Commentary, NC Budget and Tax Center

N.C. needs a people’s budget that recognizes we are in this recovery together for the long haul

General Assembly leadership admits in HB 1105 that North Carolina families and communities are facing enormous hardship, but makes only token gestures to help people survive the COVID-19 pandemic

North Carolina can and should allocate the remaining federal funds for COVID relief to meet the needs that pre-existing needs that have been exacerbated by the pandemic. The proposed appropriations in HB 1105 fall far short of acknowledging the scale of current need, much less setting the state up for a strong, inclusive recovery. After months of inaction, the General Assembly continues to take half steps toward addressing a range of crises.

  • Families facing utility disconnection and eviction – Over 1 million North Carolina utility customers and renters are at risk of utility disconnection and eviction, but HB 1105 includes no new dollars for rent and utility assistance. Instead, this bill makes explicit that the funding Governor Cooper already dedicated to rental and utility assistance is included within a range of possible uses for funds. These one-time, non-recurring funds will not maintain or create enough safe, connected and affordable housing to meet the current need. The General Assembly still needs to pass HB 1200 or similar funding to ensure that at least $400 million will be directed to people most impacted by the housing crisis.
  • Families struggling to put food on the table – Small investments for nonprofit food assistance organizations is not enough when related applications have increased by 15%. This bill proposes allocations that include $3 million in a food prescription program and $6 million for food banks. Elimination of the ban on the ABAWD (Able Bodied Adult Without Dependents) waiver would provide a long-term tool for addressing food insecurity in North Carolina and would not cost the state additional funds; however, this provision is absent in this bill.
  • A sound basic education and safe learning environments for every child – Privatization measures continue with expansion of so-called Opportunity Scholarship vouchers and failing virtual charter schools. These privatization schemes continue to undermine our traditional inclusive public schools. The provision to hold harmless public schools facing lower enrollment is helpful, but  this bill would worsen the state’s  continued violation of the state’s constitutional requirement to fund a sound, basic education.
  • Safe and affordable childcare for young children, educators and working families – This bill includes a small, $8 million increase in funding for child care assistance for families, and a modest $35 million commitment to stabilize providers. These funds are targeted to remote learning opportunities, which are only available for PreK age children, and so provide no support for parents of children ages 0-3. Assistance to families does not come close to meeting the needs of the 13,400 eligible families currently on the waiting list. Also absent from this bill is bonus pay that early childhood educators — who work for $10.50 per hour on average — need to get by.
  • Affordable health care for those in the coverage gap – While the bill provides appropriations to Community Health Centers and reduces costs for providers who are serving people without health insurance, the reality is that North Carolina is not reaching everyone who was in the coverage gap before and is in the coverage gap now because of the failure to include Medicaid expansion.  Medicaid expansion should be a key pillar in our response to this pandemic and it will draw down federal funds to support health care needs now.
  • Families that are unable to make ends meet – A small, one-time payment of $335 covers less than 8% of what a family of four needs to afford the basics for one month. Limited resources should be spent on cash assistance that is targeted to low-income families facing evictions and utility shut-offs, and must include outreach to families who had such low incomes that they were not required to file a 2019 tax return. As it stands, these dollars won’t go far enough and will miss those most in need.

Years of underinvestment have left us playing catch-up during this public health and economic crisis. The Band-aids in HB 1105 would not be as necessary if we have been truly funding public services for years. It turns out that there are harsh consequences to cutting taxes for the rich and big corporations, including the following.

  • If legislators had chosen to invest in 2012 in building affordable housing by setting aside the $500 million that was used to give a tax break on pass-through income (subsequently repealed due to bipartisan agreement that it was poorly targeted), there would have been more affordable rental options in communities.
  • If legislators had chosen in 2013 to drive dollars back into public school budgets rather than cut taxes for the rich and big corporations, schools would have had technology budgets and infrastructure that could support remote learning in this pandemic, as well as the health and support personnel on staff to support children’s recovery from the trauma of this pandemic.
  • If legislators had chosen in 2013 to raise the minimum wage and boost the wages of every educator from early childhood through to post-secondary education rather than cut taxes for the rich and big corporations, fewer North Carolina families would be living paycheck-to-paycheck.
  • If legislators in 2013 hadn’t reduced access to and the value of unemployment insurance so that employers didn’t have to pay more in taxes to address debt (created because of tax cuts employers had received in good times), state unemployment insurance would provide a greater share of prior wages for workers who have lost their job due to COVID-19 for a longer period of time and would be more accessible to workers.
  • If legislators had expanded Medicaid in 2014, more people would have had access to affordable health care and prevention tools to manage chronic conditions that make some North Carolinians more at risk for COVID-19.  Expansion would have drawn down federal dollars rather than now requiring a patchwork of charitable care to meet the health care needs of the state’s uninsured that are essential to our collective recovery from this pandemic. Because of job losses thus far during the pandemic, there are now an estimated 825,000 North Carolinians who would benefit from Medicaid expansion.

Alexandra Sirota is the Director of the N.C. Budget & Tax Center. Her colleagues Heba Atwa, Logan Harris, Suzy Khachaturyan , Patrick McHugh, Leila Pedersen, Mel Umbarger and Chanae Wilson ll contributed to this post.

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