Is Berger the Grinch who stole Christmas?

Every who down on Jones Street loved Christmas a lot, but at least one Grinch who lived north and west of Raleigh did not!

Could be his politics were too far to the right                                                                                                                                                                        Or maybe he just didn’t care about many people’s plight.

Some think the most likely reason of all                                                                                                                                                                                  Is he’s gotten too big for his britches, y’all.

But whatever his excuse, whatever his reason                                                                                                                                                            Teachers and state employees won’t have a full stocking this season.

Apologies to Dr. Seus for taking such liberties with his story about the Grinch. Hopefully, it will introduce a story our state needs to consider.

 North Carolina is the only state in the nation that has not passed a state budget for the year that started July 1. Some 72,000 state employees and 188,000 full-time public-school employees (of which about 100,000 are teachers) haven’t gotten increases in pay because lawmakers haven’t done their jobs. Peoples’ costs have gone up, but their incomes haven’t.

Who is this Grinch? We could truthfully say there are 170 Grinches, because that is how many members we have in our General Assembly. But to be realistic, you would need to narrow that number down to 101 because that’s the number of Republicans – 30 in the Senate and 71 in the House – who really hold the control and make the decisions.

These 101 are at odds over several key issues that are holding up passage of a state budget, but House Speaker Destin Hall recently said in an interview that the biggest hang-up is over taxes. Specifically, over tax cuts.

A little background information: When Republicans took control of state government in 2011 the personal income tax rate was between 6 and 7.75 percent, depending on your income. We’ve said before that Republicans never met a tax they didn’t want to cut and when it comes to income taxes, they have used a cleaver.

By 2023, the personal income tax rate had been reduced to 4.75 percent. North Carolina’s economy was booming, and let’s acknowledge that one reason for that boom was due to GOP tax cuts stimulating the economy. Economic forecasts at the time predicted a continued strong economy, so House and Senate leaders agreed to a longer-term schedule of income tax rate reductions. In 2024, the rate dropped to 4.5 percent, with another quarter percent drop in 2025. The rate would further decline to 3.99 percent beginning with the fiscal year that started in July of this year.

Here is where the disagreements begin. The Senate wanted to further reduce income tax rates to 3.45 percent in the 26-27 budget year. The House disagreed with this step because of a forecast from the Office of State Budget and Management (OBM).

Because of the tax rate cuts already enacted and a projected softening in the rate of growth in state revenues, the OBM estimated North Carolina would experience a “fiscal cliff” of reduced revenue receipts next year, projecting a revenue shortfall of $100 million over budgeted expenses.

The Senate wanted to go ahead with the projected further cut. Senate President Pro Tem Phil Berger said the House had previously agreed to the rate cut and should honor their agreement. He added that he didn’t believe the “fiscal cliff” projections.

The House disagreed, insisting on a more cautious approach, saying conditions had changed since the previous agreement. Further, the House wanted to give state employees a 2.5 percent pay increase and raise pay for starting teachers to almost $50,000, second highest in the Southeast. Current teachers would get an 8.7 percent pay raise over two years. Senate pay increases were considerably lower.

There were other areas of disagreement, but most believed those problems could be resolved if a consensus on the tax rate was reached.

Neither side was willing to budge on their positions and the legislature adjourned without passing a budget. Some estimated the budget wouldn’t even be discussed further until after the March primaries in 2026.

Since then, we’ve seen big changes, including the Big Beautiful Bill that threatens to eliminate health insurance for some 600,000 North Carolinians, uncertainty over the federal Department of Education, tariffs that have greatly affected North Carolina farmers and threats to food stamps.

Thousands of employees of the state are worried about being able to afford Christmas presents and manage year-end finances. Six months have elapsed with no state budget, no pay increase and no idea when decisions will be made.

One person could end this Christmas angst. He isn’t the president. Not the governor. Or even Santa Claus. Only one person has the power and the ability to get a budget deal passed quickly. It is Senate President Pro Tem Phil Berger.

His unwillingness to make that happen earns him the honor of being named the Grinch who stole Christmas for many North Carolinians.

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