State-Level UBI and Guaranteed Income Initiatives in the U.S.
Peter T. Knight
Coordinator, Sufficiency4Sustainability Network
As of September 3, 2021, 25 cities and towns in the United States are planning or carrying out guaranteed income pilot programs, and the number is expected to continue increasing in the context of the 100 Mayors for Guaranteed Income campaign being conducted by Mayors for a Guaranteed Income and the Income Movement Foundation. Another 32 cities and towns have mayors who have joined Mayors for a Guaranteed Income but do not yet have plans for a pilot. But there are also some important state-level initiatives underway further reinforcing the growing movement toward establishing a federal basic income policy. This blog post describes the state-level initiatives this author is aware of at the time of this posting – in Alaska, Hawaii, Oregon, Maine, California, and New Mexico.
The Alaska Permanent Fund Dividend
Alaska is the only state currently having a UBI, paid as a dividend from the Alaska Permanent Fund (APF), a constitutionally established fund managed by a state-owned corporation, the Alaska Permanent Fund Corporation (APFC). It was established in 1976 by Article 9, Section 15 of the Alaska State Constitution under a Republican Governor, Jay Hammond. It was designed to be an investment where at least 25% of oil revenues would be put into a dedicated fund for future generations, who would no longer have oil as a resource. The Permanent Fund Dividend (PFD) is an annual dividend paid to Alaska residents that have lived within the state for a full calendar year (January 1 – December 31). Eligibility to receive a PFD is defined by the Alaska Legislature through statute and regulation. The PFD has been paid since 1982 and has varied between a high of $2631 in the year 2000 and a low of $530 in 1984, measured in 2020 dollars. Its value in 2020 was $992, or $3,968 for a family of four. The statutory dividend calculation is based on the number of eligible Alaskan applicants in a dividend year and half of the statutory net income averaged over the five most recent fiscal years. The available funds are also reduced by prior-year dividend obligations, PFD operation expenses, and other state agency program appropriations. But the Legislature has broken the law for several years and arrived at an arbitrary number. So far, this year, that number is zero, because the Legislature approved $525 and the governor vetoed that amount. The Permanent Fund’s investment earnings account for two-thirds of the state’s unrestricted revenue in the current fiscal year. Oil, long the state’s most important revenue source, accounts for only about a quarter, following years of low prices and falling production. In 2018, lawmakers voted to cap the amount of money that can be spent annually from the Permanent Fund and set up a regular transfer from the fund to the state treasury. With that transfer, oil taxes, and other taxes, Alaska has a small surplus after paying for all budgeted state services. But that doesn’t account for the Permanent Fund dividend. Members of the predominantly Democratic coalition that controls the state House have proposed spending $400 million of the surplus, plus another $330 million from a state savings account, on a dividend of about $1,100 per person. Members of the House’s Republican minority previously proposed breaking the 2018 cap to pay a larger dividend, as did the governor. The fund has gained almost 30% in value over the past 12 months and now stands at more than $82 billion.
Hawaii Basic Economic Security Working Group
In May 2017, the Hawaii State legislature unanimously passed legislation (HC89) to create a working group to study the feasibility of UBI in the state. HCR89 resolved that “the Department of Labor and Industrial Relations and the Department of Business, Economic Development, and Tourism are requested to convene a basic economic security working group to address the potential for significant economic disruption and ensure the economic sustainability of Hawaii’s individuals and families in light of future automation, innovation, and disruption.” The legislation recommended a multistakeholder composition of the working group including specific legislators, government officials, business, academic, and labor representatives and requested that the working group “submit a report of its findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of each Regular Session….” The present author has not been able to locate any reports of the proposed working group as of August 31, 2021.
Oregon Peoples Rebate
This is a 2022 ballot initiative to institute a minimum income tax of 3% on corporations with over $25 million in Oregon sales – and rebate the proceeds, estimated at some $3 billion per year or about $750 per capita, to every person in Oregon who has spent in this state in the aggregate more than 200 days of the calendar year for which the rebate is claimed. The rebate would not be subject to Oregon’s state personal income tax and could not be used to determine the eligibility or amount of need of an applicant for or recipient of public assistance. The first step toward putting this initiative on the 2022 ballot has been taken successfully, and the Oregon Supreme Court has authorized the second step, requiring the collection of 112,020 verified signatures by July 8, 2022. The signature collection is currently underway. The hope of the organizers of the OPR is working to gain the support of small and medium businesses that would be exempt from the 3% minimum tax and in fact benefit from spending by the recipients of the rebate.
Maine Legislative Committee To Study the Feasibility of Creating Basic Income Security
On July 6, 2021, Maine’s Governor signed a law providing for the re-constitution of a committee, composed of state Senators, Representatives, and members of the public representing low-income workers and recipients of public benefits, business and industry, higher education, and trade unions. The committee is charged with examining and assessing “the feasibility, economic impact and poverty reduction effect of providing basic income security through a direct cash payment system and other programs that are designed to help individuals and families become more economically secure.” The committee shall also “make recommendations about what the Federal Government can do to help achieve this goal.” …. “No later than December 1, 2021, the committee shall submit a report that includes its findings and recommendations, including suggested legislation, for presentation to the Joint Standing Committee on Labor and Housing. The Joint Standing Committee on Labor and Housing is authorized to report out a bill related to the report.” A previous legislative committee with a similar composition submitted a report in November 2020 that had three findings:
- There is a clear correlation between a guaranteed basic income program and a reduction in poverty. In all of the case studies, there was a positive impact of lifting people out of poverty and creating more financial stability;
- The lack of integration and coordination of our safety net programs is a deterrent to those most in need; and
- Providing an orientation for non-legislative members on a legislative study committee, commission or task force ensures the public is truly represented and a full partner in the study process.
That committee made four recommendations:
- Reestablish the Committee to Study the Feasibility of Creating Basic Income Security;
- Provide the reestablished study committee with the authority to contract with an outside consultant to conduct a study of the economic feasibility of providing a basic income to Maine residents through a direct cash payment and to raise the necessary funds to contract for that economic feasibility study;
- Create a permanent group through legislation, that includes members from agencies and municipalities that administer safety-net programs, impacted individuals that access safety net programs, and other stakeholders to examine current programs to increase the coordination of these programs; streamline the process for applying for benefits; make eligibility requirements clear and easy to understand; and, if possible, create a one-stop resource that highlights what benefits may be available and how to access them; and
- Develop an orientation or training program for public members appointed to serve on legislative studies in the interest of advancing inclusiveness and equitable representation.
The study committee believes that basic income has the potential to be a beneficial program that could augment the current safety net programs and help lift people out of poverty. However, due to the COVID-19 pandemic, that study committee was unable to get the legislation needed to hire a consultant to conduct a feasibility study and it delayed the reconvening of the study committee. Hence, the study committee was unable to fully evaluate the feasibility of creating basic income security through a direct cash payment system. But that study committee sought to convey that it is of paramount importance to continue its work through a reestablished committee that would have the necessary authority to hire a consultant to conduct a feasibility study to gather the information needed to develop a basic income program for the State of Maine.
California Guaranteed Income Pilot Program (GIPP)
As part of the Fiscal Year 2021-22 budget agreed to by California’s Governor and the Legislature, the California Department of Social Services (CDSS) is overseeing a guaranteed income pilot program. The budget for the pilot program is $35 million (General Fund) over five years. GIPP was established to provide grants to eligible entities for the purpose of administering pilot programs and projects that provide a guaranteed income to participants. The department will prioritize funding for pilot programs and projects that serve California residents who age out of the extended foster care program at or after 21 years of age or who are pregnant individuals. CDSS recognizes that receipt of Guaranteed Income (GI) may lead to impacts on eligibility for other safety-net benefits. To that end, CDSS has implemented a process for reviewing requests for demonstration projects from California counties, cities, and other local municipalities seeking to reduce poverty by administering GI pilots and projects in their jurisdictions. If a request for a demonstration project waiver of income rules is granted, recipients of GI who are also receiving CalWORKs (welfare) benefits can avoid any negative impacts that GI components of demonstration projects might otherwise have on CalWORKs participant eligibility and benefits. For the purposes of CalFresh, payments received by GI project or pilot participants must come from a private source to be excluded. If an approved GI project or pilot is both privately and publicly funded, the private funding must be sufficient to cover the cost of all payments received by CalFresh households participating in the project or pilot. This determination will be made by CDSS. GI projects can also address benefit and eligibility impacts through the inclusion of “benefits counseling” — empowering participants to make informed decisions.
AB-65 California Universal Basic Income Program: Personal Income Tax
This bill was recently under consideration in the California Assembly’s Appropriations Committee but died there. The bill was originally submitted by Assembly Member Evan Low and coauthored by Senator Wiener on December 7, 2020, was twice amended in March and April 2021 and passed by the Assembly’s Revenue and Taxation Committee. AB 65 would have created a guaranteed income of $1,000 per month for residents of California for the three most recent consecutive tax years at least 18 years of age, not incarcerated, with reported gross income not exceeding 200 percent of the median per capita income for the eligible recipient’s current county of residence. This UBI would be administered by the state Franchise Tax Board.
New Mexico considering statewide guaranteed basic income program
At least two New Mexico cities – Las Cruces and Santa Fe – are already considering, or moving forward with, targeted guaranteed basic income pilot projects, and state lawmakers heard an update on the plans during an August 9, 2021 hearing of the New Mexico interim Revenue Stabilization and Tax Policy Committee, at the state Capitol. Several legislators said they’re planning to watch the local-level efforts play out before possibly moving forward with a statewide proposal.
As of August 31, 2021, six states have undertaken initiatives related to UBI or a guaranteed income. Of these, only Alaska, the first state to do so, has implemented such a policy. But given the increased public interest in the wake of Andrew Yang’s campaigns for President and Mayor of New York and the federal cash payments made to a majority of Americans in response to the Covid-19 pandemic, it is likely that additional states will be considering how to contribute to basic income security of their residents.
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