The Caucus: 14 Things To Know About The House Budget

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On The House

Here are 14 things to know from the House budget:

The Tax Man

• Tax Cuts: The House proposal would continue GOP tax cuts, though not as aggressively as the Senate wants. Stein proposed freezing the personal income tax rate at 4.25 percent, but the House and Senate plans would proceed with a planned cut to 3.99 percent for tax year 2026. The Senate budget passed last month called for more aggressive cuts after that. The House plan, meanwhile, raises the revenue targets the state would have to hit before more tax cuts kick in.
• More Tax Cuts: The first $5,000 you earn in tips is all yours and not subject to taxes under the House proposal. The plan also calls for bringing back a tax holiday for the back-to-school season starting in 2026, and it would increase the standard deduction by $500 for individuals and $1,000 for couples.

Raise Up

• Teacher Pay Raises: Stein’s budget called for raising average teacher pay over the next two years by 10.7 percent. The Senate called for a 3.3 percent pay hike and an additional $1,500 annual bonus. The House budget proposes an average 8.7 percent increase. Stein is probably more of a fan right now of House Speaker Destin Hall than Senate leader Phil Berger.
• Starting Teacher Pay: Before state and local supplements, Stein called to raise starting teacher pay by 24.9 percent over the biennium, bumping it up to $51,200 from $41,000. The Senate proposed a 1.2 percent increase to $41,510. The House again came closer to Stein’s plan, proposing a 22 percent increase and boosting starting teacher pay to $50,000 over the next two years. 
• Other State Workers: Stein asked lawmakers to give most state workers and retirees a 2 percent cost of living increase over the next year, with additional raises in the 2026-2027 fiscal year dependent on how the state does financially. The House budget is actually more generous than Stein’s, calling for state workers to get a 2.5 percent across-the-board increase next year and retirees to have a 3 percent cost of living adjustment over the next two years. The Senate called for a 1.25 percent raise for state workers and no increases for retirees.

Policy Grab-Bag

• NCSBE Changes: The House would give $1.2 million for Sam Hayes, the new executive director for the State Board of Elections, to hire seven new political appointees to the elections board. The workers would include two attorneys, an agency human relations director, a public information manager, a legislative affairs manager, an internal auditor, and a senior administrator. The House also sets aside $1.5 million for the NCSBE to retain private attorneys for future litigation and $2 million to relocate into the Albemarle Building (where the auditor’s office is located) by the end of October.
• Cell Phone Ban: Both the House and Senate have bills that would prohibit students from using phones in classrooms for noneducational purposes. House Bill 87, which passed nearly unanimously in March, is copied and pasted into the House budget proposal. If enacted, K-12 public schools would need to “eliminate or severely restrict student access to cell phones during instructional time.”
• Exoneration: The House budget renames the Innocence Inquiry Commission, which has helped exonerate 16 people since 2007, as the “Postconviction Review Commission.” The Senate budget would eliminate it.
• Managed Out: Under the House plan, Medicaid enrollees would no longer have weight management drugs like Ozempic and Wegovy covered, which would save the state an estimated $28 million over the next two years.
• DMV Delays: The House proposes nearly $11.5 million for new field offices in Fuquay-Varina and in Brunswick and Cabarrus counties. An additional $2.6 million is set aside for the DMV to hire 61 license examiners by the end of the biennium. 

Question Marks

• NCInnovation: A private nonprofit established to bolster public university research received $500 million from the 2023 budget. The Senate plan would reclaim the money but give NCInnovation $25 million annually over the next four years. The House would take that money back and put it toward hurricane recovery. (More on this in a minute.)
• NC DOGE: The Senate set aside $12 million over the biennium for Auditor Dave Boliek to lead a new Division of Accountability, Value, and Efficiency (D.A.V.E. for short). How does the House feel? I’m told the jury is still out. We may get some answers during a 10 a.m. meeting on Tuesday in the House Appropriations Committee. For now, there’s no mention of the D.A.V.E. in the House proposal.
• Hospital Hiccups: Two major hospital initiatives would see reduced or suspended funding under the House plan. The proposal would trim the amount authorized for the NC Children’s Hospital by nearly $104 million, dropping the funding to $216 million from $320 million. A rural health partnership between East Carolina University and UNC Health is also hitting a snag. In 2023, the state had set aside $150 million for “NC Care Hospital Investment.” The House plan drops that to zero.

Gotta Eat to Live

• More Snacks: As the Snickers commercial states, you’re not you when you’re hungry. To reduce the prospects of irritated lawmakers, lobbyists, reporters, and passersby, the House budget sets aside $100,000 annually for the General Assembly’s snack bar to stay open as long as lawmakers are in session.

— Bryan Anderson

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Thanks for reading The Caucus, a politics newsletter anchored by Bryan Anderson. Reach us with tips or ideas at politics@theassemblync.com.

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Helene Funding

The House and Senate both want at least $700 million set aside for Hurricane Helene recovery but have different ways of going about it. The Senate also proposes an additional $633 million through repurposed Department of Transportation funds.

One sticking point: Much of the House’s proposed Helene spending, $500 million, would come from reclaiming NCInnovation funds. The remaining $200 million would come from the State Emergency Response and Disaster Relief Fund. 

An area of agreement: Both the House and Senate plans would replenish the rainy day fund to $4.75 billion, restoring it to pre-Helene levels.

The chambers’ Helene proposals come on top of the $528 million approved earlier this year and $1.6 billion allocated to date (about $200 million of which was shifted from other parts of the government). 

Meanwhile, Stein’s office said the state had received $1.45 billion in federal funding as of mid-April, far less than the $19 billion Stein asked for in February. On Monday, Stein proposed setting aside an additional $891 million in state funds for Helene recovery. Stein wants $845 million to come from the inflation reserve and $46 million through reallocations of money state agencies don’t need.

“I thank the General Assembly for what it has done to date, but now is not the time for us to take the foot off the gas,” Stein said in a news conference. “We have to continue to invest in Western North Carolina so that it can come back stronger than ever and sooner the better.”

Here’s how Stein wants the $891 million to be spent:

• $260 million to bolster the region’s economy (including $15 million to promote tourism)
• $239 million for infrastructure
• $152 million for federal matches and unmet needs
• $113 million for housing, rent, and utility assistance
• $105 million for land rehabilitation and disaster prevention
• $20 million for food banks
• $2.5 million for community colleges impacted by declining enrollments

Stein also voiced frustration Monday with the pace of federal dollars coming into the state.

“FEMA has sort of become a contraption built on storm after storm after storm with different systems and requirements, making it very slow to respond,” Stein said, referencing a letter he sent to FEMA’s review council last week.

“[I am] urging them to improve FEMA, not eliminate it,” Stein said. “The talk about eliminating FEMA makes no sense because storms happen all across this country. They don’t happen in each state every year.”

— Bryan Anderson

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Around the Hill

Not Forever Regulations: Under former President Joe Biden, the EPA, then led by administrator Michael Regan, set the first limits for acceptable levels of PFAS—also known as ‘forever chemicals’—in drinking water. Now, Trump EPA chief Lee Zeldin is preparing to roll back those regulations. Read the full story.

FEMA Again: Not all Republicans are on board with slashing FEMA funding, as they made clear last week in hearings with Homeland Security Secretary Kristi Noem. Noem said that Trump “has indicated he wants to eliminate FEMA as it exists today.” Several lawmakers pushed back, including Sen. Thom Tillis, who told NOTUS, “People lose me the minute they start talking about how we don’t need FEMA.” Read the full story.

— Grace McFadden

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Upcoming Birthdays: Sen. Jim Burgin on Tuesday, May 20; Rep. John Torbett on Wednesday, May 21; Rep. David Willis on Thursday, May 22; and Rep. Frances Jackson on Monday, May 26.

Let us know what’s on your radar at politics@theassemblync.com.

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