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You May Still Get A December Stimulus Check; Here’s Why And From Whom

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[Updated Dec 8 with detail about Mayors for a Guaranteed Income and the call for a national form of universal basic income]

Some Americans may still receive a government issued stimulus check this December, except the amount may not be $1,200 and the check will most likely not be from the federal government. Instead, the checks will vary in size and come from state governments who are eager to mitigate impending financial disaster for their residents and who must spend use-it-or-lose Cares Act funding by December 30.

Forbes AdvisorSecond Stimulus Check Calculator: How Much Will You Receive And When?

$908 Billion Federal Stimulus Package Proposal Excludes Stimulus Checks

The stimulus proposal du-jour was introduced by a group of centrist Senators including Joe Manchin III (D-West Virginia), Mitt Romney (R-Utah), and Susan Collins (R-Maine). Most notably, the new proposal excludes a second round of stimulus checks and cuts extra federal unemployment benefits down to $300 per week from the $600 in the Cares Act. In a major concession, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer both indicated they would support the $908 stimulus plan as the basis for negotiations. “While we made a new offer to Leader McConnell and Leader McCarthy on Monday,” the two Democratic leaders said, “in the spirit of compromise we believe the bipartisan framework introduced by Senators yesterday should be used as the basis for immediate bipartisan, bicameral negotiations.” 

It is still unclear if Democrats and Republicans will even reach an agreement on any stimulus plan before the end of the year, but if they do, it looks likely that the deal will not include a second stimulus check. "There may be a stimulus check, but that would be part of a different piece of legislation," said Senator Bill Cassidy (R-Louisiana) in a Fox News interview. Senator Lindsey Graham (R-South Caroline) went further, calling stimulus checks a poison pill and stating that including them in the stimulus package "probably breaks the [bipartisan] coalition.”

Economy Weakens While Coronavirus Surges

The lack of stimulus checks, and federal action more broadly, comes against the backdrop of a labor market that continues to show signs of strain. More Americans are filing for unemployment benefits and states are implementing renewed lockdowns and restrictions given the surge in coronavirus cases. Last Friday, the Labor Department reported that only 245,000 jobs were added in November, which represented the fifth month in which the pace of hiring had tapered. While the headline unemployment rate dropped from from 6.9 percent in October to 6.7 percent in November, “that figure does not fully capture the extent of the joblessness because it doesn’t include people who have dropped out of the labor force and are not actively searching for work.” With several federal programs set to expire soon, millions may see financial lifelines completely disappear.

States/Cities Step In With Own Stimulus Checks And Aid

The likelihood of another economic dip and the continued logjam at the federal level have propelled lawmakers in some states to dole out their own stimulus aid. “States like Colorado are trying to provide a bridge of help until the federal government steps up,” Colorado’s Governor, Jared Polis, told The Washington Post in an interview. “I don’t think it’s in the ability of any state to take it on their shoulders.”

State aid is being driven not only by humanitarian concerns, but also by a more practical reality: while many received large grant allocations as part of the Cares Act, those funds must be used by December 30. Any remaining funds must be returned to the federal government after that date.

State Stimulus Checks

Democratic governors in Wisconsin and Minnesota both put forward large scale state stimulus packages, but have run into resistance by GOP-led legislatures. The proposal by Governor Tim Walz of Minnesota would include a one-time $500 payment to some state residents, which mimics the $1,200 federal stimulus check payment from the Cares Act.

Colorado began distributing $375 checks earlier this week to roughly 435,000 residents. To be eligible, Coloradans must have received at least one weekly unemployment benefit between $25 and $500 from mid-March when the pandemic began and late October.

Last week, New Mexico Governor Michelle Lujan Grisham signed into law a $330 million relief bill to help unemployed New Mexicans and certain businesses that have been ravaged by the coronavirus pandemic. Notably, almost $200 million of the aid package will go towards sending one-time $1,200 stimulus checks to all types of unemployed workers in the state.

Oregon partnered with private sector banks and credit unions to implement a one-time $500 emergency relief payment to qualifying Oregonians. The $500 was an outright grant, not a loan and had restricted eligibility. North Carolina took a different approach disbursing $335 stimulus checks to all households with parents of children 17 and younger to help offset remote learning costs. The state used $440 million from its $903 million CARES Act allotment to fund the stimulus checks.

Cities Have Also Implemented Stimulus Programs

Some cities and counties have also implemented their own stimulus programs. Duval County, Florida was one of the first to do so back in April. Jacksonville Mayor, Lenny Curry, announced a plan to offer $1,000 payments to 40,000 families, on a first-come, first-serve basis, “to assist our citizens who are suddenly unemployed or significantly underemployed as a direct result of the COVID-19 pandemic.”

Residents of Nome, Alaska had until December 7 to apply for a personal stimulus check from the city. Nome allocated $500,000 from its Cares Act funding allocation to help residents who have been financially impacted by the Covid-19 pandemic. Those who are approved will receive a one-time payment of $500 per adult and $100 per child.

Harris County, Texas began distributing one-time emergency payments to residents recently and Houston is considering using $30 million of Cares Act funding to disburse $1,200 stimulus checks to 23,750 residents. Others, like Escambia County (Florida), Fort Worth (Texas), and Gadsen County (Florida) have been using Cares Act funding to provide grants to residents who have experiences a loss in work hours or need help with housing, utilities, and food because of the pandemic.

Stimulus Dovetails With Broader Universal Basic Income Push By Cities

The recent push to pass local stimulus dovetails with broader initiatives across more than two dozen cities to offer a universal basic income (UBI) to help families weather the coronavirus pandemic. A group, Mayors for a Guaranteed Income, has been piloting the effectiveness of UBI and other programs that provide no-restriction, recurring monthly stimulus to families in need. Earlier this week, Jack Dorsey, the CEO of Twitter and Square SQ , donated $15 million to the group’s efforts. The success of the $1,200 economic impacts payments that were disbursed as part of the Cares Act in March has catalyzed the group to push for a national UBI, “arguing that their experiments so far had proven that direct monetary assistance to Americans can help them escape poverty while providing their local economies with a much-needed boost.” as Tony Romm of The Washington Post noted.

A Looming Cares Act Deadline

With a looming deadline to use or return Cares Act funding, more states may find that disbursing stimulus checks is their best option to dole out funding. Even if stimulus checks are not the most targeted use of funds, they are “delivered in a much more efficient way,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center and a Forbes contributor.

Until now, many state and local governments have struggled to get Cares Act money to residents in need. Delays have been caused by political infighting as well as evolving Treasury Department rules. Many are worried to fun afoul of these guidelines and be forced to reimburse millions of dollars. States often lack the infrastructure to quickly distribute so much money and a bipartisan bill that would extend the deadline to use funds past December 30, is unlikely to see a vote.

Fairness Questions and Increased Transaction Costs

The Cares Act rules and use-it-or-lose-it deadline may mean that while more states and local governments will distribute stimulus checks, they will not reach everyone in need and may require using up precious dollars on intermediaries to administer programs.

Speedy, But Fair?

New Mexico is a good case study. The state received $1.2 billion in Cares Act funding back in March, but had at least $319 million in unspent funds in November. Given that the Cares Act money must be spent by December 30, state lawmakers met to formulate a plan for the unspent funds. The $1,200 stimulus checks it is sending will only go to 140,000 out-of-work New Mexicans, excluding other residents who may also be struggling financially, including low-income and essential workers. 

One reason why New Mexico may have limited payments to unemployed residents is to ensure that the state stays within the bounds of the Treasury Department’s guidelines on the use of Cares Act funds. These guidelines included language that allowed expenditures “incurred to respond to second-order effects of the emergency, such as by providing economic support to those suffering from employment or business interruptions due to COVID-19-related business closures.”

Lack Of Infrastructure Means Paying Intermediaries

Because many states and cities lack the infrastructure to quickly deploy millions of dollars, some are turning to intermediaries for help. While these companies can help manage complex programs, their services are not cheap.

Houston’s plan to use $30 million in Cares Act funding, for example, includes a contract with BakerRipley. The company also administers the city’s Covid-19 relief program money. If the proposal passes, Houston would pay BakerRipley a management fee “of no more than 5.26% and not to exceed $1.5 million,” to administer the program.

The Upshot:

Inaction at the federal level has led many cities and states to pass their own stimulus programs, many of which have included a state-issued stimulus check. With a December 30 deadline to use Cares Act funding, more and more may find that sending stimulus checks to residents who have been negatively impacted by Covid-19 is the most expedient use of remaining funding that also stays within strict Treasury Department guidelines.

“We are trying to open the gates and help as many people as we can, while also maintaining our fiduciary responsibility,” David Marquez, head of the economic development department in Bexar County, Texas told The Washington Post. “That is what keeps me up at night.”

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