Commentary, COVID-19, NC Budget and Tax Center

North Carolina’s first legislative response will fall short of meeting even immediate needs

The North Carolina General Assembly is scheduled to reconvene for the short session tomorrow.  All indications from legislative leadership suggest that this session will only last a few days and be limited to those items that have bipartisan support and require immediate action to move resources.

The General Assembly will likely reconvene in July or August to consider a fuller scope of proposals to address outstanding needs. That means there will be no full and transparent accounting through a revised budget document for a second year in a row. State agencies will have continued uncertainty at a time when they need to rapidly build infrastructure and adapt to address the surge in demand for public services.

It appears as if the state will not deploy the full complement of federal and state funds in a timely manner — namely the unappropriated balance from last year’s underinvest in public infrastructure, which is available now and needed to protect people from the worst public health threats and long-term economic harms.

Draft bills and summaries that the General Assembly will consider during the short session this week have been released by the House Select Committee on COVID-19. On Friday, the Governor put forward a budget proposal that would allocate $1.4 billion to meet needs identified in the House bills, including drawing down the Rainy Day Fund to stabilize the state’s current year budget that will be impacted by delays in revenue collections.

Given the urgent needs evidenced by the continued transmission of the coronavirus, the health risks faced by essential workers, and the historic scale of loss of work and wages, advancing community well-being in this moment requires bolder proposals.

Other states have done more to move swiftly and comprehensively make policy changes that meet the immediate health and employment issues brought on by COVID-19 and contain the ripple effects into education, environmental, consumer protections, justice, and public safety.  These states have more quickly been able to identify the gaps in federal programs and filled those gaps with policy action and state dollars.

Here are 6 urgent community needs that legislators must address now to ensure a quick recovery from the public health and economic crisis.

  1. Connect more North Carolinians to cash assistance: Direct cash transfers are one of the best ways to weather this crisis and speed the recovery. Unfortunately, the Economic Impact Payments provided by the federal CARES Act left too many people behind and access to automatic payments will be more difficult for those who are homeless, unbanked, and those who haven’t filed a tax return if the state doesn’t develop an outreach plan and support the trusted infrastructure to reach these groups. As states across the country are doing, North Carolina could also move to create an emergency cash assistance program to reach those left out of the federal program and at the same time move to increase its cash assistance levels to meet the standard of at least 50 percent of Fair Market Rent.
  2. Hazard pay for essential workers who earn low wages: Too many of the workers who can’t work from home but are delivering essential services are paid wages that don’t allow them to make ends meet.  Across public sector jobs and many private sector ones, too, the failure to establish competitive wages is harming frontline workers. To ensure people are not just a paycheck away from ruin, all frontline and essential workers should be earning a living wage — especially for those currently earning less than $15 an hour.
  3. Housing to support stay at home orders and prevent long-term instability: In order to stay at home, people must have a home to stay in. For North Carolina to benefit from more than $72 million in federal housing dollars, the General Assembly must allocate these funds to communities with the greatest need and agencies with the greatest capacity. Legislation being proposed should build the infrastructure that is needed to maximize the use federal funding and provide direct rental assistance to protect families at risk of homelessness.
  4. Child-care support to the essential work of caring for our state’s youngest children: One-third of child-care providers have stated that, without public investments, even short-term closures — and the revenue losses associated — would make it difficult for them to re-open.  Given the high level of child-care deserts already in the state, North Carolina runs the risk of making worse the lack of access to quality child care in communities across the state. At the same time, parents who receive child-care assistance will still be asked to pay a co-payment in June, and child-care workers are not receiving pay that recognizes the risks they face as they go to work.
  5. Small business supports that addresses barriers for the underbanked and Historically Underutilized Businesses: The General Assembly will consider expanding the Golden Leaf Foundation bridge loan program, but this program would simply layer on top of the federal program rather than fill the gaps. By failing to consider alternatives like a paycheck guarantee program, working to remove the barriers to access financial institutions faced by Black-owned and immigrant-owned businesses, and the unique financial needs facing important businesses like our childchild-care providers, North Carolina misses opportunities to stabilize employment and sustain small businesses that provide essential services during this time of turmoil.
  6. Protect the vote and prevent disenfranchisement on Election Day: North Carolina is not prepared to operate free, fair, and secure elections under social distancing guidelines. In a letter to leadership, Karen Brinson Bell, Executive Director of the North Carolina State Board of Elections (SBOE), made several legislative requests, including $2 million in state funding to unlock more than $10 million federal dollars to offset new and increased costs to counties. If the General Assembly fails to appropriate these funds, counties may not be able to meet the increased demand for absentee-by-mail ballots (expected to increase from 4-5% to 30-40%) or operate sanitary polling places, which will likely further disenfranchise voter voters and put more people at risk of contracting and spreading COVID-19.

Just as our country should not have waited to respond to the threat of COVID-19, the General Assembly cannot wait to put forward a more comprehensive plan to address immediate public health threats and prevent prolonged economic hardship. North Carolina has the capacity to fill the gaps left by federal relief packages. Maximizing federal dollars now will help save lives today and prevent more costly outcomes in the future. Failing to do so will continue to put us all at risk.

Leila Pedersen is a Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center.

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