Commentary, NC Budget and Tax Center

As the General Assembly adjourns, it leaves money on the table while needs go unmet

Now that the General Assembly is on the brink of adjournment, we have a clearer picture of which federal funds have been appropriated and how many dollars remain.

Prior to the June session, legislators appropriated $1.6 billion, or 44%, of the state’s Coronavirus Relief Fund (CRF), the largest pot of money the state received from the federal government through the CARES Act.

The legislature is scheduled to adjourn this Saturday, July 11, having now appropriated additional CRF dollars.

On closer examination of the bills passed by the General Assembly — some enacted in the early morning hours of June 26 — many of the appropriations are not allowable under the U.S. Treasury guidance to date. Specifically disallowed is the use of CRF dollars to meet revenue shortfalls, such as in the Department of Transportation, which heavily relies on gas tax revenues.

The funds set aside for non-allowable uses totals a whopping $500 million. Rather than set aside dollars in the hopes that the federal government will permit their proposed uses, North Carolina’s elected leaders can and should direct the funds to areas that are both allowable and desperately needed to lessen the harm caused by the COVID-19 crisis. They should then also make sure the federal government sends more aid to state and local governments to address ongoing needs and revenue shortfalls.

COVID-19 continues to exacerbate existing racial and economic inequities, so equitable investments in areas that will reduce hardship caused by the public health and economic crises will support North Carolina’s recovery. Among the key areas needing additional investment, and where CRF dollars could be spent, include:

  • Greater workplace protections, without which North Carolina risks sacrificing people’s lives for economic gain. A healthy economy relies on healthy people and the only way to start reopening businesses safely is to ensure that employers have the resources and requirements in place to keep people safe.
  • Direct cash assistance, the most immediate form of support people need in this moment. The one-time Economic Impact Payments that many people received from the federal government ran out long ago, and additional assistance is needed to support household budgets in making ends meet. North Carolina has no state-level general assistance programs, leaving people with very low incomes ineligible for various forms of cash public assistance and unable to meet their basic needs.
  • Affordable and safe housing, which has become increasingly important to the health and safety of people with the need to shelter in place, and which was a longstanding issue prior to the pandemic. With moratoria on evictions and utility shutoff ending soon, and rent and utility payments becoming due, people who have lost jobs and income are at increased risk of becoming homeless.
  • Support for K-12 remote learning for the upcoming school year, despite the push by some for in-person learning. Without the financial resources needed to reopen schools safely we will be putting children and their families in harm’s way.
  • Higher education supports at both the UNC System and community colleges, which at present will reopen in early August without adequate testing, personal protective equipment or increased sanitation equipment that will ensure the safety of students, staff, and faculty. Additionally, there is increased economic need among the student body that could drive up hunger and homelessness and keep the important goal of college completion out of reach.

Smart appropriations don’t involve setting money aside in the hopes that it might be allowed to be used; that approach robs North Carolinians of the aid they need now. And yet it’s also true that no single solution will solve the problems that existed before the pandemic and have only become more dire since. That’s why North Carolina needs a multi-pronged fiscal approach to this crisis. This approach includes:

  1. The General Assembly spending down federal funds before they expire at the end of the year in ways that address longstanding and worsening inequities, not setting aside money for unallowable uses;
  2. More aid from the federal government to help ease the financial pressure on state and local governments;
  3. Reversing the state’s upside-down tax code by requiring billionaires and multi-national corporations to contribute their fair share to our collective well-being;
  4. Investing in “people-first” policies that address outstanding needs like the ones listed above and set the state up to be more resilient in the face of future crises.

The public health and economic crises caused by COVID-19 have upended life for every North Carolinian. Investing in the resources needed to support people through the period will ensure that, together, we can rebuild a better North Carolina in which every life— Black, brown and white — is valued and a quality of life is guaranteed through a shared, community-wide commitment to public investments. Without such a commitment, we won’t secure the inclusive recovery that will sustain each of our well-being.

Suzy Khachaturyan and Leila Pedersen are Policy Analysts at the NC Budget & Tax Center, a project of the NC Justice Center.

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