NCGA’s proposals for US bailout funds lack vision, transparency and public input – North Carolina Justice Center

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

the $ 5.4 billion North Carolina received in flexible dollars from the federal American Rescue Plan present a tremendous opportunity to invest in transformational change that can help all communities in North Carolina respond to the continuing threat of COVID-19 and lay a bold foundation for the future. Yet analysis of the intended uses of those dollars by NC House and the Senate reveals a plethora of random articles – over a hundred in each proposal – that fail at all to provide a vision for the change in our state.

The CN General Assembly is in talks on the state budget through the conference process, where appointed members of the House and Senate meet in private to negotiate a single legislative budget which will then be forwarded to each. chamber for final approval and sent to the governor. . Our analysis to date has focused on lodge and Senate proposals for dollars from the General State Fund; however, the respective state budget proposals include suggested uses for much of the flexible US federal bailout dollars (via the state tax relief fund).

In addition to allocating a large chunk of the flexible dollars allocated to North Carolina from the US bailout, the House and Senate plans also allocate problem-specific federal grants to the competent public bodies. These dollars will go to support services, including child care, mental health and addiction, and support areas like transportation, capital projects, small business credit initiatives, and more.

Here are our key takeaways, outlined below:

  • The lack of transparency and the public contribution of the communities severely hamper the possible positive impact with these funds.
  • Seemingly arbitrary and one-off allocations for specific needs in specific communities, in many cases, fail to paint a picture of the General Assembly’s vision for the transformative opportunities presented by the influx of flexible federal dollars.
  • Investing in state dollars for long-term needs is a more sustainable path forward for North Carolina, rather than using federal dollars to offset anticipated short-term losses due to further reductions in money. taxes.

Lack of transparency in the process of developing these credits harms the communities left behind. State Fiscal Recovery Fund dollars allocated to state and local governments can be used to fund meet a wide range of needs to respond to COVID-19 and start rebuilding stronger communities, and should seek out and provide ample opportunities to contribute to the public, as well as assess needs in communities to ensure they are targeting those who have it. Not needed anymore. Instead, the proposed plans allocate dollars to restricted uses without any indication of existing needs.

Additionally, despite differences between the House and Senate plans, the two are remarkably similar, suggesting that there were private negotiations between the chambers before the plans were publicly released on what to fund. and not finance with state fiscal stimulus funds. . The public has been excluded from this process. Unlike other states where plans are underway to conduct statewide listening tours and seek community input, North Carolina legislative leaders have not made it clear that most investments that they raise as important in their budget this year are one-off and funded by them. federal funds.

The plans do almost exclusively one-off allowances billions of federal dollars, with no indication in the wording of the bill or in the committee’s reports how far the funds will go, when the funds will be spent by, or as previously mentioned, how communities and needs have been prioritized . According to federal guidelines, the funds must be allocated by December 31, 2024 and spent by December 31, 2026. The House and Senate plans would each allocate about 90% of North Carolina‘s share in the funds. dollars of the state tax adjustment (see graph), plan very little reserve for unknown future needs and assess the impact of the initial credits.

For example, both proposals include one-time lump sums for infrastructure grants for water and wastewater ($ 550 million in the Senate plan and $ 900 million in the House plan), but they do not outline a plan for how subsidies will be allocated to water and sanitation. sewerage utilities; and how state allocations will interact with local government allocations that have been or will be made with the localities’ own share of flexible federal dollars.

A better approach would be to systematically assess needs across the state, create channels for input from community members, and meet with a cross-section of local governments to understand where dollars are needed most and where local governments seek to allocate dollars so that their efforts are complemented and not duplicated by the state.

The General Assembly also proposes to use a large portion of the dollars in the State Budget Recovery Fund to replace what would otherwise have to be recurring government dollar investments. Funding for affordable housing development, rapid relocation services for North Carolinians at risk of homelessness, behavioral health services in crisis situations, and communicable disease surveillance and prevention services are among the areas funded. with one-time federal dollars in proposed budgets, while little or no state dollars are committed for these ongoing and critical needs in our state.

In addition to offering tax cuts that would put North Carolina state revenues below the level needed To meet the current, let alone growing, need for state investment, the budget proposals demonstrate the legislative leadership’s use of federal dollars to support the state’s flawed funding model. This strategy is short-sighted and puts utilities at risk for years to come.

Certainly, the plan includes investments that will change the landscape of opportunities in a systemic way, but will likely require continued investments. These include lead and asbestos remediation in schools and daycares ($ 150 million in each plan), rapid rehousing of individuals and families at risk of homelessness due to the pandemic ($ 15 million in each plan) and funding for the Workforce Housing Loan Affordable Housing Development Program ($ 200 million in the House plan and $ 40 million in the Senate plan).

Data continues to reveal the pandemic’s disparate impact on high and low wage workers, the more likely it is that Black and Latin adults suffered loss of income, as well as women and immigrants. We must seize this opportunity to provide greater support to those who need it most and to advance a better and more inclusive vision for North Carolina.


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