Gov. Cooper last week released his plan for American Rescue Plan dollars, focusing primarily on the $5.7 billion in federal funds that will be available to North Carolina to shift from relief and response to rebuilding and recovery. There’s a lot of merit to the governor’s proposal, but the long-term impact will hinge on how these investments are made and whether the legislature gets serious about meeting the needs that cannot be addressed with federal money alone.
The dollars coming to North Carolina were an essential part of the American Rescue Plan, a transformational piece of federal legislation signed into law on March 11, 2021, that will reduce child poverty nationwide by half. The allocation of federal funds for states and local governments, in particular, addresses the critical role that state and local leaders and public institutions must play in addressing systemic failures and responding to the greatest need.
Gov. Cooper proposes deploying those dollars across a range of investments with a focus on two critical goals: to address the hardship people continue to face, and to build infrastructure that will strengthen people’s connection to opportunities in the classroom and for jobs.
First, Gov. Cooper builds on the Extra Credit Program to establish a cash grant for people who have yet to see their jobs recover. For these North Carolinians, the program would provide $500 or $250, with greater amounts for those with the lowest income.
By targeting the program, Gov. Cooper can provide a more significant boost to those most severely harmed by the pandemic and downturn. There are still details to be worked out, like how to reach the hundreds of thousands of North Carolinians who don’t file income taxes, but the administration should consider the lessons of the first round of Extra Credit grants. Increasing household incomes holds significant promise for supporting well-being and should be part of the state’s permanent policy agenda.
Second, and the greatest single area of investment, is the allocation of American Rescue Plan funds to broadband infrastructure and affordability. Gov. Cooper’s plan allocates $1.2 billion to closing the digital divide, including $600 million for infrastructure, with a goal of providing broadband service at significantly higher speeds than the federal definition of broadband. This is an important goal, as the federal definition is woefully inadequate for providing the speeds people need to access educational resources, job applications and remote work. The plan also recognizes that infrastructure alone is not enough, and includes $420 million to support subsidies for services to households, along with dollar to support devices and digital literacy.
The proposal also includes $800 million for local water and sewer projects, $160 million for lead and asbestos remediation in local schools, and $175 million for downtown revitalization. This funding can provide much needed local assistance, but they won’t fix all that’s broken. For example, the N.C. Department of Environmental Quality estimates that more than $25 billion may need to be invested in North Carolina’s water and wastewater systems over the next few decades.
The governor also proposes complementing investments in rental and homeowner assistance with dedicated dollars to increase the supply of affordable housing through renovation and building. This commitment to addressing the supply is critical to ensuring the housing cost burden facing too many North Carolina households is not just temporarily addressed.
This is a key point. Gov. Cooper’s plan is ambitious, but it has to be. Years of tax cuts for rich people have left an even larger hole than these funds can fill. Lack of affordable housing meant people were struggling to pay the rent before the pandemic. Limited access to broadband made it more difficult to shift to remote school and work. The lack of investment in public institutions and public-sector workers meant less flexibility to adapt and deliver services over the course of the pandemic.
The result is that more dollars from the American Rescue Plan, which could have been used to double down on the poverty-fighting impacts nationally, must be spent to shore up state agencies and address a backlog of unmet needs.
So while the American Rescue Plan will allow the state to take steps to redress the harm of nearly a decade of austerity, it won’t fix everything that is wrong right now with North Carolina’s economy and approach to policymaking. The investments proposed in the governor’s plan are important, but it’s going to take a longer-term commitment to build the foundations for future well–being.
In the coming weeks, it is critical that the governor and legislative leaders engage with people in communities to discuss plans for these dollars — learn about the needs and the solutions — that can set us on the path to a more inclusive economy.
It is critical that the governor and legislative leaders consider how to ensure the state has the resources to invest long-term in the people and communities of this state. That means rejecting tax cuts for the very wealthy and powerful, as well as rejecting arbitrary limits on tax and spending decisions. That means embracing the reality — made clear during the pandemic — that the well-being of every person should be the focus of policy. It will fuel a stronger economy and democracy.