Officials Advance $500/Month Basic Income Plan

A pilot program to provide 50 low-income families with $500 a month for 18 months continues to move forward.

The Common Council’s Community and Economic Development Committee approved a file Wednesday that requires the Department of Administration director Sharon Robinson to present a plan to the council for advancing the universal basic income proposal within four months.

Funding for the program, modeled after another pilot in Stockton, CA, would come from private philanthropy. The program’s lead sponsor, Alderwoman Chantia Lewis, and others still need to raise the necessary $450,000 to fund the effort. The city adopted the basic framework for the program as part of the 2020 budget approval process, but didn’t allocate any money towards it.

“I’m really excited about this,” said Lewis on Wednesday. “It’s proven to work.”

Participating families would need to be meet certain income restrictions, live in the city and consent to having the city monitor how they spend the money from the program. Funds would be provided on a debit card.

Lewis said the early results from the Stockton proposal show people don’t spend the money frivolously. An on-going independent audit of Stockton participant spending shows that, broadly categorized, participants have used their funds on food (36 percent), sales/merchandise (22 percent), utilities (11 percent), auto care (10 percent), services (eight percent), medical (three percent), insurance (three percent), transportation (three percent), self care/recreation (three percent), education (one percent) and donations (one percent). The Stockton program has found that less than one percent has been spent on alcohol or tobacco each month.

But that tracking represents only 60 percent of the funds awarded in Stockton. The on-going monitoring of the Stockton program has found that approximately 40 percent of the funds loaded onto the debit cards have been transferred off. Interviews with participants reveal that participants didn’t trust the program and wanted cash, preferred cash as their primary spending method or transferred the money to another card.

Lewis said each participant would be paired with a financial coach. Alderman Russell W. Stamper, II asked who those coaches would be. “We have some people in mind,” said Lewis, but declined to publicly identify any partners at this point.

Ald. Khalif Rainey asked how the selection process would work. Lewis said all of the eligible families would be identified and notified via mail. The alderwoman told Urban Milwaukee that would include receiving the application, with the first 50 fully-qualified respondents gaining admission to the program on a first-come, first-served basis. She said her understanding of Stockton’s program is that many families did not want to participate because of the monitoring requirement.

But getting into the program could be only part of the challenge. Ald. Cavalier Johnson asked what would be done to ensure that participants weren’t bounced from other programs as a result of an income increase. Lewis said care was being taken to prevent that from happening. “Child care is a huge expense,” said the alderwoman, when discussing the tradeoff of potentially losing access to the Wisconsin Shares child care assistance program.

The proposal is co-sponsored by council members Nik Kovac, Milele A. Coggs and Cavalier Johnson. “With poverty levels being what they are in this city, there needs to be innovative solutions brought to the table,” said Coggs. “We know that whatever models we have been using have gotten us where we are.”

The committee voted 4-1 to advance the proposal, with Ald. Robert Donovan the lone objection. The proposal will next be heard by the full Common Council.

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Related Legislation: File 191463