It’s EITC Awareness Day! We’ve talked in the past about how the federal credit is one of the best anti-poverty programs to date, and how a state EITC can further build Montana families’ financial security. It’s been a while since we posted on the topic so in case you’ve forgotten why the EITC matters for Montana, let’s revisit the highlights:
The federal EITC is one of the best solutions to reduce poverty
The federal EITC was established in 1975 and has consistently received bi-partisan support because it has proven to be one of the most effective ways to reduce poverty.
In 2013, the federal EITC lifted over 9 million people out of poverty nationwide, including 6 million children. The EITC’s success centers on its ability to reward work. The refundable credit offsets the amount workers owe in federal taxes. If a worker’s credit exceeds the amount he or she owes, the individual receives a refund, which for many families, helps cover basics like utilities, or pays for auto repairs so they have a reliable way to get to work.
The federal credit not only supports working parents, but research shows that it also benefits the next generation. When parents have more income to cover things like doctor visits or provide breakfast each morning, children do better in school. And a stronger start in life sets children up to do well later on.
Children who move out of poverty early on are more likely to graduate from high school, attend college, and have higher future earnings. Frankly, the EITC is the best way to lift children out of poverty, period. Without it, the number of children living in poverty would be 25% higher than it is today.
Finally, because the federal EITC makes work pay, families have more money to spend at their local businesses, which strengthens the economy overall. In fact, in 2012, the federal EITC put about $170 million dollars back into Montana’s local communities.
Creating a state EITC would build on the proven success of a federal credit
In 2012, 85,000 Montana families received the federal credit and almost two-thirds of these families lived in rural areas. Boosting family income is especially important because Montana is one of the few states that impose income taxes on people living in poverty.
Consider this. In Montana, a single mother with two children who works full-time and earns minimum wage is living in poverty. Creating a state EITC and combining it with a federal EITC would effectively raise her wage by $3.00 per hour.
Legislators can bring Montana in line with the 26 other states that have chosen to support working-class families by creating a state EITC. When working families thrive, we all do.
A quick look at the CFED’s Assets and Opportunities Scorecard, and you will find that Montana ranks best in outcome and policy measures related to Housing and Homeownership.
It’s true that Montana has fared far better than many states across the nation in the rates of foreclosures, and overall, Montana ranks high for the number of 2-parent households who own their own home. We can applaud the legislature for enacting laws to protect homeowners from foreclosure, and entities like NeighborWorks have worked hand-in-hand with government to provide foreclosure assistance and first-time homebuyer education programs.
With that said, when we begin to examine housing affordability, the numbers tell a different story. Many homeowners and renters in Montana are struggling with high mortgages, rents, and utilities.
Among homeowners, almost one in three reported spending at least 30 percent of their household income on mortgage costs alone. And almost half of all renters in the state reported spending the same amount on rent and utilities. When housing and rental costs exceed 30% of a household’s income, it dramatically impacts their ability to afford critical necessities like food, transportation, healthcare and investment in savings.
Families continue to struggle to afford housing because most workers’ wages are not commensurate with Montana’s housing costs. The current median housing value in Montana is over 4 times the amount that a typical worker earns annually. While high home values are good for those who already own a home, exorbitant costs leave many unable to buy a house or begin to build equity in their home. And with the number of low-wage jobs in the state, there are simply not enough opportunities for workers to earn enough to purchase a home and keep their families financially stable.
We can do better to support working-class families. Even in the face of low-wages, there are options that help low-and-moderate income families find housing.
On Monday, the Montana Board of Housing announced this year’s awardees for Low-Income Housing Tax Credits. Out of 19 eligible projects, 8 were funded, leaving 11 projects on the table. All of these projects are well thought out and would fill critical housing needs in their communities. Most states have some state designated pool of funding specifically to support the preservation and development of affordable housing. Our state does not, and it is a clear gap in resources that should be filled.
Another area our state should look to improve is the way we approach titling of manufactured housing as real property. Manufactured housing is a significant source of affordable housing in our state, and allowing this housing to be titled as real property creates opportunities for better financing and a more valuable asset for these homeowners. Although Montana allows titling as real property, the system is inefficient and difficult to navigate. Montana should streamline our titling process and look to the recently developed Uniform Manufactured Housing Act as a model to emulate.
The CFED report points to these and other good housing policies across the country that may be relevant for our state. We encourage policy makers to review these options, and look to the Montana Coalition for Housing and Infrastructure to identify and advocate for smart housing policy initiatives in the next legislative session.
Kaia Peterson is the Assistant Director of Statewide Operations at NeighborWorks Montana. NeighborWorks Montana’s mission is to “create opportunities for families and individuals to live in affordable homes in strong communities” throughout the state.
Have you ever wondered how you can learn more about how Montana families are faring and what types of solutions are available to support them? Today, we’ll look at a comprehensive tool that sheds light on the financial security of Montana families and policies that could help them better make ends meet.
Every year, the Corporation for Enterprise Development (CFED) releases its Assets and Opportunity Scorecard, measuring the economic security of families in each state and highlighting how policies help or hurt their ability to make ends meet.
There are a number of scorecards and studies out there, but we find this scorecard to be one of the most helpful. It not only provides solid data, but also workable solutions that other states have implemented to help strengthen families’ economic security.
The scorecard is organized into five categories:
- Financial Assets and Income
- Businesses and Jobs
- Housing and Homeownership
- Health Care
New this year is the policy change map, which let’s you see policy gains and losses in each state.
CFED uses two measures – outcomes and policies – to better understand financial security in each state. Overall, Montana ranks 15th in outcomes. These outcomes measure things like rates of poverty, unemployment, and homeownership. CFED also lists policy opportunities to support families. Over the next week, we will dig deeper into some of the data and policy solutions, but here is a quick overview on how Montana fares:
Financial Assets and Income
Nearly one in six households in Montana are living in poverty, and there remains a large gap between high-wage and low-to-moderate wage earners. Over one-fourth of Montana households do not have a savings account.
Enacting a state earned income tax credit (EITC) is one of the best ways to supplement working parents’ income, helping them to catch up on bills, put food on the table, and rise out of poverty. Eliminating asset tests for programs like Temporary Assistance for Needy Families (TANF) help people focus on saving for the future and achieving self-sufficiency. Finally, tax fairness reforms are key to ensuring that corporations and wealthy Montanans are paying their fair share for the things we all need, like schools, police, and roads.
Business and Jobs
For the second year in a row, Montana scores high with small-businesses. However, almost one-in-three jobs are low-wage. Montana workers report that they feel underemployed – many want to work full-time, but are only offered part-time positions – and unemployment rates are twice as high for workers of color.
Enacting paid family and medical leave would help working parents better balance work and home demands by taking time off to attend to their own health needs or that of a family member without risking their financial security. Increasing unemployment benefits so that workers receive an adequate weekly wage while unemployed would help parents afford the basic needs while they search for long-term work opportunities.
With Medicaid expansion just recently up and running, it is not surprising that Montana still ranks low on health care outcomes. Montana has already enrolled over 22,000 individuals in affordable health care coverage. We know expansion will have a significant impact on the uninsured rate, and we look forward to seeing how we will compare in 2017.
We encourage you to visit the scorecard. Play around – it’s a lot of fun! And learn more about how Montana families are doing. Also, please follow us this week as we dig deeper into specific policy issues related to the scorecard.
MBPC is seeking a State-Tribal Policy Analyst to join our team. This position, established in 2011, will conduct research and analysis on state fiscal issues and policies that have an impact on Indian Country in Montana. This position will promote sound fiscal and budget policy that can help reverse the history of economic injustice that has led many American Indians to unacceptable levels of poverty, unemployment, and poor health. Working with the rest of the MBPC team, the goal is to inform policymakers on how tax and budget choices affect Indian Country and to increase participation among American Indians in advocacy for sufficient investment in the state budget.
A complete position announcement, duties and experience, and required eduction and experience can be found here.
With only two days left in the year, we decided to take a look back and remember what a great year 2015 was.
Together, in 2015, we:
- Passed Medicaid expansion providing tens of thousands of Montanan access to affordable health care.
- Defeated dozens of irresponsible tax cuts that would have drained our state of critical resources needed to invest in our communities.
- Released cutting edge research on paid family leave, tribal colleges, earned income tax credit, and more.
- Formed two new partnerships with the Women’s Foundation of Montana and the Montana Health Care Foundation.
- Made real progress toward establishing a Montana earned income tax credit to help working families make ends meet.
- And much, much more.
It really was a year to be proud of, and we wanted to take a second to say thank you. Whether you wrote a letter to the editor, called your legislator, talked to your friends about Medicaid expansion, donated to MBPC, or simply became more informed by reading our blog, you helped make 2015 one where the lives of our low-income neighbors will be a little bit better.
Unfortunately, 2015 is also the year we say goodbye to our long time staff member, Laura John. Laura has served as the State Tribal Policy Specialist, and her perspective and dedication was critical to our work. We will miss Laura, but we wish her all the best as she begins her next adventure.
MBPC is committed to continuing the groundbreaking work Laura started, and we know she leaves big shoes to fill.
We wish you and your family a fun and safe New Years. We look to next year when we will work on issues like paid family and medical leave, EITC, affordable childcare, pre-Kindergarten, and so much more. Together we can accomplish great things in 2016.
Shifting work and family structures in the 21st century highlight the need for workplace policies that help parents balance caregiving and career demands. In collaboration with the Montana Department of Labor and Industry, the Montana Budget and Policy Center will conduct three reports on paid leave. This is the first report, which uses evidence from state-initiated paid leave programs, and national studies to examine how paid leave benefits families, businesses, and the economy.
>>>Read our first report: Paid Family and Medial Leave: Supporting Families, Businesses, and the Economy here.
Today is Veteran’s Day and our team here at the MBPC wants to thank the men and women who have served or continue to serve our country. One great way we can thank and support our veterans and military families here in Montana is to protect policies that ensure their financial security.
There are approximately 88,000 veterans and military service members that call Montana home. These men and women know the meaning of sacrifice. But too often they return home to face further challenges, like making ends meet for their families and translating their skills into good-paying jobs. Tax credits like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) help sustain working veterans and their families by boosting their income and making it possible to pay for things like housing expenses, utilities, transportation, and groceries.
In 2014, 12,000 veteran and military families received the EITC or the refundable portion of the CTC. These working family tax credits are one of the best solutions to keeping families from falling below the poverty line. These credits create a path toward a sustainable future by allowing them to work their way out of poverty and keep more of what they earn.
Unfortunately, unless Congress acts, up to 7,000 Montana families that currently receive these federal credits stand to lose all or a part of it 2017. For a single veteran with two kids who works full-time and earns minimum wage ($16,744 annually), he or she would stand to lose all or a portion of a $5,500 EITC. This loss of income could mean putting off car payments, forgoing utility or rent payments, or purchasing fewer groceries to make ends meet.
Right now, our elected officials have one of the best opportunities to ensure that key provisions of the EITC and CTC do not expire in 2017. We hope that Congress will stand up and support our veterans and military families by choosing to protect the working-family tax credits that ensure these families’ financial security. Military members should not have to return home and live in poverty. They’ve sacrificed enough for us, now let’s protect them and their families.
See the following to learn how Congress can protect veterans and military families:
This week was a big week for ensuring Montana kids and families have access to a quality K-12 education.
As many of you know, last week the county treasurers across the state sent out property tax assessments. This notice explains how much each property owner will be paying in the upcoming year, factoring in the property’s appraised value and the number of mills the property is subject to.
This is a good opportunity to revisit our Policy Basics piece on property taxes and the role these taxes play in providing critical local services in our communities, like schools, public safety, and infrastructure. Unlike other tax revenue streams, the vast majority – 81 percent – of property tax revenue is directed toward local governments and schools. With these funds, city and county governments provide essential services, like police and fire, and fund critical infrastructure projects. Local school districts receive property tax dollars that go towards providing quality public education for our communities’ children. The remaining 19 percent goes to the state, for additional support to K-12 schools, as well as support for Montana’s universities and colleges.
Additionally, Montana voters across the state had a number of proposals to provide additional property taxes to ensure our local schools can provide quality education for Montana’s children. Voters in the communities of Missoula, Frenchtown, Bozeman, and Belgrade endorsed school bonds or levies to help renovate aging facilities, representing about $183 million investment in Montana’s children.
Our public schools play a critical role in our communities across the state, providing our children with the strong start they need. Congratulations to those districts that saw the support they needed to help improve the lives of children.
In a recent study by the Economic Policy Institute, researchers found that child care costs are so high that most moderate-and-low income working families cannot afford quality child care. We wanted to see how Montana stacks up and found that a significant amount of Montana families’ earnings go toward child care. As you can imagine, it is particularly difficult for low-income working parents to balance work and quality child care. We highlight a few comparisons to show just how unaffordable child care is for families in our state.
At the very least, child-care costs account for a quarter of total family earnings in middle income households. Among low-income families though, child care costs can comprise half of total earnings. See the table below.
As you can see, two working middle-income parents with two children spent an average of $15,792 a year on child care. That is almost one-fourth of the family’s total earnings! For that amount of money, this family would be able to send one of their kids to Montana State University-Billings for almost three years.
If this family lived in Great Falls, they likely spent twice as much on child care than they did on their total housing costs for the year.
While child care is an exorbitant expenditure for middle-class families, it has a greater impact on low-income families, making it nearly impossible for them to earn enough to cover basic family needs. Regardless of whether a household has two parents earning minimum wage or a single-worker earning minimum wage, child care costs comprise almost half of low-income families’ total annual earnings.
To put this into perspective, a single-working mother working full-time at minimum wage would have to dedicate nearly all of her salary for 6 months to pay child care costs for her 4-year old. This amount of money would cover tuition at Missoula College and enable her to complete her Associate Degree. Further, in 2014, this same individual could use the money she put toward child care to pay for 91% of her total housing expenses for the year.
In most circumstances, it is an economic necessity that both parents work in order to make ends meet for their families. However, with child care costs rising and consuming a larger proportion of families’ income, it is becoming harder and harder for families to cover basic household necessities. We need to keep working on policies that improve the quality of child care and make it affordable for all working parents, regardless of income.
Last Wednesday, the Census Bureau released new data on health insurance rates, showing the benefit of health care reform and growing coverage in states that have expanded Medicaid.
Health care reform is working in Montana. The Affordable Care Act has increased the number of people insured by offering people access to health care coverage through the health insurance marketplace. Through the marketplace, people can easily compare prices and benefits of health care plans. For individuals that make too much to get care through Medicaid but don’t make enough to afford private insurance through the market place, federal subsidies help them pay their premiums and reduce their out-of-pocket health costs. As a result, an additional 22,000 Montanans had health insurance in 2014.
Health care reform has also strengthened Medicaid. The 25 states that have expanded Medicaid to include more people collectively had a higher share of people with insurance than the other 26 that did not expand Medicaid, and that gap is growing. Estimates suggest that if the 26 states had expanded Medicaid, an additional 2.6 million Americans would have gained health insurance last year.
Medicaid is good for people, communities, and states. Medicaid has been improving people’s lives by providing affordable health care that boosts state economies for the last 50 years. Once CMS approves Montana’s waiver, an additional 70,000 residents – who previously couldn’t afford health insurance- will finally have access to quality and cost-effective insurance and a greater share of our state’s population will be insured.
This new health insurance coverage data suggests health reform increases opportunities for affordable and quality health care for millions of Americans. We look forward to an additional 70,000 Montanans receiving health insurance coverage once CMS approves the state’s waiver.