For a year, a local family crammed into hotel rooms with three kids, wondering how they were going to keep paying for that and save for a place of their own.
Now, due to a recently approved federal relief package that includes one-time stimulus payments and monthly child tax credits, that family says they are hopeful they will be able to catch up on bills and move into a house with a yard.
Within the $1.9 trillion coronavirus relief package passed by the House and Senate and signed by President Joe Biden last week are several types of aid meant to enable Americans to recover from the COVID-19 pandemic, but particularly those living in poverty like LeAnn Hughes and her partner Taylor Pavey.
<strong>What families get</strong>
Some of the most impactful aid will be directed to low- to moderate-income families by way of one-time and monthly stimulus payments.
A one-time check of up to $1,400 for U.S. adults has already been released to millions of Americans. The checks are available to all adults who earn up to $75,000, or married couples who earn up to $150,000. Adults who make more than $80,000 or married couples who earn more than $160,000 are eligible for a lesser amount or no money, depending on how much they earn.
A one-year change to how the Child Tax Credit is distributed will also provide millions of U.S. families with monthly payments of $250 to $300 per child.
The tax credit is currently available to families as an annual tax deduction of up to $2,000 per child paid all at once with federal tax refunds.
The temporary change for 2021 taxes would increase the amount of money the tax credit is worth and split up the payments throughout the year. The credit this year will be $3,600 per child under 6 years old, and $3,000 for children age 7 to 17.
The additional tax credit will start phasing out for single parents who make $112,500, and for married couples who make $150,000. The wealthiest individuals would not see an increase above $2,000.
The median annual income for Johnson County families is about $74,400, so most families in the county will receive both payments.
Both payments together are expected to benefit two-thirds of American children and provide a life-line to the poorest families, who do not qualify for the full tax credit under current tax law, according to Columbia University’s Center for Poverty and Social Policy.
Of the $99.7 billion per year cost to expand the tax credit, about 60% would be sent to families making under $50,000, 22% to families earning $50,000 to $100,000, and the remainder to higher-income families, the center finds.
<strong>Fitting the bill</strong>
For low-income families, such as those served by KIC-IT, a Franklin-based nonprofit that helps homeless youth, the payments could mean they are better able to finally move into a place of their own, said Katie Sparks, executive director.
“This would be a game-changer for many of our clients with families,” Sparks said. “Having the additional income to offset monthly expenses would allow families a cushion to make ends meet and increase opportunities to better provide for themselves and their children.”
The lack of low-income housing, supportive and transitional housing in Johnson County forces some low-income families to live in hotel rooms because they do not have any extra money to set aside for a security deposit on an apartment or rental, Sparks said.
“The reality is that clients who live in a hotel pay $1,200-$1,500 a month — on low- (and) minimum-wage jobs. The cycle is hard to break when they are barely making ends meet,” Sparks said. “Being able to receive ongoing assistance in the form of a child allowance, instead of (just) a tax credit, not only saves money but provides opportunities for families to improve their circumstances.”
Hughes and Pavey fit the bill. The KIC-IT clients recently moved into a Franklin apartment after living in hotels for a year, with help from the organization.
Pavey has a job, but with just one income right now, things are still hard. The extra money will take some pressure off the family, Hughes said. They plan to make sure their bills are covered, their children’s needs are met and they can save for a security deposit on a rental home with a yard.
“It is going to be very helpful. It will help us with getting everything situated, paying our bills so we don’t end up losing our place,” Hughes said. “We want to make sure that the girls have everything they need.”
<strong>Breaking down need</strong>
It is estimated that the expansion of the Child Tax Credit will equal roughly $100 billion per year, while future benefits for society will equal roughly $810 billion — more than eight times the initial cost, according to a cost-benefit analysis from the Center for Poverty and Social Policy. The benefits to society would be realized through children having better access to basic necessities, and by reducing stress-induced health problems for parents, the analysis concluded.
The package also includes a $300-per-week unemployment boost through Sept. 6, $350 billion for state and local governments, $130 billion for K-12 schools, $50 billion for COVID-19 testing, $40 billion for pandemic-related expenses at higher education institutions, $30 billion to curb homelessness and provide mortgage and rent assistance, $28.6 billion to create a new relief program specifically for bars and restaurants, $15 billion for vaccine distribution, $7.25 billion for the Paycheck Protection Program and $3 billion to help states curb mental health and substance use disorders.
Many of the programs will have benefits for the local economy that could, as Biden hopes, create an even recovery, said Christian Maslowski, Aspire Johnson County president and CEO.
Business aid, along with the extra money for families, is likely to boost the local economy if residents shop local with their checks, Maslowski said.
Stimulus data suggests the lowest-income individuals immediately use that money for bills, car repairs, daily necessities or health care, he said. While middle and higher earners are more likely to spend the money on experiences and goods.
Both the payments and stimulus package are controversial. The stimulus package passed along party lines in both the U.S. Senate and House of Representatives. Both Indiana senators and all Hoosier Republicans in the House voted against the package, while the two House Democrats voted in favor of it.
Though the bill passed along party lines, popular support for the bill crosses party lines. A poll from the Pew Research Center, conducted during the first week of March shows about 70% of adults support the bill. However, only 41% percent of Republican and Republican-leaning independents back the package, compared with 94% of Democrats.
Hoosier Republicans, such as local Rep. Trey Hollingsworth, believe the bill does not allocate money to the right places to ensure recovery from the pandemic.
Hollingsworth said he would instead like to see money allocated to getting back to normalcy, by focusing on creating new jobs or sending kids back to school in person. He also said there is no need for bill like this, because there are millions of unspent dollars in previous COVID-19 relief packages for many of the same programs that are funded with this aid package.
But “need” is subjective, Maslowski said. Even as businesses and county residents are starting to see the end of the pandemic, both are still struggling, he said.
“‘Do we need it is subjective,” Maslowski said. “If you are a small business owner or if you are in an industry that has been rocked by the pandemic, your answer is going to be ‘yes.’ If you are unemployed or if your personal budget was decimated, the answer is ‘yes.’ There are people who are in a deep hole financially.”
