Last week, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, which was immediately signed by the President.
While the bill has many good provisions, it misses the mark in many ways, like prioritizing tax breaks for big companies over federal aid to state and local governments.
Of the approximately $4 billion North Carolina is expected to receive, the Center on Budget & Policy Priorities estimates that $3.5 billion will go to the state and only about $481 million to local governments. This is largely a result of the allocation formula, which only provides allocation to local governments if the population is above 500,000 residents.
State and local governments are on the front lines of trying to keep communities healthy and to protect people from losing income and access to basic needs. Prior to the passage of the CARES Act, the NC League of Municipalities wrote letters to state leaders calling for additional resources to make up for declining revenue and meet the growing need for public safety personnel and broadband access. In a letter to Congress, the National League of Cities outlined four recommended improvements the CARES Act: enact a stabilization fund for cities and states, make local governments eligible for tax credit to offset costs of paid leave, stabilize the municipal bond market, and repeal state and local and property tax deduction caps.
Although the state and local aid in the CARES Act is a meaningful and important first step, it is likely to be insufficient to support North Carolina’s increased expenditures from combating COVID-19, as well as the potential loss in revenue from an economic downturn. Read more