5.14.2015 This morning, Governor Brown released his 2015-16 budget revision. Since the January budget was released, state revenues have increased. Growth has been driven by an improving economy, increased capital gains and other incomefrom high-wage earners. The May Revision reflects a $6.7 billion increase in General Fund revenues compared to the January budget. Regardless, the May Revision continues to affirm the Governor’s commitment to austerity and a reduction of state debt.
The majority of additional revenues will be dedicated to an increase in Proposition 98 General Fund spending to meet the education guarantee and contributions to the Rainy Day Fund and debt repayment as required by Proposition 2.
Otherwise, the May Revision commits new spending in three areas:
- Creation of a state Earned Income Tax Credit (EITC)
- Holding undergraduate tuition flat at state universities
- Providing health care and other safety net services to undocumented immigrants who gain Permanent Residence Under Color of Law status
Like his January proposal, the Governor’s budget revision maintains key elements of the January budget – implementation of the Local Control Funding Formula, federal health care reform, public safety realignment, the Water Action Plan, and the Cap and Trade expenditure plan.
CFPA applauds the Governor for creating a California EITC to assist the state’s lowest-income workers. According to the California Poverty Measure, which incorporates taxes paid and tax credits received, federal EITC dollars represented the difference between living in poverty and not living in poverty for about 430,000 adults and 368,000 children in California in 2012. The creation of a state EITC builds on and improves the impact of the existing EITC. The state EITC will not be enough to lift individuals and families out of poverty, but will alleviate deep poverty. Combined with other public benefits, the EITC provides families with essential resources to help them avoid hunger and food insecurity.
That said, more than 8 million Californians live in poverty and at least 4 million struggle with food insecurity. More must be done. As State revenues continue to increase, the budget should focus on further investments in vital public programs that help struggling Californians get back on their feet. What’s more, these investments should reach the range of Californians who struggle to make ends meet.
CFPA urges the Legislature to pursue budget revisions that will do more to reduce the number of Californians living in poverty and experiencing food insecurity. To help fulfill the Governor’s vision of long-term fiscal stability, the 2015-16 state budget should further address the growing inequities faced by California’s low-income families.
Read the Governor’s May Revise Summary. link
Revised Budget and Nutrition for Low-Income Californians
California EITC: The May revision includes the creation of the first-ever refundable California EITC to assist the state’s lowest-income workers. The targeted credit will provide a refundable tax credit for wages and would focus on the lowest-income Californians – households with income less than $6,580 if there are no dependents or $13,870 if there are three or more dependents. The credit will provide $380 million in benefits to 2 million Californians. This equates to an average estimated household benefit of approximately $460 annually for 825,000 families.
CalFresh: The May Revision does not include any new spending for CalFresh. Though the January budget included and the May revision maintains, a General Fund investment for a state energy assistance subsidy benefit to continue the “Heat and Eat” program for low-income Californians.
CalWORKs: The May Revision does not include any new spending for CalWORKs. Rather, the revision reflects decreased General Fund and TANF block grant expenditures of $97 million in 2015-16 to reflect a revised caseload. These savings are not being reallocated into the program.
Early Childhood Education (ECE) Nutrition: The May Revision does not include any major restorations to the field of ECE, including the state reimbursement for meals served through the Child and Adult Care Food Program (CACFP).
SSI/SSP: There is no increase in the state contribution to the SSI grant. State SSP funding remains at the minimum level required by federal law. The 1% grant increase included in the budget is a pass through of federal funds to reciepients. Grant levels continue to leave recipients below the federal poverty level. SSI/SSP has yet to have any cuts made during the recession restored.
Public Benefits for Immigrants: In November, the President announced executive actions that would allow certain undocumented immigrants to temporarily remain in the United States. These individuals would be recognized as having Permanent Residence Under Color of Law and would be eligible for a limited number of public benefits. The May Revision includes $62 million General Fund for this purpose, which presumes the court allows the federal government to proceed with implementing these executive actions. This status qualifies individuals for state-funded full scope Medi-Cal, In-Home Support Services and Cash Assistance Payments for immigrants. Under federal rules, the status does not allow individuals to qualify for Covered California, CalFresh, CalWORKs, or the California Food Assistance Program.
Enacting the 2015-16 Budget
The Legislature will begin discussing the May Revise and other state budget items this week with the aim of finalizing their budget proposals shortly. All proposed budget items will be discussed during Conference Committee hearings. By midnight June 15, the budget must be approved by the Legislature. After the Legislature approves the budget, the Governor can sign the budget for immediate enactment or veto individual items. By law, the new budget must be enacted by July 1.
Questions? Contact Alexis Fernández at 510.433.1122 ext. 111 or alexis@cfpa.net
