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NH News

What Could The COVID Stimulus Bill Mean For N.H.?

Vaccine line at Plymouth, N.H.
Sarah Gibson / NHPR
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President Joe Biden signed an almost $2 trillion COVID-19 relief bill on Thursday. Now, what does that mean for New Hampshire?

Morning Edition host Rick Ganley spoke with Phil Sletten, a senior policy analyst with the New Hampshire Fiscal Policy Institute, about how this relief money will have an effect on the state.

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Rick Ganley: I want to ask you first and foremost, and I think this is getting the most play in the media, the child tax benefit for families and this new benefit. What do we know about how many families are going to qualify for this benefit? And, you know, what's the possible impact here in New Hampshire?

Phil Sletten: Yeah, so the national numbers I've heard is that it's the vast majority of families, a large percentage of households that have children. Of course, not every household has children, but for those that do, it's a relatively high income limit. It would encompass most households in New Hampshire and most around the country. And the really interesting thing about the child tax credit, because I should say there are two components. There is the economic impact payments, the $1,400 checks, which will include checks for qualifying dependents such as children. So there's that one time infusion.

But then later, perhaps starting in July, from what I understand, the child tax credit is expanded, the amount is expanded and it becomes fully refundable, which means that will include more families with very low incomes who previously weren't qualifying for all of the tax credit. And while there's still details to work out, it would be paid differently in that it might be distributed on a perhaps monthly basis. It's a very significant change in terms of how that aid is distributed.

Rick Ganley: But this would be a temporary benefit, no?

Phil Sletten: Yes, it would be a temporary benefit at this point under the American Rescue Plan. There's a lot of components that are temporary, a lot of extensions of either existing benefits or implementations of new ones that are time limited, and this is one of them.

Rick Ganley: These are popular things, these direct payments. How much do they really stimulate spending in a local economy?

Phil Sletten: They're probably a little bit less stimulative than some other things, for example, that are in the American Rescue Plan, such as the expanded unemployment benefits, the additional $300 a week expanded food assistance through the Supplemental Nutrition Assistance Program, extending that 15 percent increase to September of this year. Those are probably a little bit more stimulative because they're targeted at people with both lower incomes and people who had income previously from employment that then don't have it when they lose their their job and then receive unemployment compensation.

However, we've seen the economic stimulus already a little bit in New Hampshire. After the CARES Act passed in March of 2020, at least at the national level, there are monthly estimates of poverty. And we saw that even though a lot of people were losing employment, estimated monthly poverty rates actually went down for a fair bit of time in the summer when those expanded unemployment compensation benefits and the economic impact payments went out to folks in the economy.

In New Hampshire, unfortunately, we don't have monthly poverty estimates, but we do know that Medicaid enrollment has expanded. And we know from surveys that have been conducted by the US Census Bureau on a more frequent basis during the pandemic. We know that in early December, about one in three households in New Hampshire identified that it was somewhat or very difficult to pay for usual household expenses in the prior seven days.

And after the federal relief passed in late December, which included a $600 economic impact payment, that percentage in January then fell to one in four, roughly one in four households that had somewhat or very difficult time meeting those expenses. So obviously, one in four is still a large number, but that decrease likely had something to do with both that economic impact payment and those expanded unemployment benefits that we saw that passed in late December. That's New Hampshire specific data that gives us a little bit of insight.

Rick Ganley: While we're on unemployment, which sectors of the economy here in the Granite State are still struggling as we start to see the end for the pandemic?

Phil Sletten: Yeah, so I would say that especially low wage sectors, particularly accommodation and food services, which is a really, actually, a fairly significant employment sector in the state. It's among the larger employment sectors. Retail and health and social assistance are the two largest employment sectors in the state. But accommodation and food services isn't far behind. That is one where we've seen the most applications for unemployment compensation. And it's one of the ones that really depends on what happens with vaccine rollouts, what happens with people's ability to get back to engage in the economy safely in ways that they did prior to the pandemic.

The sectors that have the most difficulty working from home, if you will, or being able to do the work remotely and involve a lot of interaction with people, are still the ones where we've seen a fair bit of lagging. While a lot of jobs have come back in New Hampshire, there's still a fair bit of recovery to go to get to the point where we would have been if the pandemic hadn't happened.

Rick Ganley: Phil, what does this rescue plan doing for local government?

Phil Sletten: So it's not quite clear yet, but there is aid for state and local governments specifically in this relief package. One thing that I'll note that's different from what we saw in the CARES Act back in March of last year, the relief that was provided there was to be used only for COVID-19 related expenses and couldn't be used, by and large, to offset revenue shortfalls. And also the formula was a little bit different. So in New Hampshire, because we didn't have local governments that had high enough populations to meet the thresholds, the 500,000-person threshold, all of the resources went to the state and then the state deployed them.

Here the formulas are a little bit different. And we know that New Hampshire as a state government is going to receive at least $500 million, likely significantly more. There are guidelines around those uses. There are restrictions on them, but it's relatively flexible and can be used to offset budget shortfalls. So to the extent that that aid reaches local governments in New Hampshire, that could be used to offset, for example, if property taxes don't come in as strongly because people have been unemployed for some period of time and haven't been able to pay property taxes. Those dollars can be used for that as well as COVID-19 related expenses and economic relief.

So we don't know exactly how many dollars are going to be coming to local governments versus the state government at this point in New Hampshire. But it's far more likely from this package that a local government will see aid from the federal government than it was in the last package where the $1.25 billion went directly to the state because of the way the formula was built.