Commentary, COVID-19, NC Budget and Tax Center

New report: Now is no time for federal and state governments to retreat

In case you missed it yesterday, be sure to check out a new report from the fiscal and economic policy experts at the N.C. Budget & Tax Center entitled “Meeting the needs of today to secure a more inclusive recovery tomorrow.” In it, the BTC analysts explain why it’s critical that both the federal and state governments remain strong and active in responding to the health pandemic. Now, the report, points out, is the last time to start cutting services and aid to communities in need.

In a section entitled “Critical lessons learned from prior recessions,” the report puts it this way:

In this historic policy landscape, policymakers are likely to best accomplish the goal of a full recovery from the public health and economic crisis with the least possible harm by considering lessons from previous recessions alongside the unique features of the COVID-19 pandemic.

Timely and targeted interventions. Early response to the crisis is a critical element to both public health and economic shocks as timely engagement can address the initial impacts before they spread broadly into other aspects of life. While many public health analysts point to the delays at the federal level in planning and responding to COVID-19 despite knowledge of its potential harm, the federal response began with a targeted effort to respond to the public health issues with a focus on bolstering the public health infrastructure and accelerating research into a vaccine and treatment.

Bold and inclusive support. Another lesson of public policy response in moments of crisis is the importance of bold action. Researchers often point to the fact that the greater risk comes from proposals that are too small relative to the need and that don’t do enough to reduce the potential for long-term impact on people and communities. Such support must also reach all people since the exclusion of certain groups can further hamper the recovery process and hold back overall public health.

Systems-oriented policy design. Perhaps most significant in this moment is the need for a sustained commitment to the use of public policy to address the issues resulting from public health or economic shocks. Many analysts have pointed to the problem of ending public policy interventions too soon before the recovery has been secured and reached all people. Additionally, making certain the policy design continues to meet and respond to emerging needs is critical to ensuring that families are supported to financial security and greater well-being.

The coronavirus pandemic ended the longest economic expansion in U.S. history, and its threat to public health will persist for longer than a season. Researchers at the Congressional Budget Office suggest that effects on the economy could extend through 2021 into 2022. While projections for North Carolina in particular are still forthcoming from state agencies, some economists in North Carolina have pointed to the early stages of impacts and the long road to recovery.

Once the official expansion begins, however, it will be clear that recessions have a longer-lasting impact on well-being than the time frame in which they occur. North Carolina’s own experience of the last expansion period showed little progress in bringing down poverty and increasing the wages of the average worker. National studies of the Great Recession and prior downturns point to the large and scarring effects — including lost income and wealth, reduced educational opportunities, and poorer physical and mental health outcomes — on people. Recessions also generate disproportionate harm on communities of color and women, both of which already face barriers in connecting to opportunities.

Given that the underlying cause of this economic shock is likely to linger, it is even more important that policymakers continue to engage in assessments and actions that can minimize the long-term harm to our collective well-being.

In short, the basic message is that now, more than ever, is the time for government to do its job and for state and federal leaders to secure the resources necessary to make it possible. Click here to read the full report.

Commentary, NC Budget and Tax Center

COVID-19 damage will worsen and linger without quick, robust policies from state leaders

The speed and strength of our economic recovery from COVID-19 will depend on the timeliness and inclusivity of our state’s policy response.

If we wait to deploy dollars and connect more people and businesses to the necessary supports for health, housing, and income, North Carolina’s recovery will take longer. It will also result in costly long-term damage to the wealth, stability, and health of our neighbors. As researchers at the New York Fed have found the importance of timely and adequate early policy interventions during a public health crisis can make a significant difference in the trajectory of a community’s  recovery.

Already, the Congressional Budget Office is projecting that unemployment rates will remain as high in 2021 as they were during the highest points in the Great Recession — 10%.

Nationally, the scope of need is staggering and unlike any economic event in modern history.

Yesterday, 100 county snapshots for North Carolina were released to show the barriers that persisted through the last economic expansion for too many communities and people in our state. This data — along with emerging measures of need in light of COVID-19 — should signal the urgency of a robust response that seeks to secure recovery for everyone and all communities.

It’s worth repeating: Quick deployment of dollars and policies to minimize the harm to people will strengthen the state’s recovery and ensure that the new rules of the game better support our collective well-being.

The needs are stark and make clear the wide-reaching effects of the virus on every person. For example, there have been nearly 15,000 confirmed cases of COVID-19 and more than 500 deaths in North Carolina since the start of the pandemic, adding to the already high numbers of people without health insurance.

With reopening underway and people returning to their jobs, too many workers are at greater risk for infection because protections are not in place. Personal protective equipment is available at varying levels, with just 31 days’ worth of supply for N95 masks and no gowns.

And since our last economic expansion kept too many people living paycheck to paycheck, many families are struggling even more now to meet basic needs. Food and housing insecurity were already high before COVID-19, and evidence of missed meals and missed rent payments is mounting. Read more

Commentary, NC Budget and Tax Center

Failure of NC relief package to adequately fund early childhood education was a big mistake

For years North Carolina legislators on both sides of the aisle, business leaders, and early childhood advocates have emphasized the powerful role that quality, affordable preschool education plays in supporting healthy development, family stability, and community economic well-being.

Yet, too often, the rhetoric has not translated into the investment necessary to build an early childhood education system that supports children, families and educators.

The first legislative response to the COVID-19 pandemic provides another example of this problem. Rather than tap into available federal Coronavirus Relief Funds to fully support early childhood education, North Carolina legislators allocated federal funds only from the Child Care and Development Block Grant, which limited their reach and fell short of addressing the need.

The first legislative package provides $166 million to child care and child care response (an initiative to help families frontline workers) from federal funds dedicated to this purpose. But only an additional fraction of a $19 million line item for multiple services providers will likely be allocated in the child-care response.

This figure is unlikely to sustain even the existing commitments by the Department of Health and Human Services — important efforts to provide hazard pay and support to families — through Phase 3 of reopening the state. This amount is insufficient to meet the full need for investments in health and sanitation measures, and for stabilization grants and small business supports to child care providers whose reopening is critical to ensuring access to early childhood education in many communities.

One third of child-care centers in North Carolina have reported that it will be difficult for them to reopen — even when it is safe to do so — without public support. Closures of child care providers risk increasing the state’s already real limits on access to early childhood programs. Estimates suggest that 144,000 child-care slots are at risk in North Carolina alone.

Even as another federal boost to child care funding is being considered, the North Carolina General Assembly should commit available federal and state funds at a higher level to the explicit purpose of strengthening the early education system in the state. After all, our state’s early childhood system will be essential to the strength of our economic recovery.

The failure to invest doesn’t just jeopardize the health and safety of early childhood educators, particularly in the near-term, as Phase 1 of reopening will immediately affect child care centers. It also puts at risk the quality and accessibility of our state’s nationally recognized early childhood system and the ability for the state to secure a strong recovery that supports the resiliency of families and communities.

North Carolina’s second legislative package to address the COVID-19 outbreak must begin to recognize that our early childhood system’s successful recovery requires focusing on the fact that those who care for our youngest children earn some of the lowest wages and must often make do without health care insurance or paid sick days.

It should be clear now that we cannot revert to an early education system built on parent-paid tuition and low wages and benefits for early childhood educators.

It also should be a priority to stabilize high quality child care centers and family-home centers that are operating in child care deserts and serving families with financial need. These providers should be supported with grants that allow them to stay in business as children slowly return to child care and as the economic recovery takes hold.

But our legislators shouldn’t be content to merely patch the holes through the initial crisis; they should embrace solutions that strengthen the system for the long-term. That means envisioning an early childhood system that delivers services and commits public funding to maintain an infrastructure of early childhood education in every community that is accessible to all children, regardless of their family’s income.

COVID-19, NC Budget and Tax Center

NC General Assembly allocated some federal dollars; more are available and urgently needed

Yesterday, Gov. Cooper signed into law the first two pieces of legislation agreed upon by state lawmakers following five days of committee and chamber meetings that were held virtually in Raleigh. Unfortunately, while this first step will address some of the urgent needs arising from the COVID-19 pandemic, it leaves most of the response work undone. As a result, lawmakers will need to move quickly to use billions of dollars in available federal and state funds to combat the immediate effects of the crisis and prepare for recovery work.

The package approved by the Governor yesterday spends $1.58 billion for fiscal relief for transportation, supports for nonprofits and hospitals in meeting the needs of the rural and marginalized communities, “non-transportation” state agencies and local governments, funding to support remote K-12 education, local government supports and more.

Read more

Commentary, COVID-19, NC Budget and Tax Center

The General Assembly’s COVID-19 bill: what you need to know

Lawmakers include some important elements in initial COVID-19 response, but glaring omissions leave need for lots of additional action to build a truly resilient and inclusive North Carolina

The House and Senate agreement on the first legislation to respond to COVID-19 is an important first step that signals the potential for policymaking in a way that we haven’t seen in the past year: an acknowledgement that leadership and service to the public must transcend politics and has a critical role to play in the protection of our collective well-being.

And yet, the scope and focus of the final legislation will fall far short of meeting the needs of the people across North Carolina who are struggling with job loss or working in unsafe conditions doing essential work, and with limited resources, caring for families and educating children.

The bill spends just $1.6 billion of the $3.6 billion provided in federal funds to the state via the Coronavirus Relief Fund. It will provide only minimal support to North Carolina’s public systems and local governments that are strained to respond to the need for health care, information and income supports.

A preliminary analysis of the final agreement approved Saturday morning suggests many important items will be missing; critical provisions from one chamber’s bill were omitted, even as modest progress was made primarily on first-order public health and economic impacts of the coronavirus. It is hard to imagine a justification for the General Assembly’s stinginess given documented needs, as these federal funds must be spent by Dec. 30, or forfeited back to the federal government.

The final provisions that in some way will protect public health and minimize economic harm include a higher amount of funding for small business supports, as was included in the Senate proposal. However, they will still likely fall short of the need and funding for testing, vaccine research and emergency health care coverage. Nor will these provisions fully cover the Division of Employment Security’s need to increase its ability deal with historic numbers of claims, to schools for nutrition programs and to local governments for COVID-19 related expenses.

Critical provisions that were in earlier versions are not in the final bill, however. Most notably, changes to the state’s unemployment insurance system that would increase the maximum benefit amount from the low $350 (which represents a third of average weekly wages) to $400 and changes to how weekly benefit levels are calculated included in the Senate proposal were left out of the final bill.

When more than 950,000 North Carolinians have claimed unemployment insurance benefits, North Carolina needs a system that adequately replaces lost wages and allows workers to cope should federal programs expire before the economic recovery is secured.

Additionally, in the face of a public health crisis and the loss of employer-provided health care, policymakers failed to advance a proposal to close the coverage gap so that North Carolinians could access affordable health care and ensure that people can get necessary treatment.

We know that expanding Medicaid isn’t just good policy for our state, it’s also is a key tool in meeting the immediate and disparate public health impacts of COVID-19. Absent Medicaid expansion, emergency health insurance coverage or increases in funding to hospitals to cover uncompensated care will fail to maximize federal funds and provide the health care people need over the long-term.

In education, several key investments were included that were omitted the Senate proposal, but at levels that will likely be inadequate to address the challenges faced by schools (see funding details here). A number of problematic provisions remain in the final bill, including limited flexibility for school districts to move funds to meet urgent needs, as well as a number of unfunded mandates that could hamper the delivery of education. Meanwhile, key stabilization funding for child care providers was missing Also missing was funding to ensure child care remains affordable for working parents and early childhood educators and can receive protections and hazard pay.

House and Senate leaders should immediately turn to work on the issues not addressed in this proposal. Their second package should adequately respond to communities’ needs in a way that reaches those most in harm’s way. It should build the necessary public systems for our communities to respond to public health and economic crises and serve the people of this state in need.

These missed opportunities include, along with those detailed above, Read more