The state’s political leaders who are cutting off federal coronavirus-related federal unemployment benefits could provide needy Mississippians cash assistance through another federal program.
Apparently, a portion of the $1.8 billion the state is receiving from the American Rescue Plan, signed into law earlier this year by President Joe Biden, could be paid to Mississippians in direct payments.
The law provides for “direct assistance to households and populations facing negative economic impacts due to COVID-19.”
The payments would be similar to the federal benefits sent out over the past year. Those federal checks have totaled $3,200 for most Mississippians. U.S. Treasury Department regulations, released last week, specified that the cash payments could not be significantly larger than the checks sent out by the federal government, but with more limitations to narrowly target those who need help the most. The language in the law appears to allow benefits to be paid to the families of people who died from COVID-19.
The Legislature cannot use the $1.8 billion in federal funds for recurring expenses, such as for pay raises, since the money must be spent by the end of 2024. And the funds are not needed to fill budget shortfalls caused by a decline in tax collections, as some states have experienced, because of COVID-19. With two months left in the fiscal year, Mississippi has a surplus of $804 million.
Presumably, the Mississippi Legislature could craft a program to provide the cash assistance to the needy during the 2022 session that begins in January. Of course, Gov. Tate Reeves could call a special session to immediately consider the program.
Just last week Reeves, after strong urging from state House Speaker Philip Gunn, opted out of a federal program that provides unemployed Mississippians an additional $300 weekly in jobless benefits, thanks to the American Rescue Plan. The federal assistance is in addition to the normal state unemployment benefit of up to $235 per week.
Gunn wrote in a letter to Reeves that businesses “are suffering from a labor shortage caused by unemployment benefits that exceed normal wage levels for productive work.”
When asked about the issue of the enhanced federal unemployment benefits last May as the pandemic intensified, former state Economist Darrin Webb pointed out, “They (unemployed Mississippians) do want to work, but they also respond to market forces.”
Rep. Robert Johnson, D-Natchez, the House minority leader, argued that before eliminating the federal unemployment benefits, the state should look to raise the $7.25 per hour minimum wage as an incentive to encourage more people to want to work.
The issue of the level of federal assistance is being debated against the backdrop of Mississippi having the nation’s lowest per capita income. And Mississippi does perhaps less to help its low wage earners than any state in the nation.
Mississippi is one of 12 states that have not expanded Medicaid to provide health care coverage to primarily the working poor.
Until this past session, Mississippi provided the lowest cash assistance in the nation to poor children through the Temporary Assistance for Needy Children Program even though the benefits are paid with federal not state funds. This past session the Mississippi Legislature agreed to increase those federal funds $90 per month for a family of three to $260 per month, meaning while still low nationally, it is not the lowest.
Mississippi is among the 20 states that have not increased the minimum wage above the federally mandated base level of $7.25 per hour, according to the National Conference of State Legislatures.
The maximum compensation paid by the state to workers who lose their job through no fault of their own also is the lowest in the nation at $235 per week.
And to top it off, Mississippi has one of the nation’s most regressive tax structures.
“The lower and middle individuals share a greater burden than the state’s wealthiest,” Kyra Roby, a policy analyst for One Voice that advocates for Mississippi’s poor and working families, recently said while explaining Mississippi’s regressive tax structure.
For instance, those earning less than $16,100 pay 10.2% of their income on state and local taxes, primarily because of Mississippi’s high sales tax rate, which includes the 7% tax on groceries. Those in the middle — earning between $43,000 and $77,500 pay — pay 9.2% of their income on state and local taxes, while those earning more than $162,200 pay 6.5% of their income on state and local taxes, a study by the Institute on Taxation and Economic Policy says.
Tax plans offered by both Reeves and Gunn would further lessen the tax burden on the wealthy.
This past year, the Mississippi Legislature and the governor offered federal coronavirus-relief funds to many Mississippi businesses, which indeed did face hardships because of the pandemic.
Many of Mississippi’s lower-income residents face similar hardships all the time.