It’s time to use the state budget to fix North Carolina’s leaky roof

Years ago, a traveling salesman was stuck outside in a thunderstorm, miles from the nearest town. At the next house he came to, a man was standing in the door watching the rain pour. The salesman walked up and asked whether he might be able to stay the night while the storm passed.

“Well,” the man replied, “the only place I’ve got is in the kitchen, and the roof leaks so bad in there you’d get just as wet as staying out here.”

Taken aback, the salesman asked, “Why don’t you fix the roof?”

“Are you crazy?” the man replied. “It’s raining out here!”

“’Course I don’t mean now,” the increasingly frustrated salesman retorted. “Why don’t you fix it when it ain’t raining”?

“’Cause then it ain’t leaking.”

There’s some wisdom in that old country yarn about where North Carolina was when COVID-19 arrived. Our state government is like the roof in the story. We had been through the longest period of uninterrupted economic growth in generations, but leaders allowed our shared home to fall into disrepair. As soon as the storm started, it became even more painfully evident how years of neglect had left our public institutions unable to cope with a crisis.

We also allowed an economic situation to evolve that left far too many families with little or no shelter of their own to fall back on. Big corporations and the ultra-rich did just fine in the wake of the Great Recession, but most families and working people in North Carolina didn’t have the savings to survive without work or income when the pandemic shuttered businesses across the state. Like the traveling salesman, millions of North Carolinians were left out in the storm with little shelter in sight.

Now the combination of broken public institutions and a top-heavy economy are undermining the pace of our recovery. As we document in a recent report, hundreds of thousands of North Carolinians face enormous barriers in their effort to rejoin the labor force. Around 250,000 people in our state, mostly women, can’t work because they don’t have access affordable child care; roughly 100,000 have site concerns about contracting or spreading COVID-19 by working in person, 50,000 lack reliable transportation, and many either can’t access the jobs that do exist or lack broadband needed to work remotely or search for a job. In most of these cases, people of color and women who had the least financial cushion to fall back on when they lost jobs due to COVID-19 face the largest obstacles to rejoining the labor market.

The good news is we have an opportunity to rebuild our collective home. As legislative leaders huddle behind closed doors to hash out a budget, the question is whether they will make the long-overdue choice to fix our public institutions or continue down the path that left us out in the rain when COVID-19 darkened the skies. After years of not passing a budget, North Carolina has billions of dollars sitting in the bank that could be used to help people still struggling to make it through the pandemic. Unfortunately, the proposals made by both the Senate and House failed to tap into those resources and would continue to hand out tax cuts to profitable corporations. State action is also urgently needed to make good use of any potential additional federal support. Years of neglect made it hard for the state to deploy previous rounds of state aid, so investment is needed to get any future relief to where it is most needed.

It certainly hasn’t stopped raining yet, but it’s time to get those hammers swinging to put a new economic roof over the people of North Carolina.

Patrick McHugh is the Research Manager with the Budget & Tax Center.

Legislature’s plans for the use of American Rescue Plan funds fall short in three important ways

Click here to view and download a comprehensive list of the ARP items from the NC House and Senate budgets.

The $5.4 billion in flexible funding that North Carolina received from the federal American Rescue Plan presents a tremendous opportunity for the state. With such an unprecedented cash infusion, state leaders have a rare opportunity to both invest in transformational changes that can help all North Carolina communities respond to the ongoing threat of COVID-19, and lay a strong foundation for the future.

Unfortunately, an analysis of the planned uses of these dollars in the competing House and Senate budget proposals reveals a haphazard slew of line items – more than a hundred in each proposal – that altogether fail to provide a vision for change in our state.

Budget conferees are currently attempting to negotiate a compromise budget bill that will be presented to each chamber and, if approved, sent to the Governor. Our analysis to date has focused on the House and Senate proposals for the state’s General Fund dollars; however, the respective state budget proposals also include suggested uses for much of the flexible funding that was received by the state via the federal American Rescue Plan (via the State Fiscal Recovery Fund).

In addition to allocating the American Rescue Plan dollars, the House and Senate plans also allocate issue-specific federal grants to the appropriate state agencies. These dollars will go to support services including child care, mental health, and substance abuse, and will support areas like transportation, capital projects, small business credit initiatives, and more.

Three key takeaways emerge from our analysis (see below for more details):

  1. A lack of transparency and public input from communities is severely limiting the positive impact that’s possible with these funds.
  2. Rather than constructing a coherent vision of the transformational opportunities presented by the influx of flexible federal dollars, the budget proposals instead rely upon mostly arbitrary, one-time allocations for specific needs in specific communities.
  3. Rather than using federal dollars to make up for anticipated near-term losses resulting from a new round of tax cuts, North Carolina should pursue the more sustainable path of investing state dollars to address long-term needs.

A lack of transparency in the process of developing these appropriations does harm to the communities that are left out. State Fiscal Recovery Fund dollars allocated to state and local governments are able to be used to meet a broad range of needs to respond to COVID-19 and begin to build back stronger communities. Lawmakers should therefore seek and provide extensive opportunities for public input and assess needs in communities to ensure funding is targeted to those who need it most. Instead, the proposed plans allocate dollars to narrow uses without any indication of what needs exist.   Read more

NC needs to make sure every eligible family receives the expanded Child Tax Credit

National analysis conducted by the Census Bureau shows that the first payment to families of the temporary and expanded Child Tax Credit (CTC) worked to bring down challenges with paying for household expenses and reduced food insecurity.

This builds upon the solid foundation of research that cash income matters in households — and households with children in particular.

It is also common sense. With more income available, people are able to meet basic needs that otherwise go unmet and often generate greater costs and greater hardship in the future.

In North Carolina, an estimated 924,000 children were excluded from receiving the full benefits of the CTC before the expansion. After expansion, some 130,000 children were estimated to be lifted out of poverty by the expanded credit, which both provided additional value and ensured that families with very low incomes would receive the credit.

Now with the expansion, there remain two issues for families with children.

The work to make this temporary policy permanent — something that’s a significant part of the federal budget debate right now — is a top priority.

But an equally important issue that hasn’t gotten nearly enough attention in North Carolina is making sure that everyone who is eligible receives the CTC. By ensuring maximum take-up of the CTC, children, families and the broader economy will benefit.

In North Carolina, an estimated 46,000 children were in newly eligible families that did not file income tax returns in 2019 and 2020. A low estimate is that $138 million is not going to families and children where it can generate the powerful benefits of increasing security of food and finances. An estimated additional 52,000 newborns are also likely eligible but not currently receiving the CTC.  The Center on Budget and Policy Priorities estimate that $337 million is the Child Tax Credit total for families who need assistance to claim it.

In every NC House and Senate district, there are households that will need to be reached to make sure that they receive the Child Tax Credit this year.

A new report from the Center on Budget & Policy Priorities details the proven tools to increase take-up. Among them are:

  • Including information about the Child Tax Credit at all public agencies and enrollment sites for other public programs;
  • Providing on-site tax filing support for families at local Department of Social Service offices, Community Health Centers, child care or K-12 schools;
  • Using state and federal resources to fund outreach campaigns to get the word out; and
  • Funding direct help for families to file for the Child Tax Credit and other benefits for which they may be eligible but are not receiving.

North Carolina policymakers can make a commitment to these families in every district of the state that they will help families connect to the resources that have already been made available to them through federal action. It would serve as a demonstration that they recognize the hardship that too many North Carolina families with children continue to face and the high costs of ignoring it to us all.

Alexandra Forter Sirota is Director of the Budget & Tax Center. Logan Rockefeller Harris, a Senior Policy Analyst for the Budget & Tax Center, contributed to this report.

Four takeaways from the House budget proposal

On Monday evening, the N.C. House of Representatives finally released its proposed two-year budget for the state, which is expected to pass the chamber by the end of this week. The House budget proposal is only marginally different from the Senate’s, and restricts spending to an arbitrary spending limit like the Senate’s proposal.

It also unnecessarily and severely underfunds public schools in violation of the state’s constitutional obligation to provide a sound, basic education to every child as prescribed by the longstanding Leandro court case, and either fails to meet the needs across a raft of other issue areas altogether, or merely provides token investments that fail to bolster core public structures and systems critical to our collective well-being.

After, as is expected, the House budget passes on a simple majority vote, the Senate and House will appoint members from both chambers to develop a conference committee compromise, which will need to pass both chambers before being sent to the Governor for his final review.

Regrettably, the House’s proposed budget would continue North Carolina on a long path of disinvestment, prioritizing tax cuts that disproportionately benefit the wealthy and corporations at the expense of our communities, rather than using this moment as an opportunity to survey the vast needs across the state and invest our collective dollars to ensure every person – Black, brown, indigenous, and white – can have their needs met.

1. Proposal continues to drop state spending to historic lows

The plan proposes spending $25.7 billion in Fiscal Year (FY) 2021-2022 and $26.7 billion in FY 2022-2023. Like the Senate’s proposed budget, the House proposal would bring North Carolina’s investments to a 45-year low of 4.56 percent of the state’s economy in the first year and 4.54 percent in the second year. Spending levels continue to fall over $7 billion short of the 45-year average spending as a share of the economy (as represented by the dotted blue line in the chart).

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House environmental budget appropriates money for flood control … then rolls back flood control protections

High water during Hurricane Florence

Update: The House amended the budget Wednesday night to strip the isolated wetlands language from the bill.

The House released its $25.7 billion budget proposal this week, and unlike previous legislative sessions when lawmakers held a veto-proof majority, there are no dire cuts to the Department of Environmental Quality. (Considering past slashes to DEQ’s budget, there’s little left to trim.)

That said, the DEQ portion of the budget is not completely benign. It contains some regulatory rollbacks that work at cross purposes to the appropriations.

The Senate has already passed its version, and the two chambers will have to compromise on a final version before it goes to the governor.

The budget funds five new full-time positions — $487,000 per year — for an emerging compounds unit to address PFAS and 1,4-Dioxane contamination. The Senate budget allocated money for 10.

Regardless of income, residents whose private drinking water wells are contaminated with PFAS can apply for a grant from the Bernard Allen Memorial Drinking Water Fund. The fund typically is reserved for low-wealth households, but in cases of PFAS contamination, the income limitation is lifted.

Left hand, meet right hand: Lawmakers appropriated a lot of money for resilience and flood control while relaxing and eliminating rules that would help with resilience and flood control.

DEQ would receive $1.45 million in one-time money for coastal resiliency grants and temporary coastal resilience planners, plus $98,000 for a new permanent resilience coordinator, and $5 million in non-recurring funds for a pilot project in the flood-prone Stoney Creek area of Goldsboro. The Department of Natural, Economic and Cultural Resources would get $20 million in non-recurring funds for floodplain grants.

This funding is necessary to help the state adapt to the vicissitudes of climate change, but buried halfway through one budget document is a provision that would prohibit local governments from enacting stormwater ordinances that are stronger than the state or federal rules. Ditto for riparian buffers, which keep development from sensitive areas near waterways, usually 50 to 100 feet away, depending on the river basin. Both stormwater ordinances and riparian buffers help with flood control.

Nor would the state require a permit for “activities” (read: filling) in isolated wetlands currently not protected by the federal Waters of the United States rule.

Wetlands are key to filtering pollutants and controlling flooding, which is why they have been legally protected.

Since there are no maps that identify these wetlands — known as “non-jurisdictional” — it’s impossible to predict what projects could affect these wetlands, according to a DEQ presentation last month to the Environmental Management Commission. However, the Division of Water Resources estimated 99 isolated wetlands would be unprotected. Data gathered by a non-governmental organization indicated that more than 900,000 acres of wetlands in just two river basins could be non-jurisdictional, according to the presentation.

WOTUS, as it’s known for short, is under revision by the EPA and the US Army Corps of Engineers, so certain isolated wetlands could be protected in the future, but that would be too late for the ones filled in.

Another tool for flood control: dams. Yet the budget would strip DEQ’s ability to classify a dam as high hazard if a private engineer determines it doesn’t merit that designation. DEQ would have to defer to the engineer’s opinion for dams less than 20 feet tall and that can hold up to 653,400 cubic feet — or 4.8 million gallons — of water.

According to the state’s dam inventory, 789 dams fit that height and capacity criteria. Of those, 152 are currently classified as high hazard.

Department of Health and Human Services

Not in the DEQ budget, but potentially related, DHHS would receive $150,000 in one-time money for an Huntersville ocular melanoma study. Twenty-two people have been diagnosed with this rare cancer since 2009, most of them young women. The majority of people diagnosed with ocular melanoma are men over 50.

This study would follow up on a 2017  investigation, in which DHHS gave a $100,000 grant to the Town of Huntersville, to try to determine if there is an environmental link to the disease in the area.

Another $150 million in the DHHS budget would go toward removing lead and asbestos in schools, child care facilities and residential housing. Lead, often present in older plumbing and paint, is a neurotoxin; children who are exposed to lead and have high levels of it in their blood can suffer irreversible neurological damage. Asbestos exposure can cause cancer and other debilitating or fatal respiratory diseases.