The steps NC leaders must take to save the state’s economy

With the passage of a $2 trillion stimulus bill, federal lawmakers have gone big and they’ve gone together.

Now it’s North Carolina’s turn. Republican lawmakers and Democratic Gov. Roy Cooper must unite to save livelihoods and take actions that could save lives. The specifics of a state relief package are yet to emerge, but this much is clear: It needs to be big and it has to come fast.

It certainly helps that the spending discussion starts with plenty of funds on hand. Republican austerity polices and an impasse on a new budget have created a big budget reserve ($900 million), a healthy rainy day fund ($1.5 billion) and a bulging unemployment reserve fund (almost $3.9 billion). A large share of those reserves should be used as direct aid to individuals, families and businesses similar to what is in the federal legislation.

Clearly one of the first ways to get more money to more people is changing the state’s woefully inadequate unemployment compensation program. Last year, less than 10 percent of North Carolina’s jobless workers received unemployment compensation and those who did got an average of only $264 weekly, according to a report compiled by state Sen. Wiley Nickel (D-Wake).

Cooper issued an executive order that waived some requirements and expanded eligibility to people who lost jobs or hours to the COVID-19 crisis, but it will take legislation to increase the weekly payments, extend the duration of payments and make more people who’ve lost work eligible for benefits.

Since March 16 in North Carolina, more than 200,000 people have filed for unemployment benefits. The federal bill will provide $600 a week and an extra 13 weeks of benefits to a wide range of workers. But that support will be muted in North Carolina if lawmakers do not improve the unemployment compensation program.

John Quinterno, a Chapel Hill consultant who specializes in economic and social policy, said, “Even if federal money comes falling out of the sky, it’s not going to do as much in North Carolina because it’s harder to qualify, benefits are much lower and duration is so minimal.”

On the business side, Cooper is likely to propose filling gaps in federal assistance, especially for small businesses. Other governors are offering state loans to keep small businesses afloat. Pennsylvania Gov. Tom Wolf is putting $60 million into a fund to provide loans of up to $100,000 to businesses with 100 employees or fewer. Minnesota Gov. Tim Walz has set aside $30 million for zero percent interest rate loans for any small business temporarily closed by COVID-19 health measures. The loans will be 50 percent forgivable.

In North Carolina, State Sens. Danny E. Britt Jr. (R-17th) and Jay J. Chaudhuri (D-16th) have proposed a Main Street Emergency Bridge Loan targeted at businesses with 500 and fewer employees. The state-backed loans would be near zero interest and repayable over 15 years.

Spending much of the state’s reserve dollars would greatly buffer the state economy. For instance, the state’s unemployment compensation reserve fund is the fifth richest in the nation and twice the level the Department of Labor recommends. The state could pump almost $2 billion into broadly dispersed unemployment payments and still be within guidelines for a well-balanced program.

Whatever the reasons, North Carolina is fortunate to come to this hour with reserve funds at hand. Now is the time to use that money to help North Carolinians get to the other side of this national, state and often personal crisis.

This story was originally published March 30, 2020 at 8:09 AM with the headline "The steps NC leaders must take to save the state’s economy."