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Sunday, September 25, 2022

States Move Ahead With Stimulus Checks For Millions

More than a dozen states are sending out stimulus checks to residents to contain the pressure of record inflation that has affected not just the low and moderate-income groups. Every section of society except the rich is feeling the pressure of rising prices that has affected every segment including gasoline, other essentials, utilities, and home rent. 

The state stimulus checks are mostly one-off payments and will reach most beneficiaries in the last quarter of 2022. 

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Only Maine and New Mexico have moved ahead and are in the process of sending out inflation relief funds to their residents. California is the latest among states to announce further stimulus checks. It has already paid residents two rounds of stimulus checks named the Golden State Stimulus Check I and II.

The states are paying the residents from excess revenue in their 2021 budgets, a result of a booming economy in the last two quarters linked to the series of stimulus checks, the extended unemployment payments, and the enhanced child tax credit stimulus checks. 

The Successive Stimulus Checks Put Excess Money Into People’s Hands

The American Rescue Plan Act signed by President Biden in March 2021 gave out the third stimulus check, along with a host of other support measures that benefitted businesses, states, local bodies, cities, and many other organizations. 

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But the payment came soon after the second stimulus check of $600 in December 2020. Many economists and policymakers believe that it put more money into people’s hands than was required at that moment. This is believed to have led to a spurt in demand for goods, even as the supply logjam created a scarcity that was not sufficient to meet even the normal demands of the market. 

This imbalance in demand and supply led to an abnormal scarcity of all goods including food and gasoline. The war in Europe further aggravated matters. People were hard-pressed to manage their home finance in the absence of federal stimulus checks. The last of the stimulus support from the government dried up with the last of the monthly child tax credit stimulus checks. 

Stimulus Check
Stimulus Check

The inflation rate crept up to 8.5% by the end of the first quarter of 2022. The price of gasoline has almost doubled in the past two years. The economic situation seemed more desperate than it was during the pandemic. 

The inflation rate has not improved even as June figures were released. It hit a fresh 40-year record that month as consumer prices increased to 9.1% over the past 12 months according to figures released by the labor department. 

Not all economists and politicians are buying the contention of a section of politicians that the third stimulus check, or the economic impact payment, was responsible for the mess that the economy is in at the moment. It appears to be a more political ploy to divert attention ahead of the midterm elections in November. 

Inflation has affected most of the advanced nations and the UK and the European Union are finding it just as difficult. The situation is expected to worsen as the contract with Russia for oil dries out at the end of the year, and it will not be renewed at this stage. Independent economists who do not have a political ax to grind say that at the most it added around 3 percentage points to inflation while many believe that the stimulus checks money were used up by the beginning of the third quarter of 2021 and did not have any significant effect on the economy and did not affect the inflation rate. 

The state stimulus checks are too small to significantly affect the national inflation rate. They draw some parallels to the three federal stimulus checks given out in a space of a little more than a year starting from the initial days of the COVID-19 pandemic. Those checks helped workers provide for themselves and their families even as they were forced to stay away from the workplace due to enforced stay-at-home measures set in motion by the federal administration. 

The stimulus checks also were instrumental in preventing the economy from crashing into the deepest recession seen in recent times. The latest round of payments from the state governments will not be as widespread as the federal ones, one reason being that only 16 of the 50 states are adopting these measures or have already taken measures to support their residents. 

California Latest Among States To Go For A Stimulus Check For Residents

Around 23M residents of California will receive inflation relief measures in the form of a stimulus check that could go up to $1,050 for a family of three. The payments are being sent under a budget deal that Governor Gavin Newsom signed in late June. 

The plan envisages that a vast majority of residents of the Golden State would receive relief in some form. It would start from as little as $200 and would depend on the income of the beneficiaries and the size of their household. 

Governor Brian Kemp of Georgia has also signed a bill that will give Georgians a stimulus check paid from a state budget surplus of over $2B. The payment by the state will have three variables and will depend on how the households pay their state income tax. While single filers will receive a $250 stimulus check, married couples filing jointly will receive double that amount. Household heads will receive a $375 stimulus check. 

Stimulus Check
Stimulus Check

Maine has put together a generous plan that will send out relief checks of $850 to around 858,000 residents whose federal adjusted gross income is $100,000 or less. For couples filing jointly, the limit is $200,000 while for household heads the amount is $150,000.

New Mexico will provide multiple rebates for 2022 taxpayers, according to a press release by the tax and revenue department. 

Residents of Colorado will receive rebates of up to $750 for single filers and double that for joint filers in the summer of 2022.

Hawaii is also providing a one-off stimulus check to tax filers and dependents, according to a release from Governor David Ige’s office. The funds will start going out in August 2022. Single filers with an income of $100,000 or less will earn a $300 stimulus check while it is the same for couples who file jointly and have an income of $200,000 or less. Others will earn a $100 inflation relief payment.

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