Leaders in Congress have signaled that now is the time to look beyond recovery toward large-scale progressive policies like the American Opportunity Accounts Act that can, by implementing a federal Baby Bonds program, begin to address serious systemic issues like the racial wealth divide. The states, too, are ready to establish their role in building more equitable economies with their own recently introduced legislative actions. Prosperity Now is actively working with several states on emerging proposals to bring Baby Bonds to the state level, and we are remaining ahead of the curve on this issue by helping guide state leaders and advocates toward the most effective policies.
Our team is currently assessing the details of recent state proposals, including bills from New Jersey, Connecticut and Iowa, to help ensure they align with the intended goals behind the Baby Bonds concept, as well as complement the federal proposal. Based on our work with legislators and partners in these states and our review of available legislation, here are initial details about the proposals that have emerged:
- New Jersey: Following Gov. Phil Murphy’s unsuccessful attempt to create a state Baby Bonds program through his 2020 state budget proposal, bills have been introduced in the Assembly (A. 4638) and Senate (S. 3130) to establish the New Jersey Baby Bonds Account Program. This program would create a one-time seed deposit of $2,000 for babies born into New Jersey resident households with incomes at or below 200% of the federal poverty level. When the recipient eventually becomes eligible, the funds could be used for postsecondary education, homeownership, small business or other investments determined by the program’s board.
- Connecticut: H.B. 5697—An Act Establishing a Baby Bonds Program—was introduced to grant $2,500 to every child born in the state, plus an additional $1,000 every year until each child reaches age 18. Additional details on the proposal are still emerging, including a recently-introduced bill to establish a state Baby Bonds Trust.
- Iowa: Going a step further than previous proposals, a bill introduced in the Iowa House, H.F. 544, would not only establish a state Baby Bonds program but also designate a revenue stream to fund the program through sales and use taxes. The program would provide an initial $500 deposit at birth and an additional $500 a year until each child reaches 18.
- Other proposals: A proposal similar to New Jersey’s was floated earlier this session in the Maryland House of Delegates but has since been withdrawn. A separate proposal from the Connecticut state treasurer and a proposal from a District of Columbia Council member have also recently been put forward.
Prosperity Now is also working with fellow researchers in this field to develop guidance on the essential components of an effective state-level Baby Bonds program that would complement the proposed federal Baby Bonds program, align with other existing policies and programs such as Children’s Savings Accounts and maximize efforts to shrink the racial wealth divide for future generations. As we refine our thinking on these points, we will provide updates and useful guidance to help shape these policy discussions.
In the meantime, we encourage you to stay up-to-date with the latest actions on federal and state Baby Bonds proposals and opportunities for you to get involved in future campaigns on these and other issues by signing up for our Advocacy Center. If you would like assistance exploring what Baby Bonds could look like in your state or would like to help advance an existing state-level proposal, please reach out to Holden Weisman, Associate Director for State and Local Policy, for more information.
Originally posted by Prosperity Now on 2021-04-07 19:00:00