On January 10th, Governor Newsom unveiled his initial $222.2 Billion budget proposal for 2020-21. Overall, the proposed budget signals a solid commitment to tackle underlying challenges facing California’s most vulnerable populations; and if approved by lawmakers it represents the largest budget in the state’s history.
This budget proposal serves as a guide to what the administration is prioritizing in this coming year–and there is promising news for Latinos throughout the budget. Below are key takeaways of the 2020-2021 budget proposal that will surely impact California’s Latino community!
Most notably, Governor Newsom’s proposed budget expands healthcare access to all persons 65 years and older, regardless of their immigration status. This is an important step to ensuring that all Californian’s have health coverage including over 23,000 uninsured Latino undocumented elderly immigrants.
The proposal also contains contains language for the state to establish its own generic drug label to drive down prescription drug prices. Increasingly, low-income Latino families have to decide to forfeit their use of medications because of the exceedingly prohibitive costs. In recent studies, 83% of Latinos have indicated that they are concerned about being able to afford prescription medications for themselves or their family in the next few years. This is a step in the right direction to ensure that our families are not crippled by the cost of healthcare.
On the Earned Income Tax Credit (EITC)
In 2019, the budget significantly expanded California’s EITC program to more than 1 million households by more than doubling the existing credit from $400 million to $1 billion. This budget continues to expand the CalEITC program for California’s most vulnerable families, including bolstering outreach efforts to encourage and educate eligible workers to take advantage of this somewhat unknown tax credit.
The continued expansions of CalEITC will greatly impact Latino families who make up a significant portion of low-income and working class families in the states. The CalBudget Center estimates that Latinos make up 42% of workers eligible for CalEITC. However, in this budget undocumented taxpaying immigrants remain ineligible to benefit from the program and its expansion. According to estimates, expanding the program to all taxpayers, including undocumented immigrants with an Individual Tax Identification Number (ITIN), would allow for an additional 388,000 families to benefit from the expansions. The labor of undocumented immigrants contributes roughly $180 billion annually to California’s economy, according to California State Controller. Additionally, nearly 90% of children that would benefit from this rule change are Latino children of immigrant working families who are twice as likely to live in poverty.
The 2020-2021 budget proposal builds on Governor Newsom’s commitment to education–prioritizing investments in early-childhood and higher education. The proposal calls for $32 million to supports the state’s subsidized preschool program for low-income families and includes $8.5 million to create a new state office – the Department of Early Childhood Development. On higher education, the proposal provides the UC and CSU systems a 5% spending boost to enroll more students; this equals $217.7 and $199 million more in funds than the previous year’s budget for the UC and CSU, respectively. The budget also allocated an additional $409 million to community colleges to improve faculty diversity, reduce textbook costs, provide legal services to immigrant students, build food pantries, and expand programs that help students earn college credits while still in high school.
There is no doubt these proposals would have a significant impact on Latino students who make up 54% of K-12 students, 42% of CSU students, 27% of UC students and 40% of all Community College students. These investments are headed in the right direction and will no doubt help increase the number of Latinos obtaining college degrees in California which currently only sits at 18% compared to 53% of white adults. However, to ensure that the students are not over burdened by the rising costs of college expenses, the administrations needs to address non-tuition expense barriers such as housing, food and transportation which can pose a major challenge to Latino student success.
The administration continues to aggressively target the housing and homelessness crisis in California. Governor Newsom, voiced that homelessness is the issue that defines our time and is calling for a $1.4 billion investment into homeless services with an emphasis on distributing money quickly for emergency rental assistance and board-and-care facilities for the mentally ill. Latinos account for about a third of the states homeless population and this increased spending on combating homelessness will positively affect their ability to move forward.
Additionally, limits on annual rent increases (which may not exceed 5 percent, plus inflation) and protection from discriminatory and evictions without cause will go into effect this year in California to protect renters many of which are Latino.
On Jobs and the Economy
Governor Newsom has made business creation one of his priorities in this years budget proposal. To encourage new and small businesses, which are a major engine of economic growth in California, the budget proposes a first year tax exemption from the $800 minimum tax paid by LLC’s. This will give small businesses the same exemptions that large corporations receive on their first-year from the minimum franchise tax. In total, these changes are expected to provide around $100 million in tax relief per year.
This first-year tax exemption would be great news to Latino Small Business Owners who are driving the growth of California’s new businesses. A report from HOPE found that the number of Latina-owned businesses in California has skyrocketed by 111 percent since the beginning of the Great Recession in 2007 – these same businesses businesses now employ more than a half million people in the state. By lowering the barriers of entry for starting a new business the state can continue this steady growth of Latino-owned businesses to drive economic development for one of California’s most important communities.
This Administration has made a clear statement about the priorities for the state of California in this year’s budget proposal. It is an ambitious, bold, forward-thinking policy document that has placed an emphasis on the most vulnerable populations of our state. If approved by lawmakers, the $222 billion spending plan would have a substantial impact in the future and wellbeing of Latino families. The Latino Community Foundation looks forward to working with our community partners to ensure that these resources are leveraged and doors of opportunity are opened for our families and communities.
Click here to read the full 2020-2021 budget proposal!