Of the $1.9 trillion coming to the American people from the American Rescue Plan passed by Congress and signed into law by President Joe Biden last month, $84 million is estimated to be headed to Monterey County, with millions more going to cities to subsidize pandemic losses.
That’s just the start. With money headed directly into the bank accounts of individuals, the final total benefit to the county’s economy will be much greater. According to the staff of U.S. Rep. Jimmy Panetta, D-Carmel Valley, it’s too early to know what that total dollar figure will be.
But we do know the impact of direct payments and increased benefits to struggling Monterey County families will be profound, especially for children in families living at or below the poverty line. The Center on Poverty and Social Policy at Columbia University estimates that the plan could reduce poverty by as much as 45 percent for all the nation’s children under the age of 18. It estimates 45 percent of Latino children will see a reduction in poverty, with Black and Native American children seeing decreases of 52 and 61.5 percent, respectively.
The money headed directly to families likely won’t stay in pockets for long, with recipients expected to spend it on housing, food, child care, medical expenses and other necessities. The money in turn is expected to flow into the local economy and fuel job creation. A 2019 study by the U.S. Department of Agriculture found that every dollar spent in the Supplemental Nutrition Assistance Program – or SNAP, formerly known as food stamps and called CalFresh in California – when the economy is weak and unemployment is high increases the gross domestic product by $1.54.
In Monterey County, 42,513 people receive CalFresh benefits, a number set to increase by 15 percent under the ARP. The USDA estimates that on average it will mean $28 per person per month, or $1,000 for a family of four. That’s possibly more than $1 million that will be spent at big-box stores, supermarkets and farmers markets in coming months. For those receiving WIC benefits (for women, infants and children), it could mean nearly $600,000 coming into the county.
Already the American Rescue Plan has resulted in an immediate disbursement of more than $90 million economic impact payments nationally, and counting.
The financial benefit to families goes even further. Here’s a breakdown of what families and Monterey County can expect under the ARP.
Child Tax Credit
One of the sweeping changes meant to decrease childhood poverty as well as help middle-income families is the increase in the child tax credit for the 2021 tax year. But unlike traditional tax credits, the cash is coming directly to families’ bank accounts this year. Those eligible will receive advance payments periodically from July 1 to Dec. 31.
The Internal Revenue Service will set up an online portal for taxpayers to update their data, which means children born in 2021 may be included.
- The credit has been increased from $2,000 to $3,600 for children under age 6 and up to $3,000 for children under age 18.
- Previously, a child tax credit could be claimed only for children 16 years old and younger; 17-year-olds are also included under ARP.
- The credit is fully refundable, which means low-income households will receive the full amount even if they don’t owe any taxes.
Child and Dependent Care Tax Credit
The child and dependent care tax credit has more than doubled under the ARP for the purpose of helping parents with the cost of child care.
- Previously the limit for child care expenses was $3,000 for one child who qualified, or $6,000 for more than one child. The new limit is $8,000 for one child and $16,000 for more than one child.
- The credit is based on 50 percent of the expense amount for those with an adjusted gross income of less than $125,000, with the credit max at $4,000 for one child and $8,000 for more than one child.
- Like the child tax credit, this credit is also fully refundable, which means low-income households will receive the full amount even if they don’t owe any taxes.
Economic Impact Payments
These checks or direct deposits have exceeded $90 million already, and the total is expected to reach $242 billion by the time all payments are made, according to the U.S. Department of the Treasury.
- Qualifying taxpayers receive $1,400 for an individual, or $2,800 for a married couple.
- Families also receive $1,400 for each dependent claimed on tax returns – not just those under age 17.
- If you are looking for the status of your direct payment, visit irs.gov/coronavirus/get-my-payment.
The ARP gives authorization for a temporary boost through September in both SNAP benefits and the Supplemental Nutrition Assistance Program for Women, Infants and Children, known as WIC.
- SNAP is being increased by 15 percent, which will mean on average about $28 more per person per month, or more than $1,000 per month for a family of four, according to the USDA.
- For WIC, the amount recipients spend on fresh fruits and vegetables is being increased from $9 to $35 a month.
- Individuals on unemployment are slated to receive an additional $300 a week through Sept. 6.
- The plan sends aid to cities recovering from pandemic losses. Salinas is receiving $50.5 million based on its population; Monterey is receiving $6.5 million; smaller cities will receive between $75,000-$4.9 million. Half the money comes this year, the other half next year.
- Monterey County government is receiving $84 million to be used on pandemic response, investing in infrastructure and providing premium pay to eligible employees doing essential work during the pandemic.
- The Health Department Clinic Services (an agency within county government) will receive $7.3 million from the American Rescue Act Funding for Health Centers.