Many states reaped benefits from federal coronavirus pandemic aid, but that well is now drying up.
Dustin Pugel, policy director at the left-leaning Kentucky Center for Economic Policy, said with inflation up and wages stagnant, there isn't enough assistance coming from state to fill the gap.
WFPL's Divya Karthikeyan spoke with Pugel for his take on the new economic data. A version of their conversation, edited for length and clarity, is below.
What is the story that the 2022 census data is telling you about poverty, about inequality in Kentucky?
Interestingly, there was not much of a difference between 2021 and 2022. Most of the data showed a statistically insignificant change from year to year. And in some cases, that's good: We had a really low uninsured rate to begin with, so you want to make sure that stays low. And in some cases, that was bad. We have a really persistently high poverty rate of 16.5%, about one in six Kentuckians, and that stayed flat year over year.
Two data points here show Kentucky has a sixth highest poverty rate in the country and the seventh highest child poverty rate among states. And there's this ongoing conversation around child tax credit and how much of a boon it was to states. How was the child tax credit really helping with mitigating our poverty rates, especially child poverty?
There are nearly a million children in Kentucky, out of 4.5 million Kentuckians total. Those children's families were receiving direct checks from the federal government, hundreds of dollars worth and, in some cases, thousands, depending on how many kids were in the household. So it really was a game-changer in the well-being of children in the state. And this was all federal money too, that was an incredible boon to children and to the state and to our economy. But when that went away, essentially folks had to fall back on what was already comparatively low wages.
One silver lining: it seems is we really made progress in terms of expanding health coverage in Kentucky.
One of the reasons why we're doing so well is because we expanded Medicaid back in 2014. And we've continued to have expanded Medicaid without barriers. And, during the pandemic, there was a requirement from the federal government that states not take people off of their Medicaid coverage unless they passed away, moved out of state or explicitly asked to be removed. And the state is beginning now to redetermine whether folks are eligible or not. We are at a sort of precarious position right now where these amazing gains that we've made over the last several years are really at risk.
Now that federal pandemic aid to states is drying up, the pandemic state of emergency has ended and states are trying to figure out how to fill that gap while also enjoying budget surpluses from the federal pandemic aid. What should we do moving forward? What do states need to do right now?
I think what we can do is look back on the last several years and learn those lessons. I mean, we really saw a proof of concept for what a robust and effective set of supports for children and families can look like. I think Kentucky can't necessarily provide those supports at the same level as the federal government. So when we're talking about people at the very, very bottom, it's a child tax credit that would really be beneficial. And unfortunately, continuing to cut the income tax reduces our ability or sort of financial headroom to be able to provide something like that.
