Study: Federal emergency funding boosted state income

BOISE, Idaho (KIFI/KIDK)-Idaho’s share of federal pandemic aid has effectively boosted the state’s annual personal income by at least 5.4% or an average $2,723.   The independent Idaho Center for Fiscal Policy said many Idahoans who lost their jobs or experienced cuts in hours or wages, were able to make ends meet thanks to substantial federal stimulus packages.

The Center said that as of September 21, Idaho was allocated $8.87 billion in federal aid. That includes the $1.25 billion Coronavirus Relief Fund. 

Stimulus checks, enhanced unemployment insurance and other direct aid to families totaled $2.26 billion.  The Center believes most of that money was spent in the economy to cover basic household needs.  That, then, contributed to the strength of sales tax and other state collections.

“The drop-off of federal pandemic aid early in our recovery adds a lot of uncertainty for state revenue. Policymakers would be prudent to avoid policy choices with major long-term revenue impacts, said Alejandra Cerna Rios, director of the Center. “Revenue ought to be directed to addressing pandemic-related needs and investing in economic recovery and long-term growth through support for schools, post-secondary education, transportation and other core services that benefit communities across the state.” 

The remainder of the $8.87 billion in federal aid to Idaho has come through aid to Idaho businesses - $3.3 billion in business aid through the Paycheck Protection Program and other business loans – as well as the $1.25 billion Coronavirus Relief Fund, which has been used for a wide range of initiatives in Idaho. Smaller federal initiatives such as grants to individuals, other types of loans to small businesses, grants to health care providers, support for schools and other targeted programs make up the rest.

Now that the emergency federal aid has run out, rising caseloads could put additional downward pressure on consumer spending.