Latest federal stimulus package will pump more than $8 billion into Utah’s economy

Nearly half of that comes from direct stimulus payments to Utahns.

(Sydnee Gonzalez | Tribune file photo) This Nov. 2, 2020, file photo shows the U.S. Capitol Building. The Utah Legislature received a new analysis that estimates the state will receive more than $8 billion from the latest COVID-19 relief package -- the biggest portion of it in $1,400 direct checks to residents.

Nearly $8.4 billion in federal funds is headed to Utah as part of the recent COVID-19 relief package passed by Congress earlier this month according to a preliminary analysis provided to Utah lawmakers.

“It’s crazy how much money is coming into the state,” says Rep. Jefferson Moss, R-Saratoga Springs. “Just insane.”

The centerpiece of the $1.9 trillion American Rescue Plan bill is the $1,400 direct payments to many Americans. The report from the office of the legislative fiscal analyst concludes those stimulus checks to Utahns will total nearly $3.8 billion, which is the largest chunk of the cash making its way to the state. The issue brief concludes 87% of households in Utah — nearly 1.2 million households in all — will see some benefit from those stimulus payments.

Last year, federal stimulus spending supercharged Utah’s economy and gave lawmakers an unexpected budget boost of just over $1.4 billion in extra tax revenue. Legislators were worried the federal money would amount to a temporary sugar high for the economy, which means lots of that cash might not be available in the future. As a result, they converted $500 million of the surplus to one-time rather than ongoing revenue so they don’t build money into programs that could disappear. Putting nearly $4 billion in the pockets of residents over the next few months could cause another, similar financial bonanza.

“The last round of stimulus, we saw people out spending. They were paying bills, they were putting that money into the economy,” says Moss, who is the House chair of the Legislature’s top budget committee.

Derek Miller, CEO of the Salt Lake Chamber, agrees the biggest impact will be billions of dollars coming into the economy over the next month or two because of those direct payments.

“I was thinking the other day about how after the 9/11 terrorist attacks, the economy started grinding to a halt,” remembers Miller. “President George W. Bush told Americans to go out and spend some money, to go buy a DVD player. This time around, not only is the government saying go out and buy, but they’re giving us the money to do it, too.”

Utah’s economy is already roaring, with unemployment at near pre-pandemic levels. The state’s 3% jobless rate recorded in February is far below the national rate of 6.2% and among the lowest in the nation. Forecasters say Utah’s economy is growing, with an expected increase in GDP this year of more than 6%.

Another big part of the stimulus package increases the per-child tax credit from $2,000 per year to $3,000 and makes it fully refundable so more families can take advantage. The credit increases to $3,600 for each child under 6. The analysis estimates 45% of Utah households will benefit from the expanded credit. The analysis estimates that could mean another $1.2 billion for Utah families next year. That’s outside of the $8.4 billion in direct payments coming to the state.

The relief package extends expanded unemployment benefits for Utahns, providing an additional $300 per week through September. There are also some low-income subsidies to cover health insurance premiums. There’s more, too, for rental assistance, plus subsidies for child care.

Analysts estimate more than $615.5 million from this stimulus will go to Utah’s public schools, with $9 of every $10 going to local education entities. Of that local money, 20% must be used to help students recover from learning loss due to remote learning. That was a point of contention during the just-completed legislative session, where lawmakers added a requirement to the public education budget that $274 million in federal money from the last round of COVID funding for Utah’s schools be used to help students catch up. This time around, a minimum of $110 million will go to learning loss, meaning more than a a third of a billion dollars for that purpose.

The remaining funds from this bill may be used for upgrading ventilation systems in schools, reducing class sizes, or paying for PPE or support staff. Local education agencies are required to create and publish a plan to return to in-person classes within 30 days of receiving the money.

Higher education institutions are set to receive a little more than $500 million from the stimulus. At least half of that must be spent on emergency financial aid grants paid directly to students.

Local governments in Utah are in line to receive $1.1 billion from the relief package. Salt Lake County, the most populous, will get the lion’s share of the cash, an estimated $225 million. Salt Lake City should reel in nearly $87.5 million. West Valley City and Ogden are slated to see more than $25 million each in relief funds.

Utah County government will get $123 million and Davis County is in line for $68.9 million. Local governments can use the cash for the same purposes as the state. The funds are expected to be released in two waves, with the first coming within 60 days and the second 12 months later.

In addition to those local funds, the state is in line to receive an additional $1.5 billion in federal aid, that can be used in a myriad of ways, including investing in capital projects, such as roads, bridges and waterworks.

Moss says the amount of cash the federal government is giving to the state presents a tricky situation for lawmakers as they will have to figure out the best way to spend it.

“What do we do? We have to make sure to do things that are meaningful for the state,” he says, noting that there’s an opportunity to make long-term investments in rural broadband, or water projects.

“We have such a fast-growing state, most of the problems on the horizon have to do with population growth,” agrees Miller. “If we use that money to invest in the state’s future, that would be a very wise move.”

Before any of those funds get spent, the Legislature has to hold a special session to formally accept the money. Moss says he expects that to happen sometime in April or May.