Even as Washington remains embroiled in partisan politics, residents are under the pressures of sustained inflation that has led to negative income for residents despite a rise in wages and stimulus checks. With inflation staying above the 8.5% mark for the whole year, a rise of around 3.5% in wages has meant little to most as they still have an approximate 5% negative earnings to contend with.
The issue of inflation has stopped the federal government in its tracks as the Republicans have made it their sole issue going into the midterms in November 2022. With Biden in danger of losing control over both the Senate and the House, he is doing all he can to remove the negative perception around the federal payments. He has sought to delink it from the record inflation that has reached heights not faced since November 1981.
Most states have little option but to step in with inflation relief measures in the form of direct transfers, stimulus checks, debit cards, tax rebates, and sales tax holidays on gasoline and diesel.
California is among the states that are facing the highest gasoline prices with prices crossing the $6.30 per gallon mark in the last week of September. Governor Gavin Newsom had initially proposed a gas card worth $400 for all vehicles registered in California with a maximum of two cards per family. There were also plans for a transit rebate for families that did not own a car.
But the rebate plan has hit opposition from detractors, especially conservative economists, and Republicans who have argued that the inflation rebate plan is not good economics. They contend that with the inflation rate cresting at 9%. Sending out $17 B to residents of one state can potentially lead to even worse inflation.
But people are desperate to manage expenses and at the present juncture, it appears to be the only way to help out people. It worked after the pandemic and saved millions from starvation, homelessness, and mortgage defaults.
The wheel has turned full circle and Americans are faced with the same situation of earnings that are way too below their expense levels, especially for the low and moderate-income groups.
California Middle-Class Cash Back Paid Out Of State Budget Surplus
In such a situation, states have dipped into the American Rescue Plan Act fund to send inflation rebates and stimulus checks to their residents. California, along with New Mexico, is sending its third stimulus check. but California is depending solely on its huge budget surplus of $97 B it supports its residents and will not have to dip into the Rescue Plan funds.
Starting October 7, the one-off payments, known as the Middle-Class Tax Refund (MCTR) will automatically reach residents starting October 7, 2022, and will continue through January 15, 2023.
The state administration has opted for debit cards and direct transfers to the account of beneficiaries instead of paper checks. Qualifying residents will immediately begin receiving relief payments after October 7 that go up to $1,050. The payments are expected to soften the impact of the record rise in prices of gasoline, groceries, utilities, and home rents. With inflation staying above the 8.5% mark for almost a year, there appears to be no letup in the situation.
The payments are part of the $308 state budget signed by Governor Newsom in June and will deliver direct refunds to 23 million residents struggling with inflation, which touched a record 9.1% in June, the highest since November 1981.
Governor Newsom said in a joint statement with Toni Atkins, the Senate President, and Anthony Rendon, the Assembly Speaker, that the budget would address the most demanding needs of Californians. He said it would give the highest priority to get money back to residents grappling with global inflation and the resultant rise in prices of everything from groceries to gasoline.
The administration has created three layers based on adjusted gross income as declared in the 2020 state income tax returns and the amount of the cashback will depend on income, tax filing status, and the presence of dependents.
Married or joint filers with income of $75,000 and $150,000 or less respectively will get $350 each plus another $350 if they have dependents. The stimulus check amount for dependents will remain fixed for all layers irrespective of the number of dependents. So for an individual filer, the maximum comes to $700 if they declare a dependent, and for joint filers, it comes to $1,050.
For individual income between $75,001 and $125,000 and joint income between $150,001 and $250,000, the rebate amount is $250 and $400 respectively plus another $250 for dependents.
The highest slab is between $125,001 and $250,000 for individual filers, and $250,001 and $500,000 for joint filers. They will get a rebate of $200 each plus another $200 for dependents. Individuals earning above $250,000 and joint filers earning above $500,000 are not eligible for the Middle-Class Cash Back.
The cashback stimulus check aims to offer a tax refund to millions of working residents of California. The package has other support measures including a suspension of state sales tax on diesel which is effective for a year and started on October 1, 2022.
The joint statement from the Governor and senior legislators said that the budget was an investment in the values of the state even as residents faced growing economic uncertainty. It said that the move will further fill the budget reserves of the state and build in triggers for any future state spending. This would ensure financial stability in the future years.
New Mexico $400 Stimulus Check Application Open Till October 7
New Mexico is another state that has moved for the third round of stimulus checks, though this time the amount is only for low-income families and individuals.
The application for the $400 stimulus check is open according to the Human Services Department of New Mexico. The $10 M fund was approved by the state legislature in the 2022 legislative session and will go toward economic relief efforts.
Applicants can access the form online at the YES New Mexico website. They will need to provide their social security number or their New Mexico driving license number, and their direct deposit details. October 7 is the deadline for applying. The application will be accepted till 5 pm on that date.