Final Budget Agreement Protects Anti-Poverty Investments; California Must Be…
FOR IMMEDIATE RELEASE July 1, 2025
… Bolder to Protect Children and Families from Federal Government Cuts
SACRAMENTO, CA — Today, Prosper California responded to the state budget agreement by thanking Governor Newsom and the Legislature for restoring many investments in families and communities previously cut and preserving ongoing investments for the Free Tax Preparation Assistance (FTPA) and California Earned Income Tax Credit (CalEITC) Outreach and Education (O&E) programs. The statewide coalition issued a strong call to action for Governor Newsom and Legislative leaders to protect children and families - especially our immigrant communities who are being unfairly targeted for safety net exclusions to subsidize coverage for others - from falling into, or deeper into, poverty, as Congress rushes to pass a federal budget with unprecedented cuts to crucial safety net programs.
Anti-poverty advocates say state leaders must boost support for Californians who are struggling to afford the high costs of living and to avoid devastating impacts from proposed state and federal cuts to food benefit programs, childcare, health care, and more. The Congressional Budget Office reports these cuts would cost households with the lowest incomes more than $1,600 annually.
As state budget discussions continue into the fall, Prosper California strongly urges state lawmakers to consider every available option to address budget challenges, rather than defaulting to cuts that harm working families, and not ruling out revenue-raising measures. Anti-poverty advocates also continue to push for strengthening existing investments in proven tools like the CalEITC, Young Child Tax Credit (YCTC), and Foster Youth Tax Credit (FYTC) that put cash directly into the hands of Californians who would bear the brunt of federal budget cuts – and that address California’s growing poverty crisis.
“Without immediate action, millions of Californians and our most vulnerable communities will be forced to make impossible tradeoffs: choosing between keeping their kids warm at night, feeding their families, or paying their rent,” said Danielle Bautista, Director of Public Policy, United Ways of California. “Governor Newsom and the Legislature have the opportunity to protect children and families who are hit the hardest by California’s rising costs of living and proposed federal budget cuts. We urge state leaders to strengthen investments in what works — including expanding the CalEITC and YCTC and restoring $20 million for Free Tax Prep and Outreach & Education programs.”
According to recent research by the California Budget & Policy Center, California’s poverty rate has soared over the past few years, jumping to 18.9% in 2023 up from 16.4% in 2022 and 11.0% in 2021 – an alarming trend that will be exacerbated by federal budget cuts. Even worse, the state’s poverty rate was particularly high among Black and Latine Californians and California continues to have the highest poverty rate in the United States. These findings are underscored in United Ways of California’s 2025 Real Cost Measure, which reports that more than 3.8 million families (roughly 1 in 3 households) do not earn sufficient income to meet their basic needs.
“This should be a wake-up call. Poverty in California is a growing crisis that demands an immediate and bold response. While the federal government pulls back on investments in the safety net, California must lead,” said Amy Everitt, President, Golden State Opportunity. “Strengthening tax credits like the CalEITC and YCTC is one of the most effective ways state policymakers can address poverty and begin to reverse the racial and economic inequalities that have left millions of Californians without sufficient resources to meet their basic needs.”
“We see and celebrate the many restorations to those facing the most pernicious hurdles to fighting poverty. However, California must ensure the wealthiest individuals and large corporations, who are profiting off of Californians and stand to gain the most from the Trump Administration’s tax cuts, pay their fair share so struggling families, especially our immigrant communities, aren’t left paying the bill,” said Shimica Gaskins, President & CEO, End Child Poverty CA powered by GRACE. “Anti-poverty tax credits are one the most effective tools California has to reduce poverty and build equity – state lawmakers must take urgent action to expand them.”
In 2024, the CalEITC, YCTC, and FYTC directed more than $1.4 billion in tax refunds to over 3.5 million households, providing families and individuals with immediate cash to help afford California’s soaring costs of living. In addition to helping families make ends meet, anti-poverty tax credits provide a significant boost to local economies, supporting small businesses and local jobs – for every dollar invested in tax credits, up to two dollars is spent locally.
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