Gov. Cooper outlines budget plan for spending COVID-19 relief aid
North Carolina Gov. Roy Cooper presented an outline Friday for how he wants to spend $1.4 billion in federal COVID-19 relief in the state budget.
The money is from the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act. The $2 trillion economic relief package passed by Congress and signed by President Donald Trump provides assistance to workers, small businesses, families and state and local governments.
How the governor’s proposal break down the money:
▪ $375 million for small business and local government assistance
▪ $313 million to public health and safety
▪ $740.4 million for education and state government services.
Cooper said lawmakers from both parties have already seen his proposal in detail.
“From what I understand, the House budget may be a little more than what I’m talking about and the Senate [budget] a little less,” Cooper told reporters during a news briefing on Friday.
Budget revenue shortfall expected
The General Assembly returns on April 28. The House has been meeting for the past month in multiple COVID-19 committees around topics of economic support, education, health and state operations.
Republican budget writers Sens. Harry Brown, Kathy Harrington and Brent Jackson sent the governor a letter Friday asking him to tell executive branch agencies to find 1% savings in their budgets to allow for an extra $250 million “in cushion for the state.”
“The most recent analysis from the legislature’s economist projects a multi-billion dollar revenue shortfall through fiscal year 2021. While the state has built substantial reserves, we do not presently know how severe the economic downturn will be or how long it will last. In other words, we know we’re falling off a cliff, but we don’t know when we’ll hit the ground below,” Brown, Harrington and Jackson wrote.
Charles Perusse, director of the Office of State Budget and Management, sounded the alarm to House committee members earlier this month about how COVID-19 would impact the economy.
“We know it’s going to have a substantial impact, it’s already having a substantial impact on our economy, and if we’re not already in a recession we’re going to be shortly,” Perusse said in early April.
Plus, with tax filing and payment deadlines extended to July 15, that three-month delay is also a three-month delay in tax revenue for the state.
“We anticipate a substantial revenue loss,” Perusse told lawmakers.
Where the money would be spent
Within the health and safety funds, $20 million would go to public health, mental health and crisis services; $25 million to food, safety, shelter and child care; $75 million to coronavirus testing, contact tracing, data trends and personal protective equipment; $78 million to school nutrition and $75 million to rural and underserved communities. It also includes another $40 million for “additional medical costs.”
Of education and government services funds, $243 million would go to K-12 education; $77.4 million to higher education; $40 million to revenue losses at state agencies and ports; $80 million to state government operations; and $300 to transportation.
Of the small business and local government assistance in the governor’s proposal, $300 million would be to local governments and $75 million to small business assistance through the Golden LEAF Foundation.
Perusse said Friday that the K-12 money includes summer reading help; the higher education money would fund transferring UNC system summer classes online and cleaning campus buildings. The transportation funds include letting “critical projects” by the Department of Transportation continue without interruption.
The continuing budget battle
Cooper is a Democrat and the House and Senate are both controlled by Republicans, who have the majority in the legislature. While they have agreed on some COVID-19 response priorities like tax relief, that could quickly take a turn.
The 2019 budget fight — still unresolved in 2020 — was centered around Medicaid expansion and teacher raises. Cooper and Democratic lawmakers want to expand Medicaid, while the Republican-led Senate does not. The Republican-led House discussed a Medicaid expansion compromise with work requirements, but it never made it to the House floor for discussion. Democrats and Republican could not agree either on how much of a raise to give teachers, with the governor vetoing a bill that would have given teachers an average raise of 3.9% over two years, calling them “paltry” and calling for higher raises.
The General Assembly came back for a one-day session in January. While the House overrode Cooper’s budget veto in September, the Senate never called it up for an override vote. Instead, the legislature passes several mini budgets, and last year’s budget rolled over to the new year, following an earlier state law.
The Republican senators’ letter brought up teacher pay and jobs.
“I expect you agree that maintaining current government operations, including teacher positions and salaries, should be our top priority. The federal government does not permit states to use federal COVID-19 relief allocations for expenditures unrelated to the pandemic. Therefore, we must be prudent stewards of state taxpayer funds to avoid cuts to state government operations, especially education,” they said.
Cooper also announced Friday that students will not come back to school buildings this school year. Earlier this week he also extended his statewide stay-at-home order until at least May 8, with the first restrictions possibly lifting starting May 9 in a “modified” stay-at-home order as part of the first phase of a three-phase plan to lift restrictions.
This story was originally published April 24, 2020 at 3:02 PM.
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