DENVER — President Joe Biden signed a $1.9 trillion stimulus package into law Thursday. The American Rescue Plan will result in Colorado seeing roughly $17 billion to help schools, businesses, municipalities and more. That does not include the money for the $1,400 stimulus checks low and middle income families will be receiving in coming weeks.
Here’s a look at how some of that money will be spent in the state.
When will you see that $1,400 check?
Part of the American Rescue Plan offers $1,400, one-time checks to people earning $75,000 or less per year or married couples earning $150,000 or less combined.
That threshold is lower than the previous stimulus packages, meaning fewer checks will ultimately be sent out.
If you have already filed your taxes for 2020, that is the income that will determine whether you receive a check. If you have not yet filed, your 2019 tax return will be used.
Individuals earning up to $80,000 will also see some money but not the full $1,400. So, when will those checks be sent out?
"People can expect to start seeing direct deposits hit their bank accounts as early as this weekend. This is of course just the first wave, but some people in the country will start seeing those direct deposits on their bank accounts this weekend,” said White House Press Secretary Jen Psaki.
The American Rescue plan will also extend federal unemployment funding until September 6. That funding was set to expire this weekend.
People receiving state benefits will see an extra $300 per week in payments from the federal government through the Federal Pandemic Unemployment Compensation program.
Last time around, some workers who were relying on federal unemployment aid to make ends meet had a timeframe where they weren’t receiving any payments while CDLE waited for guidance from the U.S. Department of Labor and reprogrammed their systems.
This time around, Colorado is not expecting a gap in payments for most people.
“We are grateful that Congress took the necessary steps in passing the American rescue plan before the current UI (unemployment insurance) extension programs expire, saving hundreds of thousands of Coloradans the hardship and gap in payments we saw earlier,” said Joe Barela, the executive director of the Colorado Department of Labor and Employment.
There will be a group of people – mainly people who started receiving PUA backdated to early February 2020 last year, but also a small group still waiting on the December package who mainly have out-of-state wages or were part of workshare programs – who will still have to wait for the reprogramming, said Phil Spesshardt, the acting unemployment division director for the CDLE, on Thursday.
But those people should be able to reopen their claims sometime next week, he added.
Child tax credit expansion
The federal stimulus package also expanded the Child Tax Credit from $2,000 annually to roughly $3,600 per child under the age of six and $3,000 for each child ages 6 to 17.
The tax credits will be available for families earning $75,000 or less individually, or up to $150,000 as a couple.
“The child care tax credit is going to be increased. That will go right into the hands of the families. As we said, the families are the ones that really need the help, especially the low-income families,” said Mac Clouse, a finance professor with the University of Denver Daniels College of Business.
However, Clouse points out that there was some criticism over the stimulus package for not being more targeted at low-income families, particularly when it comes to the child tax credits.
Help for cities and counties
Not all of the $17 billion Colorado is set to gain from the federal stimulus package will go straight to the state. Some of the money will be sent directly to cities and counties instead to help with their funding needs.
Kevin Bommer, the executive director of the Colorado Municipal League, says cities and counties were hit hard during the pandemic and many of them lost revenue, meaning furloughs, layoffs, cuts to services and delays to city projects.
“They weren’t able to invest in jobs and infrastructure. Well, that’s exactly what we need to do and that’s exactly what a lot of members are going to be able to do with some of these dollars, as well as restore a lot of municipal programs and services that were reduced,” Bommer said.
During the first major round of stimulus spending with the CARES Act, the law prohibited the money from being used as revenue replacement for municipalities. Instead, it was only allowed to be used for costs directly related to the COVID pandemic.
Bommer says while the money was very helpful, the stipulations did cause some complications he doesn’t believe Congress understood. This time around, he believes they got it right.
For most areas with populations of 50,000 or more, the U.S. Department of Treasury has been directed to start to send the money directly to the municipalities within 60 days of the law being enacted.
The state will be sent the money for smaller areas and has an additional 30 days to get it out the door. However, the law says the states cannot redirect the money or try to add any conditions onto it.
The money will be sent out in two tranches — one now and the other roughly a year from now.
“This is going to do exactly what proponents and sponsors intended, which is ensure that there is no dip like what we saw in the recession at the end of the 2000’s, where counties and municipalities could not get their economic engines restarted and it drug down the economy for years to follow,” Bommer said.
Small business help
Another round of Paycheck Protection Program (PPP) loans were also included in the stimulus package, offering another $7.25 billion in aid for businesses. The money is on top of the $284 billion Congress authorized from the relief act that passed last year.
“Our members who were able to get PPP loans, to a lot of them they were a lifesaver. They kept them open. They kept employees on the job,” said Tony Gagliardi, the state director of the National Federal of Independent Business.
The first time around, the PPP program received serious criticism from the business community since the money was given out quickly and banks prioritized applicants who already had lines of credit established.
This time around, Gagliardi is hoping the program will be smoother and more equitable. NFIB is even offering a free webinar for businesses to help them understand how to apply for a PPP loan on Wednesday.
“I would encourage all small business owners to start talking to your lenders now, reaching out to them and seeing what the requirements are going to be,” Gaglardi said.
He’s hoping some of the relief money the state receives will go to the Unemployment Trust Fund to backfill some of the debt so that businesses won’t see as steep of a tax increase.
“We have to do everything we can to get money back to the trust fund because we’re going to have to pay something. Unemployment taxes, we’re going to have to go up. The question is how much can we withstand,” Gagliardi said.
Colorado’s unemployment fund ran out of money in August. When insolvency happens, a tax is initiated on businesses to help shore up the fund. Gagliardi says this is something the business community simply cannot afford right now.
How to spend $2 trillion
In coming weeks and months, Colorado and states across the country will see a significant revenue stream coming in from the federal government to help spur the economic recovery.
The money is not going to solve all of the country’s problems, but it could be a big boost to families, businesses, municipalities and more.
Editor's Note: This story has been corrected to fix the last name of Kevin Bommer.