The absence of federal stimulus checks in 2022 has severely affected households that continue to be affected by the economic repercussions of the pandemic. The lingering effect of the pandemic has been seen in inflation, as the disruption in the supply chain coupled with several other worldwide issues led to another round of trouble mainly for low and moderate-income people.
Political turmoil in Washington forced the Biden administration to shy away from making any further move towards direct stimulus checks to citizens. This is despite negative growth in income thanks to inflation that has beaten the generous increase in wages by close to 5%. So despite earning more when compared to the pre-pandemic period, Americans are facing depletion in the purchasing power of their wages.
States move in with alacrity in 2022 to make up for this void left by the withdrawal of federal support. Close to half the total states have sent some form of stimulus checks to their residents, though the federal funds given under the American Rescue Plan Act came in handy here.
State Stimulus Checks Possible Thanks To Steps Taken By Federal Administration
With 21 states having either sent stimulus checks to residents or in the process of sending them, the source of the funds comes up for discussion. The ease with which the states moved in with various forms of support has its basis in the American Rescue Plan Act and the support it afforded to states and other local bodies to deal with the pandemic and the economic downturn that followed.
The ARPA state fiscal recovery allocation was confirmed after the incoming president Joe Biden signed the $1.9 trillion American Rescue Plan Act (ARPA) in March 2021. It remains the last of the federal stimulus bill to aid public health and the economic recovery from the COVID-19 pandemic. Included in the plan was the allocation of $350 billion as emergency funding for state and other local governments under the Coronavirus State and Local Fiscal Recovery Funds.
State governments and the Dist. of Columbia received around $195.3 billion of the state’s share of the recovery funds distributed over two tranche disbursements.
Territories received a total of $4.5 billion in a single payment. States were given a free hand to spend the funds with no major advisories. The only catch was that states have to obligate the federal funds by 2024 and also spend them by 2026.
Many States Effectively Used Federal Stimulus Money To Support Residents From Inflation
Other than the regular ARPA funds, there were even more funds designated for specific policy areas such as education. The money proved a welcome reprieve even as inflation peaked and allowed states to send out relief in various forms to residents.
Starting in the second quarter of 2022, various states gave out tax rebates, direct stimulus checks through bank transfer, paper checks, debit cards, tax rebates, gas and transit cards, and sales tax holidays for specific products for a fixed period, mainly for gasoline.
This immediate and critical relief will hopefully see many through the inflation period that has touched record levels. States face crucial decisions on how to balance using the funds for ongoing expenses, such as one-off costs, hiring employees for the state, and on infrastructure projects and bonuses for essential workers.
One of ARPA’s key goals is to help states restore cuts to programs and operations that include ongoing costs such as education. As of March last year, state and local administration was forced to employ over 1.2 million fewer workers than employed in the first quarter of 2020. The highest job loss was among government employees.
California Stimulus Checks Payments Move Into Second Round
Inflation-linked relief payments started going out to taxpayers in California in October. The payments started on October 7 and residents started receiving them within days as the initial round of payments is total bank transfers sent to beneficiaries of Golden State stimulus checks I and II.
Residents received between $200 and $1,050 depending on their adjusted gross income for 2020, their filing status as individuals or joint filers, and also the inclusion of dependents, though the number of dependents is not a factor.
The payout is part of the $12 billion relief effort announced by Governor Gavin Newsom to protect people from the rapid spike in the price of gasoline which remains the highest in the country after breaching the $8 a gallon mark.
The national average remains below the $4 a gallon mark. With a revenue surplus of 97 billion dollars, Gov. Newsom has not been forced to depend on ARPA funds and the money is coming out of the state funds.
By October 20 close to 3.5 million residents have already received the stimulus checks through direct deposits as revealed by the Franchise Tax Board.
Around 23 million residents are eligible for the rebate plan which has been divided into three tiers based on the adjusted gross income (AGI) for 2020.
Residents must also have filed their 2020 returns by October 15, 2021, lived in the state of California for at least half of the tax period, which is 2020, and must also be a resident on the day the stimulus check is issued.
Individual filers with an AGI above $250,000 for 2020 and joint filers with double that AGI for the same year are not eligible for the Middle-Class Tax Rebate funds. Also, anyone claimed as a dependent for the same tax year, 2020, will also not get any stimulus amount under this scheme.
Residents in the lowest income bracket and with an individual AGI of $75,000 or less and joint filers with an AGI of $150,000 or less will get a stimulus check of $350 as individuals and double that as joint filers. If the filers include a dependent, they are eligible for an addition $350. Thus, a joint filer in this tier including a dependent will receive a total stimulus check of $1,050 with $350 for each filer and another $350 for dependents.
The next tax tier is between $75,001 and 125,000 for individuals and $150,001 and $250,000 for joint filers which will bring in $250 each. The highest tier is for individual residents with an AGI of $125,001 to $250,000 for individuals and $250,001 and $500,000 for joint filers. This category will bring in $200 for individuals. Dependents under both the two upper categories will get an identical amount for dependents.
