Forced ICE cooperation bill would shift costs to already hard-hit local governments

A proposal moving through the North Carolina General Assembly would further shift costs to local governments to score ideological points with those seeking stricter immigration enforcement even as the evidence shows that forced cooperation with ICE doesn’t make communities safer.  

Senate Bill 101, which passed the Senate last week, is modeled after bills introduced in previous sessions, with only some modifications that won’t protect local governments from the likelihood of lawsuits, nor reduce the pressure on local budgets.  

In 2019, the Budget & Tax Center analyzed then House Bill 370 to assess the impact on local budgets of forced ICE cooperation. The cumulative cost of ICE cooperation over a decade at that time was estimated at nearly $82 million. Under a proposal that would seek to increase the number of detainers issued, a forward-looking estimate of what local governments could expect is likely higher.  

That is even more so the case during COVID-19.    

Forced cooperation with ICE raises grave concerns about overcrowding and pushes against recommendation to reduce jail admissions during a pandemic. Analysis of local jail populations by the UNC School of Government found that in 2019, 41 percent of jails exceed capacity in one month, while 56 percent exceed 90 percent of jail capacity. National research has found that many people are held in jail pre-trial and that increasing jail populations are in part a result of agreements that local jails make with federal and state agencies. During COVID-19, public health and criminal justice experts have recommended reducing jail admissions because they have been documented to spread infectious diseases. Yet forcing cooperation with federal immigration agencies would increase the number of people entering local jails and could impact the global fight to end the pandemic. ICE has been connected to spreading the coronavirus, not just in the United States but across the globe.  

COVID-19 raises the costs of holding a person on an ICE detainer.  The costs of holding someone in jail have been underestimated in normal times and are likely to be much higher during the pandemic. Direct health care costs, along with the cost of staffing, maintaining social distancing and implementing other CDC guidelines, cost taxpayers.  These costs could, in part, be covered by state and federal dollars but Senate Bill 101 makes no provision for covering additional costs that would be incurred for holding someone for ICE.    

County budgets have been hit hard by the pandemic. While the full impact on the upcoming fiscal year budget is not entirely clear, a number of counties have had to reduce services because of revenue hits to fees and other revenue sources in the past fiscal year and could need to do the same going forwardLocal government employment has also remained below pre-COVID-19 levels. Raising costs for counties will require cuts to priority investments in vaccination campaigns, public schools, and infrastructure.  

The impacts of this legislation won’t be felt equally across the state.  

Small and rural counties have seen larger increases in jail costs in recent years: a 13 percent increase from 2007 to 2017 compared to just 2 percent for urban areas according to national analysis. Rural county budgets are also more likely to be hit hard by the downturn and less likely to receive aid to balance their budgets from state and federal governments.   

Senate Bill 101 demonstrates that Senate leaders continue to pursue hate, not fiscal constraint.

Alexandra Sirota is the Director of the N.C. Budget & Tax Center.

Governor’s budget proposal is a cautious step toward rebuilding NC

The Governor’s budget proposal is a cautious next step as North Carolina begins the serious work of not just responding to this pandemic and downturn, but rebuilding afterward as well.

By focusing on people’s well-being now in several critical areas — boosting income, supporting access to health care, and committing to investments in public institutions — it demonstrates the potential of state dollars to support a more equitable recovery.

And it makes clear that current state dollars alone won’t get us to the North Carolina we could be. Federal dollars available from the American Rescue Plan are urgently needed to meet the scale of hardship and priority investments — but so is a long-term plan for our state to align our tax code to support the common good.

By passing on popular options to raise the tax rates paid by high-income taxpayers and profitable corporations, it misses a critical moment for getting NC on a sustainable path to more equitable outcomes. After a devastating year on top of a devastating decade, the harm to people, businesses, and communities of starving our public institutions of the resources they need to respond, innovate, and deliver is clear.

What the Governor’s budget does do on tax cuts is an important contrast to the proposals that have been introduced just this week by legislative leaders that would advance tax cuts for big companies and poorly targeted income tax cuts. The Governor’s budget would provide tax breaks for people who are struggling with income that isn’t keeping up with the cost of living, recognizing that the well-being of working families earning low wages can fuel a stronger recovery.

Governor Cooper proposed a series of bottom-up tax cuts for working families that will effectively drive support to those most hurt by the pandemic, who are currently being bypassed in a recovery that has already reached very high-income North Carolinians.

A state Earned Income Tax Credit will reach more than 850,000 families, primarily with children, and boost the value of the federal credit to ensure that the earned income in households is available to meet basic needs and support children’s healthy development. Read more

Child Tax Credit expansion in American Rescue Plan is a model for supporting child well-being, fighting poverty

The historic American Rescue Plan includes a major proposal to fight child poverty and support well-being with an expansion of the Child Tax Credit. An estimated 137,000 North Carolina children will be lifted out of poverty by the Child Tax Credit expansion alone at a time when families across the state are in crucial need of help.

The power of this provision lies not only in combatting poverty and hardship, but also in its design to address historic exclusions and demonstrate how providing households monthly support will help them meet their families’ needs.

Prior to the changes in the American Rescue Plan, the Child Tax Credit disproportionately blocked Black and Latinx children from the benefits of these dollars proven to boost developmental, educational, and lifelong outcomes. In North Carolina, 540,000 Black and Latinx children will now be able to access the Child Tax Credit. 

This is primarily because the tax credit will now be fully refundable, providing households whose earnings are too low to owe income taxes the full value of the credit. Through this design and its novel delivery — via advance payments in July through December — the expansion provides families with children the income to support their children’s well-being.

The Institute on Taxation and Economic Policy finds that more than half of the Child Tax Credit expansion will go to the poorest 40% of households whose incomes are below $35,000 a year.   

Time and time again, research has pointed to the benefits from the Child Tax Credit, and by extending the policy’s reach we can expect broad benefits:

  • From the Center for American Progress: “A $3,000 increase in annual family income for children under age 5 translates into an estimated 19 percent earnings increase in adulthood.23″
    Providing families with additional income supports during a child’s early development has also been shown to have substantial benefits for future health and educational attainment.24

The American Rescue Plan provides an important demonstration of how we can design policy that reduces child poverty. The Child Tax Credit expansion should be a permanent commitment. Investing in children’s well-being is worth it.

To find out about free tax preparation sites near you, visit this Internal Revenue Service listing of locations:


Requiring work searches isn’t the urgent fix that unemployment insurance needs

Last week, the Finance Committee of the North Carolina House approved a bill that would require jobless workers who claim unemployment insurance to conduct at least three work searches each week, if they are seeking benefits for a non-COVID-19-related reason.

This week, Gov. Cooper signed an executive order that will implement a work search requirement for all those claiming state unemployment insurance after March 14.

Neither of these actions will fix the real problem with unemployment insurance that threatens to derail our labor market: the fact that our state provides the lowest levels of support to jobless workers who have lost their job through no fault of their own.

The work search requirement is a punitive measure that adds obstacles to critical income supports that keep people connected to the labor market and looking for a new job. It is not a guaranteed bridge to employment for those who have lost their job through no fault of their own. Indeed, research shows that, while such a requirement may generate the intended effect of reducing the benefits paid out in the short term, the long-run outcomes are largely sub-optimal: People are less likely to move to good job matches and more likely to take on lower paying jobs.

A work search requirement also adds administrative costs as staff and technology must be employed to monitor implementation and the verification of claimant activity. These processes are even more complicated and costly during a pandemic when people can’t go back to work because of public health measures or because workplaces are not safe to return to.

The difficulty of separating COVID-19 and non-COVID-19 claims on top of shifting federal requirements is also likely to lead to further processing delays in a program that has struggled mightily ever since state funding was cut for the Division of Employment Security in 2013. Additional administrative rules could further disrupt the critical work of making sure eligible jobless workers receive wage replacement.

Several other factors in the current difficult environment make clear that a work search requirement isn’t the right focus of policymakers at this time, including:

  1. Job losses have been uneven — as they were in the last recession, as well — meaning that some communities don’t have the same number of job openings as others and that a recovery of jobs lost is far from complete. Many people looking for work in some areas of the state could quickly exhaust application opportunities as there are too few job openings for those looking for work. Moreover, job losses continue at elevated levels as the pandemic continues to wreak economic havoc in several regions and job sectors.
  2. Not all workplaces are safe; many workplaces are not providing the necessary protections for workers, so requiring people to search for and then be ready and able to work given the public health threat of the pandemic is bad policy.
  3. Many North Carolina households lack access to the high-speed internet needed to conduct work searches right now, either because they can’t afford it or because the necessary infrastructure in their community doesn’t exist. In different times, a trip to the public library may provide a connection to the internet and job search, but many public connections points remain closed.

States that want to ensure that work search requirements actually get people connected to good jobs must do more than simply set an arbitrary number of required work searches each week. They must assure that unemployed people have access to high-speed internet and assistance in conducting job searches from trained professionals. They must also commit to connecting the unemployed to adequately-funded job training programs and provide exemptions from the search requirement while people are engaged in job training, working part-time or temporarily laid off.

In short, the evidence in support of work search requirements as a tool to achieve a just recovery is weak. There is, however, a significant body of research to show that unemployment insurance that provides adequate wage replacement for 26 weeks supports stronger employment outcomes, alleviates negative health outcomes, and supports improved well-being over time. Right now, North Carolina’s unemployment insurance provides too few jobless workers with too little in wage replacement for too short a time.

We don’t have to aim high; even aiming to get to the middle of the national pack would be much better for the people struggling in every community in the state. An unemployment insurance program that is adequate and equitable would be much better for us all by stabilizing the economy and starting us on the path toward a more just recovery.

Alexandra Sirota is the Director of the Budget & Tax Center, a project of the NC Justice Center.


NC legislative committee takes yet another misstep on unemployment insurance

This morning, the Finance Committee of the North Carolina House approved House Bill 107, which, among its largely technical provisions, would make two significant changes to state unemployment insurance policy: 

  • it would reinstate work search requirements for individuals making non-COVID-19-related unemployment insurance claims, and 
  • it would hold the base tax rate for employers at just 1.9%, rather than following the planned increase that currently contained in state law. 

The decision to hold employer tax rates at the current low rate is a mistake. 

Back in 2013, when lawmakers and Gov. McCrory approved House Bill 4 — the bill that imposed significant cuts to worker benefits — they also included a trigger that would have raised the State Unemployment Tax Act (SUTA) base tax rate in order to ensure that employer contributions into the state Unemployment Insurance Trust Fund are sufficient to keep the system solvent — a major priority of legislative leaders.  

At present, North Carolina’s tax rate is the fourth lowest in the country.  

Meanwhile, as national experts, state researchers, and media outlets have repeatedly noted, North Carolina has the least effective unemployment insurance system in the country because it serves too few jobless workers, with too little wage replacement for too short a time. 

A glance at the latest data from the third quarter for southeastern states further demonstrates how our program has fallen behind. North Carolina trails only Florida for the number of people exhausting state unemployment insurance before finding a job, is only barely ahead of Louisiana, Mississippi, and Tennessee in the average weekly benefit amount it pays, and in 2019 was worst in the country in terms of the number of jobless workers who receive unemployment insurance.

Engaging in a “race-to-the-bottom” competition with other southeastern states when it comes to supporting the economy is not the right path for our state. If we have any hope of improving what research shows has been a very unequal recovery, North Carolina policymakers should be focused on driving policy toward achieving more equitable outcomes, and be deeply concerned that their policy choices are driving a wedge between people and critical supports. 

Policymakers should instead follow the expert advice of a wide array of economists to build an unemployment insurance system that: a) minimizes the harm to families caused by job losses, and b) stabilizes the economy by helping to maintains consumer spending. 

At present, North Carolina is failing on both counts by maintaining a system that: 

  • provides 14 fewer weeks than the standard 26 weeks of state benefits, 
  • pays extremely low benefits that, on average provide just 23 cents per dollar of the average worker’s in prior wages (the national standard is at least 50 cents), and 
  • reaches less than 9% of those who are jobless, compared to the standard of reaching at least 50 percent of the unemployed. 

A broken unemployment insurance system increases hardship, worsens health outcomes, reduces lifelong earnings and economic mobility for people, and doesn’t do enough to stabilize consumer spending — a key to supporting demand for goods and services of businesses (i.e. employers) and supporting economic recovery.?The National Employment and Law Project noted that due to its shorter benefit duration alone, a typical North Carolina jobless worker could have received as much as $24,000 less in unemployment insurance benefits over the course of the last recession thanks to the 2013 cuts. 

The bottom line: this legislation ignores the desperate need to repair and improve the system for jobless workers (click here for a list of simple and necessary policy changes that lawmakers should enact in 2021) and, indeed, erects another barrier by reviving administratively costly work search requirements. 

By keeping employer taxes low while refusing?to improve things for workers and their families, lawmakers have signaled that working people will continue to be an afterthought in legislative policymaking and are doubling down on an economic approach that will continue to serve us all poorly. 

Alexandra Sirota is the Director of the N.C. Budget and Tax Center.