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United Way Speaks Up For ALICE

CEO Kiran Handa Gaudioso calls for equity for ALICE in the state budget

United Way of Northern New Jersey CEO Kiran Handa Gaudioso called on the leaders in the New Jersey Assembly and Senate to keep ALICE households top of mind during the fiscal year 2022 budget negotiations. Below is United Way's formal testimony to the legislature this week:

Thank you for this opportunity to speak to you on behalf of the 1.2 million households in New Jersey who are ALICE (Asset Limited, Income Constrained, Employed) or in poverty and were already struggling to afford the basics before the pandemic hit.

While we all have sacrificed and suffered during this pandemic, it is New Jersey’s essential ALICE workers who have shouldered the heaviest burden this past year. And while we all wish we could go back to so-called “normal,” the reality is, normal wasn’t so great either.

Normal was 37 percent of all New Jersey households — and 52 percent of Black households — unable to afford basic bills. Normal was the cost of basics rising at nearly twice the rate of inflation and outpacing wages. Normal was these low-wage workers being shut out of the boom economy, losing buying power and financial stability.

We cannot go back to normal. We have to do better than normal. And it starts with the FY 2022 state budget. I ask you to craft this budget keeping equity for ALICE in mind.

I have three modest asks for you today. They won’t break the budget and will make a tremendous difference for ALICE families.

First, I am asking for the state to invest $1 million in the IRS-backed Volunteer Income Tax Assistance program that nonprofits operate across the state to help the most vulnerable families get their hard-earned money back from the federal government.

Annually, United Way of Northern New Jersey helps more than 6,000 low- to moderate-income households file their state and federal taxes for FREE. Last year, the state allocated $250,000 to aid in this effort. That money was critical in addressing the challenges with setting up services that protected preparers and clients during the pandemic. We created a safe, secure online portal to accept applications in addition to staffing drop-off locations for those who face the digital divide and don’t have easy access to computers and Wi-Fi.

Typically, these free tax preparation sites across the state bring back more than $30 million annually in federal tax refunds in just three months’ time. It’s an off-the-charts return on investment. A modest boost to fund this service can mean families get the credits and deductions they are due, pumping money directly back into our local economy. It also saves these struggling families the average $270 it costs for paid preparers. For ALICE, that $270 is a whole lot of food on the table or costly prescription medication, a heating bill or a car repair.

According to the Tax Policy Center, millions of eligible people fail to claim critical tax credits each year, such as the Earned Income Tax Credit, which enjoys broad, bipartisan support for lifting families out of poverty. VITA preparers are trained to ensure that all those who qualify for this credit, claim it successfully.

This brings me to our second ask, which is directly connected. We ask that you support expansions to the Earned Income Tax Credit and Child and Dependent Tax Credit as proposed by Governor Phil Murphy’s administration. These are anti-poverty, pro-work tax credits proven to make a difference in the lives of low-wage families.

Our ALICE data shows that while Social Security keeps seniors from falling into the federal definition of poverty, it does not mean seniors can afford their basics. That’s why we support the expansion of EITC to seniors without dependents. In addition, our research shows that a family of four is just surviving on an income of $88,000. They aren’t fully stable until they reach $156,000 if they’ve got two children in child care. This is why we support expanding the threshold for the Child and Dependent Care Tax Credit for married couples with dependents from $60,000 to $150,000.

Finally, if we are going to help families not just survive the pandemic, but find stability and thrive in an equitable future, we need stronger, more innovative policy initiatives, especially around safe, affordable, quality, and reliable child care.

The pandemic highlighted how critical child care is to a functioning economy. The industry was already in crisis and the pandemic has put it in greater jeopardy. My third ask is this: Please support expanding financial incentives to the long overlooked sector of family child care providers.

These are small businesses, many owned by Black and Latinx women, who have not had access to the same financial incentives that child care centers receive. In the last decade, New Jersey has lost 56 percent of its registered family care providers. Meanwhile, these are the places that ALICE workers rely on to care for their children because they are most affordable.

Without these family child care providers, workers have a dwindling pool of affordable options, which isn’t good for children, families, employers, and ultimately, our state economy.

New Jersey is at a crossroads. Returning to normal means low-wage workers are trapped in a cycle of ongoing hardship. Instead, let’s create a NEW normal and seize the opportunity we have today to use a data-driven approach to create stability and equity for all New Jersey residents.

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