While national stimulus benefits started to fade last year with the expiration of temporary federal pandemic benefit programs, a proliferation of other checks paid out at the state and local level have continued to flow largely unnoticed. Many of those continuing checks are supported by the unprecedented $350 billion in federal “state aid” provided in last year’s $1.9 trillion American Rescue Plan. But because states and localities are spending that federal money on a variety of new programs, the benefits often operate below the national media’s radar. Nonetheless, these temporary programs continue to collectively pay out billions of dollars to a wide range of recipients.

Along with record tax collections, state aid policies stemming from multiple federal pandemic relief laws have contributed to many states now “swimming in cash,” as The Wall Street Journal recently put it. In response, state and local officials have implemented an array of one-time stimulus or other short-term benefit programs designed to quickly spend those surplus funds without burdening their budgets in the long run. Such recent or proposed programs include:

• Statewide stimulus checks: California in recent weeks sent out a second round of statewide stimulus checks (dubbed “Golden State Stimulus II payments”) worth up to $1,100 to families earning less than $75,000. Recent reports suggest Governor Newsom expects that continued surpluses will result in a third round of stimulus checks this summer. Similarly, Minnesota plans to distribute “Walz checks” this year, informally named after the state’s governor. Supported by “leftover federal aid,” an estimated “2.7 million households would qualify for a total of $700 million in one-time payments.”
• UBI for families: A multitude of UBI programs now operate in cities around the country, often supported by federal stimulus funds. For example, Minneapolis will soon start a guaranteed basic income pilot program providing 200 low-income families $500 per month for two years, using “$3 million of American Rescue Plan Act funds.”
• UBI for college students: California State Senator Dave Cortese has proposed a one-year program providing monthly UBI for college students in his state, offering benefits totaling as much as $84 million to as many as 14,000 students. Looking to the future, the legislator notes “The idea . . . is to make guaranteed income stipends permanent.”
• Stimulus checks for medical students: In December, 750 students at Morehouse School of Medicine in Atlanta received a “surprise holiday stimulus payment of $6,300.” The funding comes from the March 2020 CARES Act along with the American Rescue Plan, according to the Atlanta Journal-Constitution, which adds that “colleges and local governments have occasionally found themselves scrambling to find ways to spend CARES Act funds.”
• Unemployment checks for illegal aliens: New York state lawmakers used over $2 billion in federal aid from the March 2021 American Rescue Plan to create an “excluded workers fund.” The liberal Fiscal Policy Institute estimated that program would support 290,000 undocumented individuals across New York. That includes 90,000 who could document their unemployment and collect $15,600 in a lump sum payment, plus another 200,000 who would receive payments of $3,200 if they “can prove at least their residency and identity.” The program has stopped accepting applications, as “all funds have been allocated.”
• Bonuses and higher pay for state and other frontline workers: Kentucky Governor Andy Beshear has proposed “giving all state employees a 5% raise and spending $400 million on what he called ‘hero’ bonuses for essential workers such as nurses, grocery store clerks and bus drivers.” Meanwhile Georgia Governor Brian Kemp “has proposed $5,000 pay raises for state employees, including law enforcement, and $2,000 raises for teachers.”

The list above barely scratches the surface of the state and local efforts under way to redistribute this federal cash, which admittedly pales in comparison to the trillions of federal dollars spent since the pandemic began. Nonetheless, governors and other state and local politicians on both sides of the aisle enjoy political benefits in handing out this cash courtesy of “massive aid packages from Washington.” And don’t expect the legacy of these state and local programs to expire when their temporary benefits inevitably end. That will simply mark the point when their supporters begin to argue that new permanent national programs — supported directly by federal taxpayers — must be created in their wake.

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