The success of the stimulus checks in buoying up the economy during the pandemic and after has brought about a transformative change in the federal administration’s future planning for such a downturn.
While it was not the first time that such direct funds were sent to affected Americans, the scale of the disbursal and its coverage were unprecedented. And it was not just the three rounds of direct stimulus checks that helped people stay out of poverty or default on their utility and installments.
The stimulus checks were only a part of the total stimulus packages such as the American Rescue Plan Act. While businesses benefitted from the fund, local and state governments also received generous support from the federal administration.
States Have Used Their ARPA Funds For Uses Other Than Stimulus Checks
Most states and local administrations used these ARPA funds to bring about transformative changes by investing in an equitable recovery of the economy and also offering support for their residents. Other states have used the federal stimulus check funds that had less to do with stimulating the economy. They have used it to support low and medium-wage workers, and enhance racial equity, and their families.
Even today, the state and local governments have ample resources from the Rescue Plan funds and have many opportunities to use them effectively. The federal government has disbursed all of the ARPA funds, which come close to $350 billion to the state governments.
The National Council of State Legislatures has revealed that states have so far allocated $133 billion of the $199.8 billion allocated to them under Coronavirus State and Local Fiscal Recovery Funds (SLFRF). Data for bodies below the state level are not available as counties, cities, and tribal governments do not publicly reveal their reports.
But the larger counties and cities reveal their spending pattern and by the end-2021 around 83% of the funds received under the first round of funding had already been budgeted.
One common use of the SLFRF fund has been to replenish unemployment insurance trust funds. Around 21 states have unfortunately allocated close to 12% of the funds allocated into trust funds to pay off accumulated debts. Such expenses have no impact on the state’s economic growth and the funds were not intended for such expenses.
But the Rescue Plan funds were also used to make justifiable improvements to the state UI funds. Colorado, for instance, includes $600 million in ARPA funds to strengthen the UI system of the state. Washington too has allocated $31.3 million in SLFRF funds to promote access to the unemployment system.
Many governments have also enacted premium pay programs to support low-wage workers. Minnesota is among the few states to enact frontline worker pay programs that cover both private and public sector employees. Other states to include both are Puerto Rico and Oxnard, a city in California.
Many state and local governments have used the Rescue Plan funds to address inequities in housing. Detroit unanimously approved the right to legal counsel for tenants in danger of eviction.
Such tenant protection funds also help advance racial equity as the Black community makes up over 32% of evictions though they make up less than 20% of renters. The support of legal counsel leads to a significant reduction in the rate of eviction, mainly among low and moderate-income renters.
ARPA Funds To Promote Public Health And Fight The Pandemic
Even as the successive waves of variants of the COVID-19 virus swept the country, state and other local governments made use of the Rescue Plan funds to promote health measures and fight the virus. Washington D.C., for instance, used the funds to set up free COVID-19 testing and vaccination points across the city all through the week.
Boston also used around $93,000 of the SLFRF funds to strengthen the grocery delivery system from food stamp beneficiaries. It was a vital tool for a vulnerable section of people who found it difficult to go out to buy food and other essentials.
The ARPA stimulus check amounts have also been used by states to enforce labor standards, increase the amount of cash assistance grants under welfare schemes, and increase the size of its wage theft oversight through the hiring of staff and ensuring higher starting wages.
States Using Both Budget Surplus And Rescue Plan Funds To Send Stimulus Checks
At the beginning of 2022, all American states had reported a healthy budget surplus, with 29 of them reporting an excess of over $1 billion. 21 of those 50 states have taken legislative steps to give residents a stimulus check in the form of direct transfers, paper checks, tax rebates, and gas and transit debit cards.
Alaskans will soon be getting a stimulus check of $3,200 from the state administration. The payment is more of an annual dividend, also known as oil-wealth stimulus checks. The payments have already been approved and families will start receiving them by September.
California is sending out a Middle-Class Tax Refund that will send stimulus checks of up to $1,050 for a family filing jointly and consisting of at least three members and earning up to $150,000 jointly. Even families earning as much as $500,000 will get a stimulus check though the amount for a similar family will come down to $600.
Connecticut is giving out a $250 rebate per child for a maximum of three children. Delaware residents will get a $300 payment under the state Relief Rebate Program.
Full-time residents of Colorado aged above 18 will get a $750 stimulus payment as individuals and double that as joint filers.
Hawaii is giving a $300 stimulus check to residents with individual income below $100,000 and $100 for the rest. Georgia is sending a $250 check to individuals and double that for joint filers.
Full-time residents of Indiana are getting a $125 tax refund if they have filed their 2020 returns before January 3 this year. Maine has been generous and is sending out $1,700 for joint filers with AGI below $100,000 and $850 for individual tax filers.
Massachusetts residents will get a 7% refund on their 2021 returns. Minnesota is sending a $750 bonus stimulus check to nearly 700,000 frontline workers. New Mexico is giving out stimulus checks over 3 months with rebates varying between $250 and 500 for individual filers and double that for married couples filing jointly.