For an effective and equitable recovery, NC must direct dollars to hardest hit local governments

The last downturn in North Carolina — the Great Recession — resulted in a slow and geographically concentrated recovery that never fully reached all counties by the time COVID-19 hit. At the conclusion of 2019 and the pandemic’s subsequent onset, 42 of the state’s 100 counties still had fewer jobs than before the Great Recession.

If current recovery efforts do not help communities replace lost jobs and income, stabilize housing, and improve the health and well-being of families, North Carolina will reinforce persistent inequities. Those inequities will make it increasingly difficult for our state to promote economic mobility for children and families, support business entrepreneurship, and reduce the concentration of disparate outcomes.

Intentional public policy choices at the state level will be imperative in ensuring that North Carolina recovers equitably. The aid that local governments receive from the American Rescue Plan also will be a critical tool for communities to deploy those resources that are proven to support economic well-being.

COVID-19 has impacted local governments specifically in a range of ways. Communities across the state are being challenged by the reduction in local revenues (primarily occupancy and prepared meals tax), the loss of fees, and moratoria on utility payments alongside the rising need to ramp up vaccination drives, remote school services, and supports to businesses.

The American Rescue Plan represents the first time in the COVID-19 federal relief packages that all local governments and tribes are guaranteed to get monetary assistance. Of the $350 billion disbursed by the federal government, $220 billion (63 percent) will go to state governments while the remaining $130 billion (37 percent) is reserved for metro cities, other municipalities, and county governments. Although there is an allocation for smaller governments (i.e., cities, towns, counties), states may pass on additional dollars to these communities depending on how each state government chooses to invest its respective aid monies.

For context, North Carolina is receiving roughly $8.7 billion (excluding capital projects). Of that amount, $5.3 billion is for state aid and $3.4 billion is for local aid spread across our cities, towns, and counties. A detailed breakdown of local and state ARP aid can be found here.

As local governments begin to consider where to make much-needed investments, communities hit the hardest and too often excluded should be engaged to ensure that dollars go to the greatest need. As found in a recent analysis by Resourceful Communities, BIPOC organizations were least likely to access support even though they represent trusted stakeholders in various communities and can connect underserved people with services and programming.

When deciding how to allocate aid monies, well-resourced stakeholders may seem to be making a larger impact because they are serving a larger number of constituents, have a more established network of partnerships locally and statewide, and have the means to institute an extensive data collection process — but it is important to recognize capacity limitations. In many instances, BIPOC organizations are overworked and lack the capacity needed to illustrate larger impacts, but they are indeed reaching community members in need of the most assistance and often are the only entities doing so. Local officials must take this into consideration.

It is clear that as communities move ahead, as, for instance, New Hanover County has already done with an initial framework, they must establish a process for residents’ input and make a commitment to ensuring that resources go to groups that were left out of previous aid. Helping those still on the front lines of harm can create more resilient communities in the long run.

Decision makers must also recognize that the American Rescue Plan is not the final solution. Even with local governments receiving aid, most aid is highly concentrated in densely populated and well-resourced areas (e.g., Raleigh and Charlotte) as opposed to the areas hardest hit by COVID-19. The fight is far from over, and more is to be done in the coming months.

Parker Martin is a Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center.

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NC needs to fix its tax code to secure a just recovery — for everyone

As North Carolina looks to chart a path forward and out of the pandemics damaging impacts on people, communities, and the economy, tax policy choices will matter to building toward a more inclusive economy.   

To ensure a just recovery, we must fix our upside-down tax code and ensure that everyone can thrive, not just a wealthy few. 

Signs are clear that our state’s current trajectory in this recovery will leave incomes even more consolidated at the top. A select few were insulated from the brunt of the public health and economic damage — those able to stay home and stay on the job. Many corporations have reaped record profits.   

Growing income inequality and the inequitable impacts from the pandemic would block progress for us all in securing a strong, inclusive economy. All the while, hardship has deepened and people across the state continue to struggle to put food on the table and a roof over their heads.   

The reality is that the only way to make sure the recovery doesn’t deepen inequities is if our leaders make policy choices that ensure every person can connect to opportunity — and fix a rigged system so the the rich and powerful don’t continue to receive outsized benefits 

Senate Bill 710 and House Bill 556 provide a first step in addressing North Carolina’s need for a tax code that addresses inequities and enables public investments proven to support economic well-being.  

These bills would simply put in place a graduated income tax rate  taxing income above $500,000 a year at higher rates up to the state constitutional cap of 7 percent, and putting us in line with neighboring states by raising the tax rate on corporate profits from 2.5 percent to 5 percent 

It is a wildly popular move. North Carolinians want to see the very rich and big companies contribute to the public good.  

  

These bills wouldn’t undo all of the tax cuts that went to the very wealthy in 2013They would, however, give North Carolina the opportunity to make up some of the lost ground from years of budgeting without regard to our state’s needs or the well-being of people.  They would make it more likely that every North Carolinian has a chance to recover from the range of harms in the past year 

Everyone should have access to educational opportunities, health care, and economic wellbeing. A $2 billion increase in investments would make it possible for North Carolina to: 

  • Provide all teachers a 15% pay raise, fund all instructional support personnel at industry-recommended levels, and deliver universal meals to K-12 students; 
  • Build the affordable housing missing in communities across the state and ensure that housing costs aren’t a cost burden to households with low incomes; 
  • Deliver quality health care in every community and strengthen the network of public health institutions that inform the public of health risks and support healthy living 

North Carolina’s current tax code asks the top to pay less as a share of their income than taxpayers with poverty-level incomes. By putting in place tax policies that would ask just 1 percent of North Carolinians to pay slightly more, North Carolina can invest in a more equitable, just recovery for everyone 

Alexandra Sirota is the Director of the Budget & Tax Center, a project of the NC Justice Center.

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