is a lifeline for hundreds of thousands of students and will fundamentally reshape and improve health, education, and social service delivery for 9 million California children and their families. 

The Governor’s proposal also includes important investments in education and child care, including:

• $119 billion for K-12 education, equating to approximately $20,855 per pupil when accounting for all funding sources. 
• $157 million to waive child care fees for low-income families for an additional year
• $1.9 billion for college savings account for California’s children
• An additional $3.4 billion to support access to expanded-day, full-year instruction, and enrichment for all elementary school students. 

We applaud Governor Newsom’s proposed steps to address the climate crisis and invest in drought preparedness, wildfire suppression, and community response to the long-term impacts of climate disasters. As communities contend with disasters such as COVID-19, and the impacts of climate change, we strongly urge the Legislature and Governor to invest in the 2-1-1 system as a statewide resource for all California residents who need access to health and human service information and resources, as well as critical infrastructure support during disasters. COVID-19 and recent wildfires have shown just how vital the 2-1-1 system is to link Californians to assistance for housing/rent relief, food, COVID-19 testing, vaccine information and scheduling, among other resources. 

UWCA will continue our work with the Legislature and Governor to pass a final budget that protects our children, their families, our communities, and our future. 

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United Ways of California improves the health, education, and financial stability results for low-income families by coordinating the statewide advocacy and community impact work of California’s United Ways.