6 Things to Watch That Aren’t in N.C. Republicans’ Budget Framework

State House and Senate Republicans unveiled a budget framework on Tuesday that resolved several of their biggest sticking points in negotiations over the past year. 

Party leaders said they reached agreements on taxes, a planned children’s hospital, and pay raises for teachers and other state workers. But the two chambers have a number of other differences to work out, either in the budget or in other future legislation. House leadership released a calendar indicating they hope to finish the bulk of their work by early July.

Asked at a news conference to name some issues on which the two sides remain apart, House Speaker Destin Hall and Senate GOP leader Phil Berger turned to each other and smirked. Hall replied, “That’s going to take a long time to go through all those.”

Berger later told reporters: “If things go smoothly, we could be in a place to have a vote on a conference report by the middle of June. I think it’ll take that much time to get the details worked out.”

Here are six big policy debates that weren’t addressed in the budget framework:

1. NCInnovation

The two leaders remain at odds over funding for NCInnovation, a nonprofit that seeks to help university researchers commercialize their work. Berger has championed the effort, but many House Republicans have been more skeptical.

The House wants to claw back $500 million that was set aside for the program through a 2023 budget deal. The Senate has pushed for the nonprofit to get at least $100 million to spend over four years. If they don’t pass any changes, though, NCInnovation would keep its $500 million.

At the press conference, the leaders were asked about NCInnovation three times before they acknowledged their disagreement. “It was resolved to the extent that we will continue to discuss how to resolve that,” Berger said.

Gov. Josh Stein has called for redirecting all $500 million away from NCInnovation and putting it into the State Emergency Response and Disaster Relief Fund.

2. Medicaid Funding 

Berger and Hall said Tuesday that they were still reviewing funding for Medicaid, which provides free or reduced-cost medical coverage to disabled and lower-income North Carolinians. 

If you’re feeling déjà vu, that’s because the General Assembly passed legislation closing a $319 million funding shortfall for the program last month. Now, they’re talking about funding for the 2026-27 fiscal year.

Stein and legislative Democrats say $728 million is needed to fully fund Medicaid next year. Republicans say they want any new legislation to do more to crack down on overbilling and incentivize people to get off of Medicaid.

“We need to make sure that we’re doing a better job on the renewal of all of those programs, that we’re looking at provider rates, and making sure that we’re not being double billed,” Hall said. “With technology and AI being what it is now, there are a lot of ways to identify those issues.”

Berger and Hall said committee chairs are working on a plan.

3. Helene Relief

The budget framework doesn’t address Hurricane Helene recovery, but Republican leaders say they plan to provide another round of relief for Western North Carolina. They’ve already approved roughly $2 billion to date.

“We are virtually certain to pass another Helene bill during this short session,” Hall said. “I don’t know if it’ll wind up in the budget, but we’ll get something passed on it.”

4. Election Law Changes

It’s not unusual for state lawmakers to include election-related policy changes in sweeping budget bills. After he lost reelection, Berger called for reducing the early voting window, particularly in primary elections.

He told reporters last month: “I don’t know in the general election where you have a lot more people showing up, but certainly in the primaries 17 days of early voting just seemed pretty excessive. It really stresses the local boards of elections.”

The budget framework didn’t mention election changes, but on Tuesday, Hall shared similar sentiments. “Maybe you make it a week. Maybe you include a weekend. But there’s some effort to do that,” Hall said. “Maybe that saves costs, maybe not. But I don’t know that in a primary setting that it’s going to make it where you have any fewer voters.”

5. Job Cuts

State Auditor Dave Boliek has called for eliminating unfilled positions in state government, which House and Senate budget proposals last year also would have done. 

On Tuesday, Hall said he’d like to cut unfilled jobs and use the savings to give state workers bigger pay raises. But the framework doesn’t mention cutting positions, including which ones might be on the chopping block or how to redirect any savings. North Carolina’s state job vacancy rate has been about 20% in recent years.

Ardis Watkins, executive director of the State Employees Association of North Carolina, said she’s concerned, even though state workers will get a pay bump if the budget deal becomes law.

“If the raises announced are used to justify those cuts, that is not a savings,” Watkins said in a statement. “That is the legislature making permanent the staffing shortages that have crushed state employees for years, and rewarding itself for failing to pay enough to fill those jobs in the first place. State employees are already doing the work of those empty positions. Eliminating the positions does not lighten the load. It makes it permanent.”

6. Data Centers

Data centers have come under much scrutiny amid proposed utility rate increases, prompting some local governments to set moratoriums on new development proposals.

Republican leaders have expressed an interest in revisiting a sales tax exemption that lets data centers that cost at least $75 million avoid paying taxes on construction, equipment, and electricity costs. Stein has also called for lawmakers to reconsider that tax break.
While Berger and Hall made no mention of data centers during their press conference or post-session gaggles, House Republicans shared a graphic on X that said the budget framework “repeals the data center sales tax exemption on electricity.” They didn’t mention the exemption for construction and equipment costs.