States take aim at local basic income programs

For more than 12 million households in the U.S. in 2022, most of their paychecks went toward rent, underscoring the nation’s dire housing affordability crisis. And with little money left over to cover other expenses, like medical bills or car maintenance, one expert says, families are at a higher risk of experiencing eviction or, in worst cases, homelessness if they fall behind on payments.

In recent years, more local policymakers are helping residents secure housing through basic income programs, which have demonstrated their potential to support individuals’ transition to better housing. Experts say the unrestricted cash initiatives are particularly helpful for low-income households who could benefit from having extra money to cover other essential services like child care and school supplies. 

But as millions of Americans continue to struggle to afford housing, the programs are facing increased scrutiny from state lawmakers raising concerns about the initiatives’ reliance on taxpayer money and long-term feasibility.

Ensuring residents are financially secure enough to prevent housing insecurity and homelessness is “one of the most important policy changes” decision-makers can leverage to address the housing crisis, said Sarah Saadian, senior vice president of public policy and field organizing at the National Low Income Housing Coalition, or NLIHC. Unrestricted cash assistance is “a really innovative tool that could potentially do a lot to address people’s housing needs.” 

Guaranteed income initiatives are gaining traction in U.S. cities. The mayor of Stockton, California, launched a basic income program that ran from 2019 to 2020, under which 125 residents were given $500 per month for 24 months. Findings from the initiative showed the additional payments helped residents cover housing costs and helped more participants find full-time employment through the program’s duration. 

The California project was funded with private donations, but since the pandemic, more municipalities have leveraged federal relief money to support their cash assistance programs, St. Paul, Minnesota, Mayor Melvin Carter told Route Fifty in a recent interview. 

In Colorado, for instance, the city and county of Denver used $4 million in American Rescue Plan Act funds to help finance the Denver Basic Income Project that launched in October 2022 to give adults experiencing homelessness unrestricted cash payments for a year. Participants were assigned to receive either monthly payments of $1,000, an upfront payment of $6,500 followed by $500 a month for 11 months or $50 per month. 

An October 2023 assessment found that the number of participants who were able to obtain their own rented or owned housing increased from 8% to 35%.  

“By providing a small amount of basic income, Denver can help lift people out of homelessness more quickly and cost-effectively than we can by providing 24/7 shelter,” a spokesperson for the Denver Department of Housing Stability said in an email to Route Fifty. Plus, “providing direct cash payments to the unhoused is shown to empower individuals to make decisions to best suit their needs and provides dignity and agency over their lives.” 

Despite the growing body of evidence that cash assistance can have positive impacts, a handful of states have moved to restrict the cash assistance initiatives at the local level. In the past year, at least six states have introduced legislation to preempt municipalities’ ability to use government funds to finance or implement basic income programs.

Idaho Gov. Brad Little signed a bill in late March prohibiting counties, cities, agencies, boards or any other political subdivision of the state from administering basic income programs, which lawmakers defined as “a plan funded or administered by the government under which an individual is provided with regular, unconditional cash payments to be used for any purpose by the individual.” 

State government authorization is required for the implementation of such initiatives, according to the bill. It does not apply to programs “under which an individual is required to seek reemployment, perform work, or attend training as a condition of any payments.” 

That same month, South Dakota lawmakers enacted a similar law that said if a county, township or municipality fails to comply, “the attorney general must bring an action in the name of the state for injunctive relief against a county that has adopted an ordinance, order, rule, or program in violation of this section.” 

And in April, Harris County, Texas, was also poised to embark on its guaranteed income pilot program called Uplift Harris. But the project was cut short after Attorney General Ken Paxtion sued the county, claiming that in giving taxpayer money to individuals, the county exceeded its authority under the state constitution. Paxton’s objections to the “socialist experiment” he called the “Harris Handout” include the unrestricted use of public funds as well as the program’s random selection of recipients from a pool of qualified candidates. After a bout of legal wrangling, the state’s Supreme Court has temporarily blocked the county from moving forward with cash assistance payments until justices reach a ruling.

At least three other states this year—Iowa, Illinois and Mississippi—considered preemption policies to limit the scope of basic income plans. In Arizona, a bill to preempt local guaranteed income programs was vetoed by Gov. Katie Hobbs earlier this month. 

“The broad language of this legislation could threaten programs Arizonans rely on such as housing, food, and emergency need programs if administered at the local level,” Hobbs wrote in a letter to the state Senate’s speaker of the house. Wisconsin Gov. Tony Evers also vetoed a bill last year that would have prohibited guaranteed income programs. 

The rise in states’ efforts to preempt local governments from implementing assistive programs is “a worrying trend, because it keeps localities from being able to determine what’s best for their communities,” said Aditi Shrivastava, deputy director for income security at the Center on Budget and Policy Priorities. Many states, for instance, have also stymied local governments’ efforts to establish, for instance, higher minimum wages or paid leave programs. 

It's particularly difficult to make sense of states’ motives given “there’s so much evidence that initiatives like [guaranteed income] efforts can help families,” she said. 

Many opponents of basic income programs argue that unrestricted cash assistance could lead to mismanagement of personal finances, for instance, or dependence on government assistance. For instance, Iowa Rep. Skyler Wheeler said on basic income programs, “I think this is insane, creates more reliance on government, takes from hardworking taxpayers (and) it gives to those that are not,” The Gazette reported. 

“I think a lot of those arguments are based in this misunderstanding of why people struggle to afford housing,” Saadian said, as observers often claim that housing insecurity is a personal failing. “The truth is … we have a housing system that doesn’t build enough housing affordable to people with the lowest incomes, [and] we have an employment system where millions of people aren’t paid enough to afford their housing.” 

Prohibiting income programs “does nothing to address the underlying causes of the housing crisis, and in many ways, prevents communities from experimenting with possible solutions,” she said. “The housing crisis is so severe that we really need every level of government—local, state and national—to be using all of the tools available to them.” 

“Taking possible solutions off the table is counterproductive to … efforts to end homelessness and end housing poverty,” Saadian added.