Commentary, NC Budget and Tax Center, Trump Administration

Federal eviction moratorium merely kicks the can down the road

Last week, the Centers for Disease Control and Prevention announced that it would place a “temporary halt in residential evictions to prevent the further spread of COVID-19” through Dec. 31, 2020.

This action, although needed, leaves gaping holes in the Trump administration’s response to the pre-existing and current pandemic-impacted housing crisis.

People need a home to stay at home, but an estimated 30 million to 40 million people in the U.S. were at risk of eviction prior to the moratorium announcement.

The CDC order took effect last Friday, Sept. 4, and might bring much-needed relief to renters. Unfortunately, onerous eligibility requirements are likely to cause many people to fall through the gaps. According to Legal Aid of North Carolina (LANC), tenants will have to submit a signed declaration to their landlord and bring that signed declaration to court if they have an eviction hearing.

In addition, the order does not apply to foreclosures and, importantly, it will merely postpone evictions, not prevent them.

(Note: LANC also advises that tenants can still appeal if they are ordered to be evicted. Tenants with questions about eligibility and in need of assistance should call LANC at 1-866-219-5262. Tenants should also call 211 to see if there is any help available to them with their back rent.)

Without the rental and utility assistance people need to pay their bills, the federal eviction moratorium is merely further delaying the financial cliff renters will face once it expires. Come Jan. 1, 2021, rent will be due, and now additional months of back rent will also be due, as well.

People who have been most impacted by the pandemic are familiar with what happens when poorly designed policies fail to accomplish their objectives. Housing vouchers are a clear example of how well-intended policy can fall short of meeting its objective. Anyone who has ever tried to use a housing voucher will tell you just how difficult it is to find a landlord who will take them.

In short, the CDC’s federal eviction moratorium will not solve the persistent lack of available and affordable housing, especially for people with extremely low incomes. To ensure that people can stay in their homes, policymakers at every level of government must provide more than public statements. Dedicated resources are needed to help people pay rent who do not have adequate income due to the pandemic and administrative capacity must be built to help direct dollars to families that need them most. People also need transparent information and legal support to exercise their rights.

Housing ought to be a human right, especially during a public health and economic crisis. A federal moratorium on evictions is essentially an unfunded mandate that can only be effective if supported with public resources and additional capacity at every level of government. The National Low Income Housing Coalition will host a tweetstorm today at 1pm ET. Follow #GetBackToWork for more information.

Leila Pedersen is a policy analyst at the N.C. Budget & Tax Center.

Commentary, NC Budget and Tax Center

$124 million of Extra Credit Grant Program would go to the top 20%

Image: Adobe Stock

Senate leader Phil Berger admitted yesterday that $335 isn’t enough to pay off a mortgage but could pay for a babysitter and a dinner out for parents.

His statement failed to recognize the reality of most parents in this state. When parents don’t have enough money to pay for rent, utilities or child care, they definitely don’t have enough money for a babysitter or a dinner out – even with an extra $335.

The proposed Extra Credit Grant Program within House Bill 1105 would use over $440 million of the state’s remaining coronavirus relief funds – most of the $552 million that remains in reserves.

Although direct cash payments are needed to help families make ends meet, this poorly designed program fails to target these grants to people who need them most. The primary mechanism for sending payments will be tax filings and, as North Carolinians learned after the Spring Economic Impact Payment rollout, more than 460,000 North Carolinians do not earn enough to file income taxes, even though they pay taxes in other ways. This means that this grant program would exclude many families who are most in need of cash support.

According to analysis by the Institute on Taxation and Economic Policy, about $124 million of these grants will go to households in the top 20% of income earners. Sending $335 to household that make an average of $240,000 a year is a missed opportunity to invest this money elsewhere. Especially when many students still lack broadband access and parents are struggling to pay for the basics.

As the House convenes this morning, there is an opportunity to recognize that $124 million, or 26%, of the Extra Credit Grant Program would go to wealthy households and would be better invested elsewhere.

During debate on the House floor, legislative sponsors of the bill suggested that Extra Credit payments would phase out for high-income taxpayers, in accordance with the federal child tax credit design. However, the bill language does not reference federal or state statute language on income eligibility to ensure that payments will be phased out for high-income households.

COVID-19, NC Budget and Tax Center

Will COVID-19 motivate us to recognize housing as a human right?

Before the pandemic, North Carolina was a long way from realizing the vision of adequate, affordable housing for all, despite overwhelming public support for considering housing as a human right. According to the National Low Income Housing Coalition, North Carolina has a shortage of 188,866 rental homes, and 70% of extremely low-income renters spend more than 50% of their income on housing. Of the top 25 cities with the highest eviction rates in the nation, five are in North Carolina.

Since the statewide eviction moratorium expired on June 20 and the CARES Act eviction moratorium expired on July 27, property owners have proceeded to file for thousands of evictions for nonpayment, except where protections remain. Across the country, communities are preparing for a surge in evictions.

Research from the National Low Income Housing Coalition estimates that up to 42% of renters, or about
1.2 million people, in North Carolina are at risk of eviction in the next several months. If these estimates are realized, it would mean roughly 8,600 people would lose their homes each night between now and the end of the year.

Nationally, an estimated 30 million to 40 million people are at risk of eviction in 2020. The number of people who are displaced — people who are forced to move due to the pandemic — may be even greater. Looking solely at the number of evictions could underestimate the true severity of our current housing crisis.

The Eviction Lab’s COVID-19 Housing Policy Scorecard gave North Carolina a score of 0.19 out of 5 for its lack of policies to protect people from eviction. The lack of state tenant protections has forced families to make impossible choices — put food on the table, pay rent or keep the lights on — knowing they cannot afford to do everything.

Data from the Center on Budget and Policy Priorities show that nearly one in three children in North Carolina live in households that are either behind on their housing payments, without enough food to eat, or both. Children who are hungry, insufficiently housed, and/or unable to access online learning are at heightened risk of getting trapped in a cycle of lifelong health impacts, joblessness, and poverty.

Most policy responses to COVID-19 have focused on bolstering health, economic and educational supports. Housing, although critical to the health and prosperity of all people, has gotten short shift in policy decisions to date — especially at the state and federal level.

Federal legislation provided some money to help people access affordable housing directly through Community Development Block Grants and Emergency Solutions Grants and indirectly through Unemployment Insurance and the Coronavirus Relief Fund, but much more is needed. President Trump’s recent executive order claimed to provide “assistance to renters and homeowners” but neither halted evictions nor provided rental assistance, which may result in little more than an empty gesture.

North Carolina’s General Assembly has yet to provide any direct legislative support to help people meet their housing needs. Many are still hopeful that when state legislators return to Raleigh Sept. 2 that they will vote on House Bill 1200, which would dedicate $200 million in Coronavirus Relief Funds to be used for rental and utility assistance, but nothing is guaranteed.

Locally, cities like CharlotteDurham, Greensboro and Raleigh are running eviction diversion and/or mortgage and rental assistance programs, but smaller cities and counties are less equipped to finance and administer such programs effectively.

The current pandemic creates an opportunity to recognize housing as a human right because people need a home to stay at home. To live up to this ideal and ensure that affordable housing is available to everyone, state and federal action will be needed. All eyes will be on Congress and the General Assembly to provide the direct support that is needed for people to avoid eviction, homelessness, and a cascade of undue harm.

NC Budget and Tax Center

Which corporations are enjoying record profits and how are they contributing to the recovery?

At the same time that North Carolina is experiencing the most dramatic economic downturn since the Great Depression and unemployment benefits are getting cut for jobless workers, massive corporations are enjoying record profits and tax breaks.

A recent report by Oxfam titled “Pandemic Profiteers Exposed,” found that 17 out of the top 25 most profitable U.S. corporations expect to make about $85 billion more in 2020 than in previous years.

If the $85 billion that the most profitable U.S. corporations expect this year were taxed at the federal statutory rate of 21 percent, it would generate about $18 billion. This revenue could be used to finance another round of $1200 payments for about 15 million people or $600 a week in unemployment insurance through the end of 2020 for about 1.5 million people.

Unfortunately, the average effective tax rate – the rate that corporations actually pay – is closer to 11 percent. That means that corporate welfare in the form of tax breaks will result in about $8.5 billion less in the way of federal revenue than would be collected if 17 of the top 25 most profitable corporations paid the statutory corporate tax rate. This is money that could be used to help develop a vaccine and finance the economic recovery.

The vast majority of corporate profits are distributed to shareholders – who are mostly white and male. Although Black people are twice as likely to die from COVID-19 and twice as likely to face unemployment as would be expected based on their share of the population, nine out of every 10 dollars of excess pandemic profits will go to white people, while only 32 cents will end up in Black and Latinx communities.

Super-profitable corporations benefit from tax breaks and loopholes that give them privileges unavailable to the average person. A study by the Institute on Taxation and Economic Policy found that at least 91 Fortune 500 companies paid $0 in federal income taxes in 2018. Regulatory changes since 2017 have given certain industries and companies tax privileges that go beyond what should be allowed by law. More recently, the CARES Act ushered in a $135 billion giveaway for millionaires and the latest Senate plan proposes even more tax breaks for the uber-wealthy.

COVID-19 is putting increasing pressure on state and local budgets. As Main Street businesses struggle to stay afloat, mega-corporations like Facebook, Apple and Google have seen their profit margins increase by 20-30% and many billionaires have seen their net worth double. We need wealthy corporations and households to contribute their fair share if we want to recover faster and stronger.

Wealth was unevenly distributed before the pandemic, and economic inequality has gotten dramatically worse since the beginning of 2020. While billionaires and super-profitable corporations are better off than ever, joblessness and budget cuts are threatening the lives and livelihoods of everyday people.

As Congress debates the next coronavirus relief package, North Carolina’s ability to protect people from the virus and reboot our state economy relies on the political will in Washington and Raleigh to value people over profits.

Leila Pedersen is a Policy Analyst with the NC Budget & Tax Center

NC Budget and Tax Center

Police departments are the wrong investment for North Carolina cities

This Independence Day, Americans – Black, brown & white – are likely reflecting on just how divided and unequal our country remains, 245 years since its founding. Today it will be impossible to ignore who is celebrating and who is not. Who is wearing a mask and who is not? Who has joined the chorus, “Black Lives Matter,” and who has not? After centuries of Black people insisting that police are a threat to their well-being, who is ready to “Defund the Police” and who is not?

As local governments raced to meet their July 1st deadline to pass a final budget, lawmakers struggled to make funding decisions that adequately respond to the pandemic and heed calls to defund the police. Increased scrutiny of police practices in reaction to the murders of George Floyd, Breonna Taylor, and countless others, have renewed calls to shift public resources away from policing and toward social services, community economic development and worker protections.

Protestors have justified the movement to defund the police by stating that taxpayer dollars should be invested in strengthening communities rather than the police, which have not kept communities safe.

At the same time the public health emergency has increased the need and demand for more housing, health care, and educational supports. A recent blog by Durham Beyond Policing put it this way:

“Systems of care will not end anti-Blackness by themselves. But ending anti-Blackness has no hope under punitive systems rooted in fear, brutality, and isolation. What will keep us safer is transforming our budget so city residents have healthy housing, nourishing food, free recreation, accessible healthcare and wellness services, and first responders —medics, counselors, mediators—intervening to reduce harm, not to escalate and isolate. “Public safety” means systems of care on the front end and accountability through transformative and restorative justice practices at the back end.”

However, many city councils across North Carolina continue to spend large portions of their General Funds on police. On average, the 5 largest cities in North Carolina – Charlotte, Raleigh, Greensboro, Winston-Salem, and Durham – plan to spend about 27 percent of their General Funds on police in Fiscal Year 2021. That number is up nearly 1 percent since last year. Variation across these cities ranges from about 41 percent of General Fund spending going to police in Charlotte to about 16 percent in Winston-Salem.

In Durham, the adopted budget for Fiscal Year 2021 includes a 4.3 percent increase in funding for the police compared to last year’s adopted budget. In Charlotte, where the General Fund for Fiscal Year 21 shrank by 1.2 percent since last year, the city council voted to increase police funding by 3.6 percent. By comparison, funding for housing and neighborhood services increased by only 1.8 percent. The story is similar in Raleigh, where funding for the police grew but funding for housing and neighborhood services fell by more than 15 percent.

Failing to reallocate dollars away from police budgets and toward community needs will slow the recovery and make our communities less safe and less resilient. These topline numbers may mask some of the detailed allocations within and across departments, but they clearly show the disconnect between community demands and local budget decisions.

Leila Pedersen is a policy analyst at the N.C. Budget & Tax Center.