$1 Billion Tax Credit for Working Poor Caps Newsom’s First California Budget

California Gov. Gavin Newsom signed his first budget on Thursday evening, highlighted by a big expansion of the state’s earned income tax credit program. Photo: Getty Images.

California Gov. Gavin Newsom (D) finalized a budget deal with the state legislature on Thursday, securing several important child welfare investments and opening up $1 billion in aid for the state’s working poor.

Last week, Newsom and state lawmakers doubled the state’s Earned Income Tax Credit (EITC) program by reaching an agreement to reduce business write-offs and bring the state in line with the Trump administration’s 2017 tax deal. Along with Maine, California is one of two states to pursue generous tax credit packages to middle- and working-class families.

California’s EITC program is targeted at the lowest income workers in a state with the nation’s highest poverty rate. The bipartisan EITC deal will offer money to 3 million low-income Californians, an increase of 1 million with the new investment. Families can qualify for money back on their taxes if they make less than $30,000 a year but register at least $1 in income. The governor’s plan will provide an annual $1,000 child tax credit to qualified taxpayers with children younger than 6. The money would also be available on a monthly basis and not just at the end of the year.

California’s $215 billion spending plan includes a host of child welfare investments, though most of them are time limited. Here are some of the most notable items in the state’s 2019-2020 budget:

Preventing placement instability. The creation of a family urgent response system utilizing a 24/7 hotline and mobile response teams is getting $15 million next year and $30 million the year after.

Help for dependency court system. The state budget will provide a $54 million boost to the budget of the state’s dependency courts, blending a larger state investment with federal funds newly available for the legal representation of children and families involved in the child welfare system.

Housing for foster youth facing homelessness. The Transitional Housing Placement Plus Program (THP-Plus) is receiving $8 million that will create 300 additional housing slots for foster youth ages 18-24.

Foster family agencies. The state’s private providers will receive $6.5 million to cover a cost of living increase for rates offered to foster family agencies, which provide a good chunk of foster care placements across the state.

Testing upstream services. Child Welfare Public Health Nursing Early Intervention Program in L.A. County is the recipient of $8.25 million.

Childcare for the youngest foster children. $10 million would go to expanding the state’s Emergency Childcare Bridge Program, which prioritizes trauma-informed childcare for caregivers of young children who have entered the foster care system.

Back from the dead. Foster Parent Recruitment, Retention and Support funding returns: $21.6 million a year to be spent on activities and services designed to boost the number of homes for foster children across the state.

Help with the backlog. Newsom will sign off on a one-time increase of $14.4 million from the general fund to help with the slow pace resource family approval process.

Promoting higher education for foster youth. Newsom is earmarking $740,000 in state money to create a Sacramento location of First Star Academy, a national nonprofit that works to create college-prep pipeline programs for foster youth on college campuses.

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Jeremy Loudenback
About Jeremy Loudenback 319 Articles
Jeremy is the child trauma editor for The Chronicle of Social Change.