The State of Alaska will receive a huge influx of money from the latest federal COVID-19 relief package. Some is going straight to individuals — but it remains to be seen how state and local governments will use the almost $1.4 billion headed their way.
“Yes, it’s significant. Yes, it touches every facet of the economy,” said Mouhcine Guettabi, an associate professor of economy at the University of Alaska Anchorage. He said the money can help get Alaska back on track after the pandemic, but warns it should be taken in context.
“It doesn’t resolve Alaska’s structural problems, as big as the numbers we’re talking about,” Guettabi said. “I don’t want to say that it’s a drop in the bucket because it’s not. But Alaska is still in a tough spot.”
Let’s break the money down.
First: Direct aid. Individual payments of $1,400 are already popping up in Alaskans’ bank accounts. Alaskans who’ve filed for unemployment will also receive extra money.
Second, there’s the expanded child tax credit. It’s a substantial piece of aid, but also temporary. Qualifying families could get up to $250 a month per child from July to December 2021. Guettabi estimates at least 90,000 Alaska families are eligible.
“We’ve never had something this grand, this broad, and this targeted towards lower-income individuals in particular,” Geuttabi said. “Think about a family that has two children potentially receiving an additional $500 a month, right?”
It has the potential to lift over 12,000 Alaska kids out of poverty, according to the Center on Budget and Policy Priorities. But again, families will only get that support this year.
Third, there’s the roughly $1.4 billion state and local governments will have to spend. Guettabi puts that into perspective.
“I think the most Alaskan answer I can give you is that the PFD in a typical year is more than a billion dollars. So that’s one way of thinking about it,” Guettabi said. “The other way of thinking about it is that we have a bit more than a billion-dollar budget gap.”
Most of the $1.4 billion goes to the state. About $230 million will be at the discretion of local governments.
State economist Neal Fried with the Department of Labor said the two pandemic stimulus packages are unprecedented in his decade-spanning career. And, he said, there are some economic indicators the last stimulus bill, the 2020 CARES Act, had a positive impact.
“One sort of very dramatic thing that has happened, that’s very unusual, given the fact that we’re in this recession — you know, we lost over 20,000 jobs, lots of payroll business activity — but we look at income. Income actually grew last year, in 2020,” Fried said. “That would never happen in your typical recession. Which this, of course, is not.”
Both Guettabi and Fried said the sooner Alaskans get past COVID-19, the sooner we’ll see a meaningful shift in the economy.
The takeaway? Families and individuals should see money in their pockets between now and the end of the year. The direction the state and local governments go with their relief dollars — and how they’ll help individual Alaskans and the state’s economy in general — remains to be seen.