CA Bill To Give $500 To Every Baby

Mar. 1 - KGO (KGO) -- A new plan to give newborns a head start is getting mixed reviews. The idea is to give every baby born in California $500 dollars. It would be a nest egg they would have money out of taxpayers pockets today -- that would be a nest egg when those babies become young adults.

More than half a million babies are expected to be born in California next year. With a $500 dollar savings account for each and every one of them opened by the state with taxpayer money, it would cost nearly $300 million dollars.

After families add money, at 18 the child would have to pay the state back $500 and use what's left tax free for college, a house, or a retirement account. The idea came from the New America Foundation, a non partisan think tank which found one Democrat and one Republican to introduce the bill.

David Lesher, New America Foundation: "I don't know how we can not afford to give people access to home ownership and college -- that they might not otherwise have."

But the state has been in a financial crunch for years with spending outpacing revenues. In fact, the non-partisan legislative analyst warned lawmakers last week it may be time to consider cuts. To add a savings account for newborns to the state's budget could mean less money for roads, classrooms and other government responsibilities.

Elizabeth Hill, Legislative Analyst: "We're projecting in our current fiscal year that'll end June 30th, that we're spending eight billion more than we're taking in."

The true cost of the savings account plan could actually go higher.

Just today Sacramento's Sutter Memorial Hospital announced it's experiencing a baby boom, births are up 56-percent in the last five years. New mom Lisa Jenkins would rather see the state put to use the $500 now, rather than having little Sophie wait until she's 18 to see any benefits.

Lisa Jenkins, New mother: "There's going to be a need for more classrooms, more teachers, or overcrowding of what we already have."

But the New America Foundation says we have to give these little ones a chance.

David Lesher: "We're at a point where our middle class needs to grow. We have an income gap, with too many rich and too many poor -- and not enough in the middle class."

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