A new report from NC Policy Watch this morning reveals North Carolina’s dire need for federal assistance to relieve budget shortfalls in towns and cities across the state.
The COVID-19 pandemic has had a devastating economic impact, causing a major loss in revenue for local governments, leading to the layoffs of public sector jobs, and forecasting a serious budget shortfall.
An analysis from the Economic Policy Institute found that North Carolina will lose a combined total of 156,500 jobs in both the public and private sector by the end of 2021 without federal aid and the National League of Cities has estimated that cities will have a revenue loss of $360 billion through 2022.
Without federal aid, local governments will not be able to ensure that “health care, education, transportation, first responders, and other services continue uninterrupted.”
The report also highlights the critical need to expand Medicaid in North Carolina. The Urban Institute estimated that Medicaid caseloads could increase by 25% through 2021 — “a massive and unprecedented spike.”
Cal Cunningham has been a champion for Medicaid expansion and has called for Congress to pass a Medicaid expansion incentive, to make sure states like North Carolina receive the 100% federal match regardless of when they expand.
Cal has also called for additional financial relief to support North Carolina towns and cities combat projected budget shortfalls and keep teachers, first responders, and public safety officers on the payroll.
Read more below.
NC Policy Watch: Federal funding is essential to saving North Carolina’s public services
By Suzy Khachaturyan – July 8, 2020
- The COVID-19 pandemic and resulting recession are wreaking havoc on North Carolina; the state is facing a massive revenue shortfall, which will significantly affect its budget and its ability to provide crucial services. Federal funding is needed to help North Carolina, along with the local governments within it, in ensuring that health care, education, transportation, first responders, and other services continue uninterrupted.
- The picture is already bleak; since the pandemic started, the state has lost 61,500 public sector jobs.
- The economic gravity of the shortfall cannot be stressed enough; without further federal aid to state and local governments, North Carolina is projected to lose 156,500 private and public jobs by the end of 2021.
- As of early July, approximately 1,200,000 North Carolinians, representing 5 percent of the state’s February labor force, have filed unemployment insurance claims since the beginning of March. Some estimates are projecting a double-digit unemployment rate well into 2021.
- North Carolina’s tax revenues are plummeting — creating a severe funding crisis for schools, health care, and other critical services. The North Carolina state government has projected a budget shortfall of $1.6 billion in FY 2020 and $2.6 billion in FY 2021, representing declines of 7 percent and 10 percent, respectively.
- Cities in North Carolina are facing serious revenue shortfalls as well. Charlotte alone has recently projected a budget shortfall of $22 million, according to local sources.
- The National League of Cities estimates that cities will experience $360 billion in revenue loss through fiscal year 2022, which will force them to significantly cut spending on crucial services or raise taxes on already recession-battered residents.
- Between February and May, 61,500 public sector workers were laid off in North Carolina.
- The National Education Association has estimated that North Carolina could lose roughly 79,600 education jobs by the end of FY 2022 as a result of the decline in the state general revenues that fund education.
- Absent federal action, these job losses could get much worse. A recent analysis conducted by the Economic Policy Institute estimates that without it, North Carolina will lose a combined total of 156,500 public and private jobs by the end of 2021.
- Health care in North Carolina is also in jeopardy. The Urban Institute has projected that Medicaid caseloads could increase by as much as 363,000, or 25 percent, through FY 2021 — a massive and unprecedented spike. North Carolina desperately needs help to cover those who are newly unemployed and expected to enroll in Medicaid and offset extra Medicaid costs related to coronavirus.
- Funding Medicaid is critical to ensuring that North Carolina can respond effectively to the coronavirus public health crisis and the current economic recession.
- As the recession stretches into the second half of 2020, it is becoming increasingly clear that states and localities are at the forefront of combating the pandemic and its economic fallout.
- Congress must act to get states and localities the aid they desperately need. North Carolina and its residents can’t afford to wait.