What happens when the federal money runs out?
(The Center Square) – About 180,000 people applied for the Los Angeles County guaranteed-income program in the spring of 2022. But there were just 1,000 spots available.
It was a sign of high demand for the $1,000-a-month no-strings-attached stipend from the government.
New guaranteed income programs are popping up across the country as governments are using the stockpile of federal COVID-19 emergency money to fund them.
Mayors For A Guaranteed Income is a collection of mayors from some of the largest cities in the country orchestrating the long-term development of guaranteed income plans.
The city of St. Louis approved spending $5 million of its federal COVID-19 recovery money on Dec. 13 to pay for its guaranteed income program that will give 440 households $500 a month for 18 months.
But what happens to these projects once the one-time federal emergency funds from the COVID-19 pandemic response dry up?
“It seems highly unlikely that these programs could be funded absent either a dramatic shift in funding from existing anti-poverty programs or a huge, permanent increase in federal spending,” said Kyle Wingfield, CEO of the Georgia Public Policy Foundation. “A shift is pretty improbable in the current political climate. Given that Congress is already borrowing at a large scale to pay for other programs, this increase would lead to more federal taxpayer debt.”
The national deficit was $336.4 billion for fiscal year 2023, according to the U.S. Treasury.
Veronique de Rugy, the George Gibbs Chair in Political Economy at the Mercatus Center, said states would likely have to help fund these programs moving forward, as federal money begins to run out.
“When the money is gone, state budgets will have to pick up the tab,” Ms. de Rugy said in an email. “I assume that when COVID money is gone, some states will give up the programs while others will keep them going.”
Other guaranteed income programs are already funded by cities, states, or private foundations. LA County’s program is funded by the government and philanthropic organizations.
The city of San Francisco announced on Dec. 6 that it received a $5 million grant from the state to expand its guaranteed income program for pregnant Black women. That $5 million will pay an additional 425 mothers $1,000 a month for 12 months. The initial program had 150 recipients.
The city of Providence’s guaranteed income program serves 110 households and the participants, on average, had an income of about $13,100 a year. Those recipients will receive $500 a month for 18 months. The Providence program, and is funded entirely by private money and costs $990,000.