Anti-Poverty Advocates Applaud Budget Agreement that Protects Children, Families and Californians with Low Incomes
FOR IMMEDIATE RELEASE June 24, 2024
Contact: Randall Echevarria, randall@paschalroth.com
Advocates urge state lawmakers to fully fund free tax preparation and education and outreach services
SACRAMENTO, CA – The California Earned Income Tax Credit (CalEITC) Coalition applauded the announcement of a budget agreement between Governor Newsom and the State Legislators which largely protects critical investments in children, families, and equity for immigrant communities. The anti-poverty coalition praised California leadership’s approach to closing the budget shortfall while maintaining family-supporting investments in CalWORKs, health care, child care, and tax credits which are all critical to prevent families and individuals from falling into poverty, and urged state leaders to fully restore historic funding for Free Tax Preparation Assistance, Individual Taxpayer Identification Number Application Support, and Education and Outreach (FTPA, ITIN, E&O) at $20 million.
Under the budget agreement, the CalEITC, Young Child Tax Credit (YCTC) and Foster Youth Tax Credit (FYTC) will remain a vital support for families, delivering thousands of dollars each year that help families and individuals pay the rent and utility bills and put food on the table. However, the budget agreement eliminates $10 million in funding — a 50% reduction in funding from the previous two years — for FTPA, ITIN, and E&O, threatening access to crucial programs and services offered through trusted local community-based organizations to connect communities with anti-poverty tax credits and provide free tax filing services, advocates warn.
We appreciate the commitment of the Governor and Legislature to assure access to life-changing refundable tax credits for working families,” said Pete Manzo, President & CEO at United Ways of California. “Unfortunately, the fact remains that budget cuts will severely impact our partners’ ability to reach working families who most need these credits, which is why we’ll continue to advocate for these critical programs to be fully funded at $20 million.
While the final budget agreement protects $10 million in baseline investments for FTPA, ITIN application assistance, and E&O, California must fully restore $20 million in annual funding to build on the progress made over the past several years to connect communities to powerful anti-poverty tax credits and ITIN application assistance. Eliminating $10 million in annual funding will have a devastating impact on the tens of thousands of Californians who rely on community-based organizations for free state and federal tax filing services and to claim their tax credits.
"Throughout this budget, the Governor and Legislature have reiterated their support for anti-poverty state tax credits. One of the best ways to ensure tax credits, like the CalEITC, YCTC, and FYTC, reduce poverty is through Free Tax Preparation Assistance, Education and Outreach (FTPA, E&O) provided by trusted community partners. These trusted community-based services ensure families receive every federal and state anti-poverty tax credit dollar to which they are entitled - and close key equity gaps by helping households get their ITIN,” said Shimica Gaskins, President & CEO of GRACE-End Child Poverty in California. “While we applaud the budget for prioritizing low-income tax credits, we are disappointed that FTPA funding is cut in half and look forward to fully restoring FTPA resources going forward."
n 2023, the CalEITC, YCTC, and Foster Youth Tax Credit directed more than $1.3 billion in cash back into the hands of more than 3.5 million Californians, helping struggling families afford the soaring costs of everyday basic necessities like food, housing, and child care. In the same year, temporary expansions of $20 million in FTPA and E&O investments saved Californians an astounding $38 million in paid tax preparer services and helped more than 110,000 families and households file their state and federal returns and claim their state and federal tax credits for free.
“The CalEITC, Young Child Tax Credit, and Foster Youth Tax Credit programs have proven to be one of the most cost-effective and innovative ways to lift Californians with low incomes out of poverty,” said Amy Everitt, President, Golden State Opportunity. “We are grateful to the legislature for recommending restoring the CalEITC Outreach budget to $12 million but are deeply disappointed the finalized budget reverts the funding back to $10 million. Without this funding, our community-driven outreach programs cannot maintain relief for our state’s working families.”
CalEITC advocates also thanked the Governor and Senate and Assembly for aligning the income thresholds (AB/SB 167) between the CalEITC, YCTC, and FYTC as part of the final budget agreement, which will help reduce confusion for eligible tax filers and increase uptake of anti-poverty tax credits.
