Jul 15, 2021 - Politics & Policy

California lawmakers approve nation's 1st state-funded guaranteed income plan

The California State Capitol building in Sacramento

The California State Capitol building in Sacramento. Photo: David Paul Morris/Bloomberg via Getty Images

California lawmakers on Thursday approved a state-funded guaranteed income plan to distribute $35 million in monthly cash payments to eligible pregnant people and young adults who recently left foster care.

Why it matters: California is the first state to approve such a program. It could serve as a template for other state governments as guaranteed income gains traction across the U.S.

Driving the news: California Gov. Gavin Newsom (D) announced in mid-May he would include a carve-out in the state budget to help pay for local governments to launch their own guaranteed income pilots to help low-income families.

  • The plan, included in a bill related to the budget, was approved unanimously in both chambers of the legislature in a clear showing of bipartisan support. It now goes to Newsom's desk.

How it works: The plan will be taxpayer funded.

  • Local governments and organizations that run programs to help pregnant people and youth aging out of foster care will be able to apply for funding, and California's Department of Social Services will decide who gets the money, according to AP.

The big picture: Guaranteed income programs have been proliferating in cities across the country, including New Orleans, Denver and Los Angeles.

  • Michael Tubbs, former mayor of Stockton, California, in 2017 launched a guaranteed income program that proved to be "monumental," he told Vox. He noted that California’s investment marks “the largest commitment of recurring cash in a state budget — and the first time a state has ever supported guaranteed income pilot funding,” per Vox.
  • A March 2021 report of the Stockton program's first year found that guaranteed income helped recipients pay for necessities such as rent and child care, but also reduced depression and anxiety and helped recipients find or change jobs.
  • "We found our folks spent money on food and utilities and rent and things of that sort, and not on frivolous expenses," Tubbs told Axios in December. "We've also found that people are healthier" because they have less stress.
  • "There's a lot of dignity in having these dollars at your disposal, so that you can decide what is best for you and your family," Providence Mayor Jorge Elorza told Axios last winter.

Of note: Unlike other government assistance programs, which typically come with strict guidelines for how recipients can spend the money, guaranteed income programs don't come with any rules about how the funds may be used, per AP.

  • "It changes the philosophy from ‘big brother government knows what’s best for you,’" state Sen. Dave Cortese (D) told AP about the program's lack of strict spending rules.
  • Guaranteed income is also different from Universal Basic Income, another program that's gained popularity in recent years. With UBI, all adults receive a set amount of money per month, CNBC explains.
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