Relief checks: In the face of inflation worries, local politicians are trying to get cash to their citizens

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President Joe Biden signs the American Rescue Plan, a package of economic relief measures to respond to the impact of the coronavirus pandemic, at the White House on March 11, 2021. (REUTERS/Tom Brenner)

In the face of inflation worries, local politicians are trying to get cash to their citizens any way they can. An analysis by Yahoo Finance finds that at least 20 states have so far enacted plans to send checks into people’s bank accounts, reported by Yahoo Finance.

The efforts are made possible thanks to state budgets that currently are flush with funds and typically presented as a way to help people deal with inflation at a 40-year high.

The most aggressive move of late came last week when California Gov. Gavin Newsom signed a budget which included a “Middle Class Tax Refund” that will send checks of up to $1,050 to qualifying Golden State residents beginning in October. Newsom says around 23 million Californians are in line for the funds.

The programs come after three rounds of stimulus checks from Washington D.C. in recent years. The most recent checks, for $1,400, were included in the American Rescue Plan that President Biden signed in March 2021. That bill — and those checks in particular — have been criticized for some as likely contributing to inflation.

However some economists note that such relief programs may have little effect on inflation and might, in some cases, be making the problem worse. “It really won’t do anything to solve the problem,” American Action Forum President Douglas Holtz-Eakin said in a recent Yahoo Finance interview. “What it does is temporarily disguise the inflation problem and hope maybe the Fed and other efforts can solve it in the interim.”

“I don’t think it’s too complicated to say that massive checks really kicked off this big inflation problem,” said Holtz-Eakin, who added, “and now the states are getting into the game.”

But California is far from the only one. States across the geographic and political spectrum doling out the cash — which are often described as either direct payments or one-time tax rebates — to their citizens. In Maine, some citizens are receiving $850 payments, and then — over 5,000 miles away — some Hawaii residents will soon be getting a tax rebate of $300 per person.

There are a range of plans: from the “Colorado Dividend” of $400 to a “Relief Rebate” of $300 in Delaware to an “automatic taxpayer refund” program in Indiana that promises $125 checks.

Many of the moves are being pushed by Democratic politicians, though not exclusively. New Jersey’s Democratic Gov. Phil Murphy recently signed legislation to mail checks for up to $500, while Gov. Henry McMaster in deep-red South Carolina has plans for checks of up to $800 for his state’s residents.

And it appears no amount is too small. Illinois is set to provide income tax rebates of $50, while Idaho has plans for a $75 rebate on the books.

Other states, meanwhile, have enacted programs more directly targeted to segments of their population.

New York and West Virginia have programs to send checks to help homeowners in those states. The New York program is expected to aid an estimated 2.5 million residents.

Minnesota is providing $750 payments to its frontline workers while Maryland sent out more traditional style checks in 2021 but is following it up in 2022 with offers of up to $2,000 in assistance, but only to households struggling with their water bills.

And then of course there is Alaska. The state has been sending direct payments to its citizens for decades via the state’s “Permanent Fund” which passes along energy revenue to citizens.

Alaska Gov. Mike Dunleavy promises that this year’s check will be the biggest in state history because families “need help now with rampant inflation, record-high fuel costs, and the economic damage caused by the pandemic.”

And plenty more programs could be on the way with a range of other states — from Massachusetts to Kansas to North Carolina— continuing to debate their own proposals for various forms of tax rebates.

The programs have largely been made possible by state budgets that are extraordinarily healthy this year thanks to better-than-expected tax revenues and leftover coronavirus assistance from Washington, D.C.

Virginia Governor Glenn Youngkin (R-VA) recently signed a budget that includes one-time $250 rebates to eligible taxpayers. He recently appeared on Yahoo Finance to tout the elements of the budget, which also includes a bevy of tax cuts, and said it “is an extraordinary step to allow Virginians to keep their money.”

In a statement about his state’s plan, Illinois Gov. J.B. Pritzker said, “In challenging times like these, it’s more important than ever to have a government whose first focus is on working families and those who are struggling.”

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