California’s Future Depends on Investing in Families and Children
FOR IMMEDIATE RELEASE May 14, 2024
Newsom’s budget puts families at risk, slashing free tax prep and outreach support families need to access thousands of dollars in tax credits each year and proposing deep safety net cuts
SACRAMENTO, CA – The California Earned Income Tax Credit (CalEITC) Coalition, a leading statewide anti-poverty coalition of service providers, labor, community and faith-based organizations, responded to Governor Newsom’s May Revision budget proposal. Anti-poverty advocates are urging state policymakers to reject the Administration’s proposed cuts to the Safety Net Reserve and anti-poverty programs, including cuts to Free Tax Preparation Assistance (FTPA) and Education and Outreach (E&O) and Individual Tax Identification Number (ITIN) Application Assistance.
While the Governor’s proposal would protect progress made on anti-poverty and equity-building tax credits for low incomes families, including investments in the CalEITC, Young Child Tax Credit (YCTC) and Foster Youth Tax Credit (FYTC), proposed cuts to FTPA, E&O, and ITIN support and safety net programs would have a devastating impact on families that are struggling to keep fresh food on the table and a roof over their heads, advocates warn.
“The Governor’s budget proposal, if adopted, would be a significant blow to California’s leadership in lifting families out of poverty and creating a more equitable state,” said Amy Everitt, President of Golden State Opportunity. “We urge our leaders to protect and maintain safety net reserves and anti-poverty programs, including $20 million for Free Tax Preparation Assistance, Education and Outreach, and Individual Tax Identification Number Application Assistance to ensure all Californians have support to access these critical programs that prevent even more families from falling into poverty.”
Last year, the CalEITC and YCTC directed more than $1.3 billion in cash payments to nearly 3.5 million families and individuals earning about $31,000 or less a year. CalEITC Coalition members urge state policymakers to maintain $20 million in annual funding for FTPA and E&O and ITIN support to ensure that Californians are able to access hundreds of millions in state and federal tax credits through trained and trusted community-based organizations.
“California policymakers can solve our budget deficit without jeopardizing vulnerable families and children. By cutting funding for CalEITC education and outreach and free tax prep services, thousands of working families earning minimum wage will be cut off from credits—including hundreds of millions of dollars in mostly federal funds—that are proven to lift families out of poverty and help them pay rent, put food on the table, and meet other essential needs,” said Pete Manzo, President and CEO of United Ways of California.
In 2023, FTPA and E&O, and ITIN supports helped families file more than 110,000 federal and 107,000 state tax returns and tens of thousands of households access hundreds of millions in powerful anti-poverty tax credits, including the CalEITC, YCTC, FYTC, and federal Earned Income Tax Credit, while saving an estimated $38 million in paid tax preparer fees. The Governor’s proposed cuts would result in decreased program and staffing capacity of free tax prep centers, cutting off a lifeline that tens of thousands of Californians rely on to file their taxes and claim their tax credits for free and forcing families to rely on paid tax preparers, advocates warn.
"The May Revision shows the Governor's commitment to anti-poverty state tax credits. But the best way 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 - protecting these funds is critical to the success of anti-poverty tax credits. These trusted community-based services ensure families receive every federal and state anti-poverty tax credit dollar they are entitled to, which help cover basic necessities,” said Shimica Gaskins, President & CEO of GRACE-End Child Poverty in California. “It's heartbreaking to think about the families who will be impacted by this shortsighted proposal."
Cutting funding for CalEITC E&O, ITIN support and free tax prep services goes against California’s goals to lift families out of poverty, and narrow long-standing racial disparities. About 3 in 4 Californians likely eligible for the CalEITC are people of color, including about half who are Latinx. More than 8 in 10 Californians likely eligible for the YCTC are people of color, about two-thirds of whom are Latinx.
The California Latino Caucus included $20 million for FTPA and CalEITC E&O and ITIN support in its FY 24-25 state budget priorities. The CalEITC Coalition thanked the Latino Caucus for their support and “Prosperity Champion” Assemblymember Miguel Santiago for championing FTPA and CalEITC education and outreach as a budget priority with the Latino Caucus.
