Will Newsom Back Benefits for Undocumented Californians?

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Gov. Gavin Newsom did not include expansion of California's Earned Income Tax Credit to undocumented workers in his January budget, before the pandemic-induced recession hit. (Beth LaBerge/KQED)

The coronavirus pandemic and recent protests over the use of excessive force by police have laid bare what many knew before: income and wealth inequality and all its consequences are rampant throughout the California, especially in communities of color.

This week, as legislative leaders and Gov. Gavin Newsom hammer out a final state budget agreement, we'll learn the fate of two programs aimed at helping segments of that population: undocumented seniors and a tax credit for low-income working families.

In 2015, California created its own modest version of a federal program called the Earned Income Tax Credit, or EITC. California adopted the same guidelines established by the federal government in 1996, which gives eligible people who file federal income taxes a cash refund – but only if they file with a Social Security number.

Since then, both governors Jerry Brown and Gavin Newsom have supported expanding the program to more people, while maintaining the ban on undocumented filers who use Individual Tax Identification Numbers (ITINs).

Supporters of the Cal EITC, like Sasha Feldstein with the California Immigrant Policy Center, say there is bipartisan support for the program because it rewards work.

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"Because the more that you earn, the more you can get through their credit. So that's a reason why conservatives and Republicans tend to like the EITCs," Feldstein said.

But Feldstein is less enamored of the federal limitations California adopted, which prevent those who use ITINs from getting the tax refund. In fact, if one or more family members file taxes with an ITIN, the entire family is ineligible for the refund.

Gov. Newsom, who has supported and initiated several programs benefiting low-income Californians, did not include expansion of Cal EITC to undocumented workers in his January budget, before the pandemic-induced recession hit.

Feldstein said the governor has been asked about it, "but he just says 'it's not a priority right now.' And that's about it. So, yeah, it's pretty baffling to me why the governor hasn't supported this."

"You know, these are people who are working, many of them on the frontlines of the COVID-19 crisis, farmworkers, warehouse workers, domestic workers, restaurant workers. They're working, they're paying taxes. And so there's no reason why they shouldn't be eligible for this tax credit," Feldstein said.

In fact, undocumented immigrants are ineligible for a wide range of safety net programs, like Social Security and the recent $3 trillion federal stimulus. When Gov. Newsom announced a program to give them one-time cash payments during the pandemic in April, he noted how little undocumented immigrants get back for the taxes they pay.

"[They're] paying just last year over $2.5 billion of local and state and local taxes. And yet many mixed-status families are having a hard time taking care of their children," the governor noted.

And yet while Newsom supports the Cal-EITC generally, he is yet to embrace extending it to undocumented tax filers.

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Assemblywoman Eloise Reyes, D-San Bernardino, is sponsoring a bill, AB 1593, to change that.

"These immigrants are going to continue to live here. Many have U.S.-born children. And most importantly they are working and they’re filing their taxes here," Reyes said.

Reyes notes that the Latino Caucus in the Legislature is making AB 1593 a priority for this legislative session. In fact, the caucuses representing Latino, African American, API, LGBT and Jewish lawmakers sent a letter to the governor in support of the change.

Alissa Anderson with the California Budget and Policy Center said expanding the Cal EITC to all eligible families – including ITIN filers – would help up to 460,000 households in California at a cost of about $65 million, according to an Assembly fiscal analysis.

"It's really just a fraction of what the state spends on tax breaks overall, which overwhelmingly go to people with money," said Anderson. "So ending the exclusion of immigrants from the Cal EITC is just a drop in the bucket compared to what the state spends on tax expenditures overall."

Expanding the Cal EITC now, as the state faces a $54 billion budget deficit, might be a heavy lift. And yet, the scaled-back version adopted by the Legislature in its budget framework supports a limited expansion to help only ITIN-filing families with children younger than six.

We’ll find out this week during final budget negotiations whether Gov. Newsom accepts that as well as an expansion of Medi-Cal to undocumented seniors.

Newsom is not opposed to the idea of expanding the state’s low-income health insurance program. He actually proposed more than $80 million for it in his January budget plan. But since then, the coronavirus has decimated the state’s economy. And when Newsom announced his revised budget plan in May, the Medi-Cal expansion wasn’t in it.

“That's just one of the many things that we wanted to do, that I announced, at least my support and intention, in January that unfortunately we're not in a position at this time to advance," Newsom said.

The Legislature doesn’t agree. Lawmakers included the expansion in their budget proposal, though they pushed back the implementation to 2022 and gave the governor the ability to delay it further.

Rachel Linn Gish from Health Access California said the delay is disappointing, but she’s happy the Legislature is still considering the needs of undocumented seniors.

“They've always needed this care. They need it now more than ever," she said. "We're in the middle of a pandemic that is especially preying on our senior population. And undocumented seniors are even more at risk because they are excluded from these programs.”

Shana Charles, assistant professor of public health at California State University Fullerton, said past Medi-Cal expansions have shown covering more people is a good investment for the state.

“We get savings in terms of reduced health care costs," Charles said. "When people have insurance, then they are much more likely to get care earlier. And that's much cheaper care.”

The Legislature must pass a balanced budget by next Monday.