by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
North Carolina’s budget bill to begin distributing money from the CARES Act’s Coronavirus Relief Fund. How they went about allocating the money and what they did with it provides plenty of evidence on the value of flexibility, which 29 state think tanks have requested from Congress.
The General Assembly is waiting to see what is needed and what is possible before allocating $2 billion of the $3.6 billion to North Carolina from the CARES Act Coronavirus Relief Fund. Of the $1.6 billion already specified, $470 million is dependent on federal flexibility before it can help local governments, the NC Department of Transportation, the state zoo, aquariums, and museums offset lost revenue from sales taxes, gas tax, and visitor ticket sales. State government has frozen pay increases, hiring, travel, and other purchases in a bid to save money through the end of the fiscal year, and preserve the state’s available fund balance.
The danger of inflexibility was seen when the Republican-controlled NC House included temporary Medicaid expansion to 200% of poverty for prevention, testing and treatment of COVID-19. The federal government already provided funds directly to hospitals for COVID-19 treatment for the uninsured and through Medicaid for testing. So this new appropriation of Coronavirus Relief Fund money was duplicative and wasteful.
Potentially duplicative provisions did survive to provide $225 million to schools, community colleges, and universities for the transition to distance learning. This was over and above the $856 million in the Education Stabilization Fund. Hospitals also received direct $95 million in relief on top of money already allocated through the Provider Relief Fund.