NC’s $335 COVID checks were a big Republican miss

When North Carolina lawmakers allocated federal coronavirus relief funds in September, they decided to use $440 million of it to give North Carolina families with school-age children a check for $335.

The payments – called “extra credit grants” – were purportedly intended to help with costs connected to having children learn remotely because of school closures.

But in announcing the payout, Senate leader Phil Berger described it as a bit of extra cash to help parents slogging through the pandemic. “I really am not worried about how parents will spend that $335,” he said. “All I know is they need it; they deserve it.”

While Berger wasn’t worried about what parents would do, he and his fellow Republicans should have put more thought into how to best disburse a huge amount of federal relief money in a way that would reach all those eligible.

The $335 payments were issued automatically to parents who filed a state tax return indicating that they had a dependent child 16 or younger. But those whose earnings are so low that they are exempt from filing a state tax return – up to $20,000 for a couple filing jointly, $10,000 for single filers – had to apply in order to get the money.

The original application deadline was Oct. 15, but it was extended by court order to Dec. 7 after lawyers advocating for low-income workers argued that the program was missing too many eligible parents. The extension generated almost 25,000 more applications, but the program still failed to reach many parents who needed the help the most.

The Extra Credit Grant Program was a careless dispersal of desperately needed relief money by Republicans uninterested in consulting with Democrats, who wanted to ensure that the checks would reach the most needy families.

Instead, the program ensured that even high earners would be included. Eligible parents included those filing jointly with an adjusted gross income up to $400,000 and single filers with a gross income up to $200,000. An analysis from the N.C. Justice Center estimates that one in every four checks went to households with annual incomes of $100,000 or more, while many of those hardest hit by the pandemic missed out on the aid.

The state Department of Revenue reports that it so far has sent 1,053,679 checks to North Carolinians who filed 2019 tax returns reporting qualifying children. Meanwhile, even with the extension, there were only 41,000 applications for a check. The department does not have an estimate how many non-filers were eligible, but an estimate by the Institute on Taxation and Economic Policy put the number at 243,600.

Leila Pedersen, a policy analyst at the N.C. Justice Center, said there was no need to make low-income people come forward for the money. The state knows how to reach them through such programs as Medicaid, food stamps and free and reduced school lunches. “There are so many (distribution) mechanisms they could have chosen,” she said. “And then to have it so poorly targeted seems like a missed opportunity.”

It was a big miss. The $440 million could have been instead directed to help the jobless, those facing eviction or to temporarily strengthen safety net programs.

This tale of misspending does not bode well for the expected next round of federal coronavirus relief.

Senate Minority Leader Dan Blue hopes Republicans will return to the approach they took in April when they worked with Gov. Roy Cooper and Democratic lawmakers to set priorities and target the allocation of federal relief funds. By the time the legislature reconvened in September to allocate the rest of the state’s share of federal relief money, the Extra Credit Grant Program was in the overall distribution bill after no consultation with Democrats.

“The idea just showed up in the bill. There wasn’t any real discussion,” Blue said. But in January, he expects there will be a change in how the federal money is allocated. “It will probably be a much more collaborative effort.”

And, let’s hope, it produces a smarter and fairer result.