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.

NC House tax plan isn’t good for our state (and these graphs explain why this is the case)

The N.C. House tax plan would continue to reduce income tax rates even as economic hardship persists and real, sustained investments will be required to ensure that the state and every community can thrive.

The plan reviewed in the House Finance committee Monday afternoon would reduce the state’s flat income tax rate to 4.99 percent after Jan. 1, 2022, and phase down the corporate income tax rate from 2.5 percent to 2.25 percent in tax year 2024 and to 1.99 percent beginning in tax year 2025.

These rate cuts aren’t nearly as bad as the Senate’s proposal, but make no mistake — they aren’t good either. (And Speaker Moore’s statements in a press event yesterday, suggest that the House leadership shares the Senate’s goal of getting to zero income taxes.)

The full impact of the changes by 2025 would be a reduction of $2 billion in annual revenue that otherwise could have funded priorities for the well-being of the state and the people. By just the second year of the biennial budget, the state’s revenue with these tax cuts would fall below the required funding level needed to keep up with enrollment growth in K-12 and post-secondary schools, as well as the costs of delivering health care services.

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About that labor “shortage” – Look to wave of retirements, not government aid to understand

Photo by Joe Raedle/Getty Images

For all the discussion about what’s making it hard for people to return to the labor force – lack of child care, transportation, housing, training, etc. – a major story that hasn’t received nearly enough attention is how the COVID-19 pandemic has pushed a huge number of North Carolinians into retirement. 

A lot of politicians and special interests want to blame any difficulties businesses are having in hiring workers on unemployment insurance, government benefits, lazy millennials, the vague specter of “socialism, and a supposed general decline in the American work ethic. Hold for a moment the fact that the whole “shortage” story is a bit of a misnomer (there were more people looking for work in June than before COVID-19 in 97 of North Carolina’s 100 counties and every big city) , but actual labor market data and government surveys tell a decidedly different story.  

The U.S. census has been surveying North Carolinians throughout COVID-19 about how the pandemic is impacting their lives, and the responses point to a big increase in the number of people who consider themselves retired. Between July and October of last year, roughly 1,320,000 people in North Carolina reported that they were not working because they were retired. More recently between April and July of this year, the average had shot up to over 1,485,000. That’s an increase of around 165,000 people, or a 12 percent jump, in just a few months. Understandably, a lot of people who were already contemplating retirement decided that putting their well-being at risk by continuing to work during a global pandemic just wasn’t worth it. 

Compare that shift to unemployment insurance (UI), which conservative leaders and the media have blamed for businesses struggles with finding workers. In the week before the 4th of July holiday, fewer than 110,000 North Carolinians were receiving either state or federal supplementary unemployment insurance, a number has been steadily declining throughout 2021. While leaders in the General Assembly were trying to cut off federal benefits, and blaming UI for businesses inability to find workers, they failed to note or acknowledge that a far larger number of North Carolinians appear to have exited the labor market into retirement in the past several months. So, while ignoring a major driving force of declining labor force participation, leaders sought to cut off vital benefits, which have not been shown to decrease peoples’ availability for work. 

To be clear, this isn’t about blaming retirees instead of people receiving UI benefits. We should never have been pointing the finger at people forced to rely on UI benefits for our collective failure to fix our economy, any more than we should tut-tut at older people going into retirement now.  Read more