The N.C. General Assembly has tough decisions to make, and little time to make them.
That’s the message lawmakers voiced Monday, April 27, during a handful of presentations about policy priorities. As the legislature gavels in Tuesday for its short session, Raleigh’s legislative complex will fall under intense scrutiny as people watch their representatives and senators try to repair the state’s economy amid the fallout of the coronavirus pandemic.
There’s no time to waste, House Speaker Tim Moore, R-Cleveland, said Monday during an online presentation hosted by the John Locke Foundation. The state is anticipating a $2.5-$3 billion shortfall next year due to delayed federal and state tax filing deadlines — and those numbers could be even worse when the state finalizes its projections in July.
But people are hurting now, Moore said, and lawmakers must act quickly to patch the economy with money doled out under the federal Coronavirus Aid, Relief, and Economic Security Act. North Carolina is getting $6 billion in federal relief. Some of that money goes directly to cities hit hardest by the pandemic. But roughly $3.5 billion must be appropriated by the legislature by the end of the year, Moore said. Otherwise, the federal government will claw back the money. A handful of special House committees put together a plan to spend $1.7 billion on COVID-19-relief efforts.
“The challenge is to get the money out there without wasting it,” Moore said.
The House, Senate, and Gov. Roy Cooper — who reached a budget stalemate last year over harsh disagreements about Medicaid expansion — must try to agree on a spending plan for money from the CARES Act.
Cooper, who revealed his own $1.4-billion spending plan last week, wants to put $418 million toward expenses that aren’t legally allowed — or even included in guidance from the U.S. Treasury Department, said Joe Coletti, senior fellow for fiscal and tax policy at JLF. Cooper’s proposal recommends “using other federal funds to the maximum extent allowable, and then setting up a reserve within the General Fund for remaining expenses.”
Congress should revise its guidance on how to spend the money, Coletti said. Under existing rules, North Carolina must put all the money toward new costs linked to COVID-19.
In an April 13 letter to Congress, JLF President Amy Oliver Cooke — along with heads of 27 other conservative state think tanks — asked the federal government to allow states and localities flexibility in using money from the Coronavirus Relief Fund to “offset lost tax and fee revenue that would otherwise have paid for ordinary operating expenses between March 1 and Dec. 30, or … provide one-time tax relief to individuals and businesses to revive the local economy.”
But Moore sees the situation differently.
Money from the CARES Act isn’t meant to fill long-term gaps in the state’s budget as people wait until July 15 to pay taxes, Moore said. Its purpose is immediate relief for those in need.
“The reality is, a lot of those costs are hitting right now,” Moore said.
There are plenty of places to spend the money, lawmakers say.
Public schools, the University of North Carolina System, and the N.C. Community College System need more resources as they continue summer classes online, Moore said. Health care, too, is slumping as already struggling rural hospitals are barred from performing elective surgeries — the bread and butter of their industry, Moore said.
Lawmakers will consider spending for Medicaid, which may be expanded to include coronavirus testing and treatment for the uninsured.
The legislature must waive interest on this year’s deferred income taxes and find ways to restart businesses — especially those that prop up the tourism industry in North Carolina, said Sen. Chuck Edwards, R-Henderson, during a Monday webinar presented by the NC Chamber. Edwards was joined by Sen. Paul Newton, R-Cabarrus, Rep. Michael Wray, D-Gaston, and Rep. Pat McElraft, R-Cartaret.
Gov. Roy Cooper’s statewide stay-at-home order was too costly for restaurants, breweries, and hotels, especially those in tourist areas such as Asheville, said Edwards, who owns seven McDonald’s franchises in Haywood, Henderson, and Transylvania counties. Small towns and tourist industries from the mountains to the beaches are reeling.
“I supported the decision,” the lawmaker said of Cooper’s order to stay home and shutter a slew of businesses, “but I didn’t agree with it.”
Some Republicans want to make it harder for the governor to shut down businesses statewide during emergencies.
Rep. Keith Kidwell, R-Beaufort, says he plans to file a constitutional amendment forcing the governor to get legislative approval before declaring a long-term state of emergency in North Carolina. The legislation would require the governor to get majority approval from the Council of State before declaring a state of emergency. If Kidwell’s bill passes, the constitutional amendment would go before voters in November.
Other top priorities include regulatory reforms to help people adapt in a world of social distancing and isolation. For example, the legislature will consider a grace period for people with expiring drivers’ licenses or permits, Moore said, since nobody should be standing in long lines at the Division of Motor Vehicles.
Unemployment insurance is another point of scrutiny. Since March 15, 733,917 people filed claims with the N.C. Division of Employment Security, the division’s website says. Just 288,565 of those people have been paid. North Carolina should’ve been better prepared to help people when the state shut businesses down, Newton said. The criticism isn’t a knock on the commerce department’s Assistant Secretary for Employment Security Lockhart Taylor, or on the division itself, Newton said. DES was simply underprepared to handle the volume of claims wrought by the pandemic.
While the legislature gathers Tuesday to discuss these issues, and more, things around the General Assembly complex will look a little different. Only lawmakers, staffers, and credential media members will be allowed in the building. The House will stream live video. Bills will be filed electronically. Committees will be held virtually, as members remain sequestered in their offices.
One theme prevails.
“We gotta get the state reopened,” Moore said. Responsibly. Carefully.
“If now isn’t the time to come together, I don’t know what is.”