It could lift tens of thousands of kids out of poverty, prevent dramatic service cuts on Metro, speed COVID-19  vaccine distribution, and give unemployed workers a small boost until they can find another job.

Advocates and lawmakers alike say the American Rescue Plan, the newest COVID stimulus package that the House of Representatives gave final approval to on Wednesday, could be as impactful as its $1.9 trillion price tag is big, addressing not only the widespread economic damages inflicted by the pandemic but also implementing a range of new programs to benefit low- and middle-income families and workers.

Part of that will come in direct aid to individuals, much of it in the form of aid to state and local governments, school systems and transit agencies. Many local officials say that such a large infusion of federal cash will make a splash; and they say no further proof is needed than the $2.2 trillion CARES Act passed last year, which helped sustain and in many cases saved local budgets as the country closed down.

“People are going hungry, folks are at risk of eviction, and we’re seeing businesses shut down every day. And what this package would do is provide essential stabilization dollars for families and businesses right now that make a huge investment in their lives ongoing over the next 10 years,” says Tazra Mitchell of the left-leaning D.C. Fiscal Policy Institute. “It’s a game changer and it’s going to boost our economic recovery both in the short term and long term.”

Stimulus Checks, Unemployment Benefits, Child Tax Credit

The most immediate impact will be felt in locals’ pockets in the form of $1,400 stimulus checks. The third such direct infusion of aid since the pandemic started, these checks are the largest that will have been distributed so far — though fewer people will get them.

While the first two rounds of stimulus checks went to individuals making up to $75,000 and married couples making up to $150,000 a year, the phase-out above those thresholds will be much faster this time around. More than 4 million Virginians got stimulus checks last spring, but that number is expected to drop to 3.6 million under the new bill. In Maryland, 2.8 million residents got stimulus checks last spring; 2.5 million are expected to this spring. More than 320,000 D.C. residents got stimulus checks last year, it is yet to be determined how many might get them now. Still, the overall payments for a qualifying family of four will be higher: $5,600, versus $3,400 last spring. 

Unemployed workers will see an additional impact from another extension of their benefits, which are set to expire on March 14. The stimulus bill will extend the existing federal programs that offer additional unemployment assistance and payments to gig and and independent contractors. Qualifying workers will get an extra $300 a week on top of what they get via their state program through early September. In Maryland, an estimated 300,000 workers will benefit from the extension in benefits; in Virginia, that estimate is 250,000.

Additionally, the first $10,200 in benefits will be exempt from federal taxes; unemployment benefits are already exempt from local taxes in Virginia and for some Maryland workers, and one D.C. lawmaker is hoping to do the same in the District.

Another form of direct cash assistance will come through an expanded Child Tax Credit.

The stimulus bill not only increases the existing $2,000 tax credit to $3,600 for each child under age 6 and $3,000 for kids between the ages of 6 and 17, it also makes it available to all low-income families and makes it fully refundable. That means that the bill serves to offset federal taxes a filer may owe and gives them what’s left over after the tax credit is accounted for. Additionally, the bill orders the IRS to offer the credit in monthly pre-payments starting in July.

Mitchell of the D.C. Fiscal Policy Institute says these changes “would result in historic reductions of child poverty and provide really timely income support for millions of people, including thousands of families and the District.” In D.C., 94,000 children would get more money under the program — more than three-fourths of them being Black or Latino — and 8,000 would be lifted above the poverty line.

In Virginia, an estimated 1.5 million children will benefit — and 85,000 children would be lifted above the poverty line.

“It will positively impact 1.1 million Maryland children and lift 52,000 Maryland children out of poverty,” said Sen. Chris Van Hollen (D-Md.), who called the expansion of the Child Tax Credit “a very important and historic provision.”

The American Rescue Plan also includes an expansion in assistance through the Earned Income Tax Credit for childless adults, and a more generous tax credit for child care expenses incurred by low- and middle-income families.

State And Local Aid

The stimulus bill also includes $350 billion in direct aid to state and local governments. Many elected officials in the Washington region have pushed for this money since last year to help offset not only the costs incurred by fighting the pandemic, but also the revenue losses that have followed restrictions on the economy. And unlike the CARES Act that was passed last year, this round of state and local aid will come with far fewer restrictions on what governments can spend it on.

Under the current allocation, D.C. is in line to receive $2.2 billion in total aid, with $775 million coming in the form of aid it should have received under the CARES Act but didn’t because it was designated as a territory instead of a state. (D.C.’s annual local budget is roughly $9 billion.) Maryland will get $3.8 billion in state aid, Virginia $3.7 billion. Locally, Fairfax County is in line for $222.5 million, Arlington County $45.9 million, Montgomery County $203.7 million, and Prince George’s County $176.3 million.

The money isn’t without controversy: Republicans have derided it as a bailout for Democratic jurisdictions, while some tax experts have said that it’s far too big a pot of money given that overall revenue losses in many places ended up being less severe than initially feared when the pandemic reached the region. That’s been the case in D.C. and Virginia, both of which recently reported unexpected budget surpluses.

But advocates for the aid say that even though the pandemic hasn’t decimated state and local budgets as it was once believed it could, it will impose costs that last beyond when herd immunity is achieved and economic operations are closer to what they once were.

“Even though revenue shortfalls maybe aren’t as dire as we thought they were going to be, I don’t think we fully understand what the needs are going to be over the next few years,” says David Cooper, a senior economic analyst at the left-leaning Economic Policy Institute. “We know that there are lots of people who are without jobs, who are struggling to pay their bills, to buy food, to afford rent or their mortgage. The public service needs that are going to exist over the next few years are going to be much more demanding than I think we might have anticipated at the beginning of a pandemic.”

Cooper also says places that seem OK now — like D.C. — could face challenges in the coming years, especially if office workers don’t return to the city in full force. That’s a point echoed in a new analysis by Josh Goodman of the Pew Charitable Trusts.

“Property taxes, many localities’ largest source of tax revenue, have held up reasonably well so far, in part because changes in property values won’t be reflected fully in local budgets for several years. But with declines in commercial property values possible across much of the country, some cities and counties may face depressed revenue collections for years to come,” he writes.

Money For Metro

Much like the stimulus bill is expected to provide a needed boost for state and local budgets, it’s also offering what transit officials say is another critical lifeline to bus and rail systems that have seen their riderships — and revenue — hammered during the pandemic.

The bill includes $30 billion for mass transit systems across the country. If the same formula from December’s $900 million stimulus bill is used, transit agencies in the Washington region — including Metro, MARC and VRE — stand to get a combined $1.4 billion.

That’s likely to spare WMATA dramatic cuts it says would be needed to close a $210 million budget gap for its fiscal year running from July 2021 through June 2022. The proposed cuts, which were slated to start in January, included closing Metrorail at 9 p.m., shuttering 22 stations, increase waits for trains to 30 minutes, and cutting the number of bus routes by half. The cuts were widely decried by the public during recent public hearings.

“Congress has once again stepped up to address the needs of Metro and the regional transit systems that will be critical to our region’s economic recovery,” said Metro Board of Directors Chair Paul C. Smedberg in a statement. “While it will take more time to work out all the details, including Metro’s exact share of this funding, the $1.4 billion provided by the American Recovery Plan for our region’s transit agencies will allow us to avert the painful service reductions and layoffs that were on the table.”

Metro got $877 million in the original CARES Act last May and $610 million from the December package that was meant to act as a bridge to the latest stimulus bill.

Still, the American Public Transportation Association says public transit agencies collectively will need to cover about a $39 billion budget gap through 2023. The incremental additions to the budget will eventually dry up and Metro will have to figure out how to navigate or trim its $3.6 billion budget going forward.

Metro will likely need a widespread return of peak rush hour Metrorail commuters — its largest fare revenue source — to return to keep its budget afloat. It’s unclear just how much teleworking will stick around, though many workers say they’d like to work from home at least some of the week.

Help For Restaurants, And More

Another key provision of the stimulus bill is a $25 billion pot of money for restaurants, which will be used to close the gap between revenues before and after the pandemic.

That could have a significant impact in D.C., where the city’s hospitality industry — and sales taxes — have been hit hard by the pandemic. There’s also an additional $5 billion for venues like theaters and music halls that have been forced to close due to the pandemic, and another $7.25 billion for loans under the Paycheck Protection Program.

On top of that, the American Rescue Plan includes additional funding for rental assistance, grants for schools and child care operators, and more.