COVID-19, NC Budget and Tax Center

COVID-19: Three policy principles to advance equity

The COVID-19 pandemic and ensuing economic crisis have disproportionately harmed communities of color and exacerbated existing inequities.

In North Carolina, the life expectancy for Black newborns is three years less than it is for white newborns, and the poverty rate for African Americans is twice what it is for white people. These troubling inequities underscore the ways in which the United States’ history of racism, bias, and discrimination have remained embedded in its health, social, and economic systems.

While more federal aid to states could help ease state budget shortfalls, North Carolina’s lawmakers can help reverse current trends and create a broader economic recovery by enacting policies that adhere to the three principles set out in a new report from the Center on Budget and Policy Priorities:

1. Target North Carolinians with the greatest health and economic needs

  • Support people experiencing and at risk of homelessness. Before the pandemic, rent was unaffordable for half of North Carolina renters. In the wake of massive job and income loss, more and more people are at risk of getting pushed out onto the streets.
  • Expand Medicaid. Without Medicaid expansion, fewer people will have access to the life-saving treatment they need now more than ever. Medicaid expansion would not only save lives, it would also save the state money.
  • Ensure every student receives a “sound basic education.” The state’s education shortcomings, outlined in the Leandro case and WestEd report, have been exacerbated by necessary school closures and unequal access to the resources students need to succeed. North Carolina should address students’ immediate needs while setting them up for long-term success by distributing funding in accordance with student need.
  • Track data and make it transparent. State and local agencies need the mandate and funding to track data in ways that follow best practices. Understanding disparate impacts across demographics and jurisdictions is the first step to ensuring that policy responses effectively address root causes.

2. Dismantle North Carolina’s longstanding racial, gender and economic inequities

  • Establish permanent paid leave policies. North Carolina’s lack of paid sick day protections force workers to choose between earning a paycheck and staying healthy. COVID-19 has increased the need for workers to be able to take time away from work without losing wages.
  • Improve Unemployment Insurance system. North Carolina has one of the worst Unemployment Insurance systems in the country. Significant changes are needed to ensure that workers get the benefits they need to meet their basic needs and continue contributing to the economy.
  • Boost incomes and alleviate poverty through a state earned income tax credit (EITC). One of the most effective ways to improve health outcomes for people in poverty is to reinstate North Carolina’s EITC.

3. Prepare North Carolina for long-term economic growth and opportunity

  • Judiciously draw down rainy day funds and reserves. Federal funding has been helpful in responding to the most immediate threats of COVID-19, but there is much more work to be done.
    North Carolina currently has over $1 billion in its rainy day fund and even more in its unreserved balance. Even if the state exhausts these dollars, which would leave us unprepared for the upcoming hurricane season, the state budget shortfall could still reach more than a billion dollars.
  • Raise revenue, especially from those with the lightest tax load, Without enough money to cover the costs of responding to the pandemic, North Carolina should reverse its upside-down tax code and start asking those most insulated from economic harm to contribute more to our collective well-being.
  • Close corporate loopholes and eliminate unnecessary tax breaks. North Carolina has one of the lowest corporate tax rates in the region. Profitable corporations should pay their profits forward to ensure that the public benefits that helped them succeed are broadly accessible to communities that have traditionally not had access. Rolling back ineffective incentives and tax breaks will free up more resources to improve economic supports for people in underserved communities.
  • Ease restrictions on local government revenue-raising. Local governments — cities, towns, counties, and tribal governments — are on the frontlines of responding to COVID-19. Restrictions on local governments, such as property tax limitations, prevent local governments from raising more adequate and equitable revenue.

In the era of COVID-19, preexisting disparities have resulted in even more severe health and economic inequities. In North Carolina and nationwide, Black people are contracting and dying from COVID-19 at higher rates. The country’s unprecedented unemployment levels have also affected lower-wage industries the most, where people of color, including immigrants, and women are overrepresented.

The need for these principled choices has always existed but is even more important now. Failing to address the needs of communities without financial resources, economic opportunities, and political power systematically disadvantages communities of color and preserves the privilege of an elite, largely white class. The only way to emerge from this crisis with a stronger, more vibrant economy is to directly address longstanding structural inequities with targeted policies rooted in fairness.

2 Comments


  1. L Bach

    May 25, 2020 at 12:35 pm

    I agree with your caring, wise policies and am very happy with you publishing them!

  2. Aaliya

    May 29, 2020 at 4:47 am

    A much-needed post. It is really frustrating to know about the troubling inequities in the state of North Carolina. The above-listed policy principles to improve equity looks practical. Quality basic education for all is the right policy principle to get rid of racial inequalities.

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