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Saturday, July 2, 2022

States Step In With Their Version Of The Stimulus Checks: Work Out What Your State Has For You

Since the Great Recession of 2008, the federal government has sent economic stimulus payments 4 times to most citizens. But the biggest initiative was taken during the COVID-19 pandemic which included a variety of initiatives including stimulus checks, fiscal and tax policy changes, business credits, and more.

The unprecedented crisis wreaked by the pandemic forced the federal administration to announce a slew of measures immediately after the whole world went into a lockdown mode. It caused immediate fiscal disruptions as millions lost their jobs and the economy went into a tailspin with multiple sectors shut down.

Multiple Federal Stimulus Checks Helped Citizens Immensely During The Initial Phase Of Pandemic

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Consumer spending slow down even as the federal administration announced the first stimulus check in 2020 was issued with the signing of the CARES Act on March 27. The payment maxed out at $1,200 per person with an extra $500 per dependent. People started receiving it as early as mid-April 2020, either as a direct bank transfer or as a paper check sent through the US Postal Service.

Another stimulus check was issued in December 2020 worth $600 and was followed by the third stimulus check issued in March 2021 when Joe Biden signed the American Rescue Plan Act, 2021.

This was followed by the Child Tax Credit, which gave parents monthly payments of $1,500 to $1,800 for each child, depending on their age. These enhanced CTC stimulus payments were issued between July and December 2021 and constituted 50% of the total planned amount.

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The rest 50% has remained in abeyance as Congress is gridlocked in bickering over the issue, with the Republican opposition refusing to allow any more federal stimulus support to citizens.

 But the economic condition worsened in the first quarter of 2022 after a relatively better year in 2021 when the economy staged a smart recovery.

Inflation inched to a 40-year high in March 2022 to touch 8.5% and has remained over 8% for the past two months. The consumer price index in January 2022 was 7.5% higher than it was a year ago.

This prompted the state government to step in to avert a crisis as gasoline and grocery prices touched record levels. The federal government remains in gridlock and has more pressing matters like the war in Europe.

State Governments Announced Multiple Measures Depending On Their Budget Surplus

The state government has announced various support measures ranging from tax cuts, and state stimulus checks, to gas cards to ease the burden of high fuel prices. Most state administrations are paying from the budget surplus that their state enjoyed during the brief economic recovery in 2021. The direct federal support to states under the American Rescue Plan Act was also another fund that the state governments fell back on.

California was the first off the mark with its version of the stimulus check, the Golden State Stimulus fund I and II. Following the recent inflation, Governor Gavin Newsom, the Democratic Governor of California, has proposed an additional inflation relief measure worth $18.1B to help tackle the rising prices.

The Governor said that a big share of the amount will go towards plants to offset the rise in gasoline prices. He has proposed a $400 stimulus check for each car owner, with families receiving money for a maximum of two cars.

There are also plans to provide 3 months of free public transportation to families with $750M being set aside for it.

Vermont has proposed 3 major funds to tackle inflation, the Education Fund, the Transportation Fund, and the General Fund. They come to $531.4M, which is a third higher than the consensus expectation of $161.6M.

Georgia is enjoying a historic surplus budget and the state has decided to give much of the remaining cashback to residents. People who filed their income tax returns for 2020 and 2021 will get a rebate payment of $250 for individual filers and double that for married couples filing their returns jointly.

Residents of Idaho can line up to collect their share of the $350M rebate announced, with each resident receiving $75 or 12% of their 2020 state taxes, which is more.

The governor of Indiana has signed a one-time $125 refund for qualifying residents following a huge surplus in 2021. Here no income requirements and a married couple filing jointly will receive $250.

The biggest windfall is for residents of Maine, where every qualifying resident will receive a direct stimulus check of $850. The Governor of New Jersey has approved legislative measures that will give a one-off stimulus check of $500 to close to 1M residents of the Garden State.

The governor of New Mexico has also signed a bill that will pay eligible residents as much as $750 for single filers while married couples could receive as much as $1,500.

Legislators in Virginia are ironing out details of a stimulus check worth $300 to all taxpayers in the state. Another couple of bills are intended to eliminate the grocery tax for its residents and suspend the 26.2 state gas tax for one year.

The Governor of New York, Kathy Hochul, has moved to allow a rebate on property tax that could range from $425 to %970 for low-income and middle-income households. There are a host of other measures that include tax relief for businesses. New York could also move for a suspension of the motor fuel tax levied by the state till December.

Back in January, Governor David Ige of Hawaii proposed a $100 refund for all income tax filers and their dependents. The finance House Committee in April increased the sum and has approved a $300 stimulus check for tax filers who earn below $100,000, and a $100 stimulus payment for those who make over that.

Stimulus Checks May Have Increased Inflation By 3 Percentage Points

The successive stimulus checks have helped Americans immediately and tangibly by reducing poverty, way more than merely keeping people afloat during the early stages of the pandemic.

 National figures reveal that 11.7M people moved out of poverty in 2020 as a result of the stimulus checks and the poverty rate dropped from 11.8% to 9.1%. The 2021 poverty rate went even further down to 7.7%.

But there is also enough evidence to support that the successive stimulus checks, especially towards the end of the pandemic, stoked higher prices. It was stoked by global supply chain issues and the war in Europe. Researchers at the Federal Reserve found that the stimulus checks may have raised inflation by about 3 percentage points by end-2021.

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