Good thing lawmakers didn't pass a budget

As legislators resume their session that started January 8th, they will face issues potentially as hot as the July temperatures. However, the big question being asked by teachers, state employees, and many others is when they will pass a budget for the year that started July 1?

I have concluded the state is better off that they haven’t passed one before now! Allow me to explain.

Let’s start by reviewing why a budget hasn’t been passed. One of the biggest drawbacks was whether to further cut personal income taxes.

Legislators had agreed to personal income tax cuts from 4.25 to 3.99 percent for the year just begun July 1. The Senate wants to reduce those rates to 3.45 percent in the 26-27 budget, but the Office of State Budget and Management has forecast that while revenues to the state would be stable and able to meet the $32.6 billion spending levels both chambers had agreed upon for this year, those cuts would result in a budget deficit of some $100 million the second year of the biennial budget. Some analysts have predicted a “fiscal cliff” for revenue receipts. The House is balking at further cuts.

There were other disputes. The House eliminated about 20 percent (around 3,000) of vacant state jobs; the Senate only cut 850. The House would give state employees a 2.5 percent pay raise; the Senate plan has a 1.25 percent increase and two-year bonuses. The House raises starting teacher pay to almost $50,000, second highest in the Southeast. Teachers would receive an 8.7 pay raise over two years and restore supplements for advanced degrees. The Senate provided 2.3 percent increases for teachers and two-year bonuses. State retirees would get cost of living adjustments both years of the House plan.

The Senate proposed $400 million in funding for a new children’s hospital, operated by UNC and Duke. Some question why another children’s hospital is needed when we already have them in Chapel Hill, Durham, Raleigh, Greenville, Charlotte and Winston-Salem?

The House disagreed with the Senate’s proposal to create a new program like the federal DOGE federal initiative, putting the one-year tenured State Auditor in charge. If needed, shouldn’t the legislature be in charge?

In a rare bipartisan move many House Democrats sided with Republicans in passing their budget plan. Even Governor Stein had good words for it. New House Speaker Destin Hall did not cave to Senate demands and, with no agreement in sight, lawmakers decided to call a recess in late June.

So many things have changed since June 27th that any budget lawmakers could have passed would need revising or at least serious review.

In late April, FEMA informed the state it would no longer match dollar-for-dollar expenditures for Hurricane Helene, a move that could cost our state $200 million. The legislature did pass a bill allocating $700 million additional funds to Helene Relief, appropriating $500 million of it immediately.

On July 6th tropical depression Chantal dumped 9 to 12 inches of rain into 13 counties in central Carolina. Widespread flooding prompted the governor to declare a state of emergency. It is too early to estimate damages, but government relief will be needed.

Further, our schools begin a new year next month. The federal Department of Education froze $165 million in funding to our state, potentially eliminating about 1,000 positions. North Carolina joined 24 other states in lawsuits against the move. The feds folded and the freeze thawed.

Then there’s Trump’s “Big Beautiful Bill” (BBB) that threatens to eliminate Medicaid health insurance for some 600,000 North Carolinians. When our state finally agreed to expand Medicaid in 2023 it was with the provision that if the federal government reduced or cut the 90 percent funding for the expansion our state could cut the coverage to those participants.

It's bad enough so many might lose health insurance, returning them to already crowded hospital emergency departments. Many rural hospitals teeter on financial insolvency already. A flood of uninsured patients will threaten closure to more.

The BBB also threatens the 1.4 million residents who count on SNAP (Supplemental Nutrition Assistance Program) to eat. The bill requires the state to pick up the $700 million annual cost. SNAP has been especially crucial to people in the west impacted by Helene.

Fortunately, neither the Medicaid nor the SNAP cuts take effect until October 2027 (after the next congress takes office), so there’s time enough to make decisions, but our lawmakers would be foolhardy not to initiate those discussions now.

The bottom line is that conditions have changed dramatically, and lawmakers would be wise to factor in those changes into budget deliberations. Lawmakers and government leaders need to understand that their actions now will impact our state for decades. These times demand responsible actions on fiscal matters as well as consideration for the best interests of all 11 million of us.

Tom Campbell is a Hall of Fame North Carolina broadcaster and columnist who has covered North Carolina public policy issues since 1965.  Contact him at tomcamp@ncspin.com