North Carolina Has a Lot of Money to Help People
North Carolina has a lot (A LOT!) of money right now. Billions of dollars in our bank accounts.
Republicans are bragging about having this cash as if that money came from them rather than millions of hard-working North Carolinians. We need to put the money to work for the people who have been hit the hardest by the last year, and we need to make smart investments that will build future success.
Republicans will likely say that we should put the money into more tax cuts, instead we should look to North Carolina’s past for the keys to building our strong economy. North Carolina became a leader in the Southeast because we invested in education, because we pursued ambitious projects like the Research Triangle Park, and because we supported homegrown businesses and talent like our state’s banks. We can continue that successful trajectory by smartly using these funds.
First, let’s talk about how much money we actually have. We can think of all the money in 3 buckets. We have the “Unemployment Trust Fund,” the “Rainy Day Fund,” and the “Unreserved Balance.” The Unemployment Trust Fund and the Rainy Day Fund are stand-alone, separate accounts and not included in the unreserved balance. So, using the unreserved balance doesn’t deplete these accounts or hinder our ability to pay unemployment claims and respond to storm damage.
Unemployment Trust Fund:
- Prior to the pandemic in early 2020, the fund was at $3.8 Billion
- In early February 2021, the fund was at $2.5-2.6 Billion.
The fund has stabilized and is actually expected to increase as revenues exceed payouts this year. For a reference point, in 2008 before the great recession hit, the trust fund was at $544 Million.
Savings Reserve (“Rainy Day” Fund):
- 2017-2018: $1.849 Billion
- 2018-2019: $1.254 Billion
- 2019-2020: $1.169 Billion
- 2020-2021: $1.104 Billion (but $575M is expected to be deposited so the expected balance in June is $1.679 Billion)
So our Rainy Day fund is in amazing shape and will be LARGER this year than last year. Sadly, because we continue to fail to address climate change, we are likely to continue needing this funding for weather related crisis recovery.
This is the big one. This is money currently in our bank account and not budgeted for anything in particular. It is calculated by taking projected tax revenue and subtracting out things we have to appropriate along with what an expected budget is going to be.
At the end of last Fiscal year, we had $1.471 Billion in unreserved funds. This year, we have $4.018 Billion on hand!!
This means we could spend $1 Billion in non-recurring money on COVID aid and still have double the unreserved Balance we had at the end of last year.
Why are we doing so well? There are three big factors:
- The April 2020 tax deadline was postponed to July. Instead of getting a big bump in April 2020, it was collected in the new fiscal year that begins in July.
- We recently started getting sales tax revenue from out of state purchases via the internet, such as from when you buy something on Amazon.
- North Carolina likely weathered the pandemic’s impact better than some states because of our industry mix of health care, technology, banking, and education. Most of those sectors maintained high employment numbers throughout the pandemic. On the other hand, we know that the tourism industry (especially restaurants and hotels) were hit hard and need help.
All of this puts us in a position to aid those people who really were hurt, and are still hurting. We have about $8 Billion in potential aid that we can provide to people. If we have that kind of money, it’s not irresponsible to spend a portion of it to get through this pandemic. I’ve written previously about who we should help with these reserves. Here’s my brief list:
- People who get Sick & their Health Care Workers
- Small Business Owners & their Employees
- People hit with Hunger & Housing Needs
- Students & their Educators
- People Unemployed & looking for Work
We clearly have the means and the ability to take care of North Carolinians and still keep our economy strong. It’s disappointing that Republicans would rather brag about our savings than about saving people’s livelihoods – and their lives. As we negotiate this year’s budget, Democrats will be pushing for using our strong financial position to help those who need it most.
Graig Meyer is the State Representative for House District 50, covering portions of Orange and Caswell Counties. He can be contacted at email@example.com.
This article originally appeared in the News of Orange and Caswell Messenger.