Among the funds allotted to various accounts under the American Rescue Plan Act were several wide-ranging new measures. It ranged from unemployment benefits to Child Tax Credits, and from support to businesses to stimulus checks.
These economic impact payments were initially confined to the federal level with the sole exception of California. The Golden State moved in and helped out residents with the Golden State Stimulus Check, I and II.
Also included in the massive $1.9 trillion package was the $350 billion set aside for state, local, and tribal governments. The first two years of the pandemic were particularly tough for low and moderate-income Americans. At the same time, the finances of state and local governments were stretched to the limit. The pandemic shutdown was extended several times and multiple sectors of the industry remain frozen for months.
The local and state governments benefitted immensely from the Rescue Plan funds. This enabled them to step up support to residents on their own even as the federal government faltered after 2021.
It was the Rescue Plan funds that enabled local and state governments to consider giving out payments in 2022. With a few notable exceptions, it was the Rescue Plan funds that ultimately supported the inflation relief stimulus check and tax rebates. It sustained many families and individuals through 2022 and into the first quarter of 2023.
Even as the pandemic shut down the American economy for prolonged periods, the situation then was grim both for local governments and the federal government. The total shortfall for 2020-21 and 2021-22 was alarming and reached close to half a trillion. It resulted in the worst crisis that America faced since the great recession.
State And Local Administration Hardest Hit By Pandemic Shutdown
At the start of the pandemic, many state and local governments faced a grim situation. The total budget shortfall that states faced for the 2020-2022 fiscal was as high as $434 billion. It was the hardest financial crunch since the Great Depression. Local and state governments had to make tough decisions. They cut basic services, laying off or furloughing close to 1.5 million employees and deferring capital improvement projects.
But not all states were affected as the impact of the pandemic on the local economy was uneven. It was dependent on the condition and structure of state and local governments. Some states like California were in a better situation.
The situation for around 28 states was particularly grim, especially those that depended more on tourism, oil and gas, and sales tax. Revenue was in a steep decline during the period. The pandemic hit low-wage workers the most, those living paycheck-to-paycheck
But for around 22 states the fiscal citation was not as dire as predicted. As a consequence, 22 states reported an increase in tax revenue during the same period and some even generated a budget surplus. California, for instance, reported a $26 billion surplus for 2020-21 alone, according to reports by the California Legislative Analyst’s Office.
States Benefitted From Stimulus Check Amount Under Rescue Plan
The biggest assistance that states initially received was under the CARES Act, the first of the three stimulus check packages. States received federal assistance through Medicaid. But few cities were eligible for this assistance. The total shortfall that states faced in the budget years 2020-22 alone was $148 billion.
While the funds were sufficient for the inflation relief stimulus checks in 2022, most states have stayed away from further stimulus check commitments in 2023. The first quarter saw payments that were 2022 payments that were delayed for multiple reasons. But some states have again come forward with new announcements in the second quarter of the new year.
New Mexico Repeats Stimulus Checks In 2023
Close to a million taxpayers in New Mexico will benefit from rebates which is the third round of inflation relief payments announced by New Mexico. With prices of necessities consistently high across the nation, Gov. Luhan Grisham announced new relief and rebate payments. The governor said that the state today was financially in a fantastic position, and it was important that families in New Mexico became a part of the success of the state.
The state is giving out a refundable income tax rebate. The stimulus check will be $,000 for married couples filing jointly, surviving spouses, and heads of households. For individual filers and couples filing separately, the stimulus check comes to $500. The rebates go out automatically to residents of New Mexico who have filed their income tax returns for 2021 and are not dependent on the income tax returns of another taxpayer.
No application is required to be submitted. The rebate stimulus checks will be printed and sent through the US Postal Service through June. Taxpayers who have given their bank details while submitting their 2021 income tax returns will receive the payments earlier through the direct transfer of funds to bank accounts. The New Mexico government has given residents ample tie to file their income tax returns for 2021. They have until May 31, 2024, to file the PIT returns if they are yet to do so.
A fund has also been set aside for residents of New Mexico who have not qualified or do not pay taxes. Though the exact amount is yet to be determined, around $5 million has been allocated for the stimulus checks. Residents who apply through this scheme have to apply to the Human Services Department. Distribution of stimulus checks under this scheme is expected in July 2023.
The New Mexico administration has advised residents to file a state income tax return even if they are not required to do so. Besides getting access to every rebate, low and moderate-income residents are also eligible for refundable rebates and tax credits such as the Low Income Comprehensive Tax Rebate. Refundable rebates and credits can lead to stimulus checks even if filers do not declare any tax liability. The Human Services Department funds become applicable if the resident chooses not to file a return. But in such cases, the stimulus check amount is limited and is given on a first-come-first-served basis.