Some 20 states are using budget surpluses to provide relief to residents, though some say such expenditures could continue to fuel inflation.
Key Details
- This year, several states are using a budget surplus to provide relief to their residents suffering from high inflation-driven prices.
- However, some economists worry that this attempt at relief could prolong the effects of inflation.
- Around 20 states are offering tax rebates or expanding tax credits—more than the year before.
- In some states, the relief has already been sent out, but some states will send out checks next year.
- Budget surpluses are largely due to the amount of funding states received during COVID along with increased tax revenue this year.
Why it’s news
While the state inflation relief payments are smaller than the stimulus checks distributed federally in 2020 and 2021, the total amount can still be significant in some states.
New Mexico, for example, is offering up to $1,500 in rebates and relief. Certain residents can even file their taxes late and receive benefits.
California’s relief varies depending on the resident’s income, but the “middle-class tax refund” is anywhere from $200 to $1,050. Some states are simply expanding already existing programs that give relief to low-income residents. All of the states offering rebates have different rules regulating who is eligible.
As the federal spending in 2020 and 2021 stimulate massive spending, some economists worry that these well-meaning relief efforts could increase overall spending and drive up inflation.
Additionally, states could regret spending excess funding this year if the state tax revenue declines next year.
