North Carolina Finally Has a State Budget. Here’s What’s in It.

The budget offers a mix of good news on Medicaid, bad news for public schools, and weird news about judges, guns and plastic bags.

After three months of delays, extended vacations and in-fighting, Republicans in the General Assembly finally unveiled the state budget on Wednesday. 

Legislators will vote on the $30 billion budget in batches over the next two days, entering the final sprint of what has become a marathon wait for vital funding, including for Medicaid expansion and pay raises for teachers and state employees.

But the 625-page document also reflects the priorities of a party that, despite some last-minute sniping, is intent on under-funding public schools, lowering taxes on the wealthy, and expanding the power of lawmakers who already have supermajority control.

Six hundred pages covers a lot of ground.

Republican leaders spent months negotiating the budget outside the public view, but didn’t publicly release the full document until 4 p.m. on Wednesday, just 17 hours before the first scheduled votes in the House.

The narrow window to read the bill, much less process it, drew widespread complaints from Democrats, who accused Republicans of violating good-faith governance. 

Still, the budget fulfills several promises Republicans made this legislative session and contains more than a few surprises. 

Here’s a look at some highlights:

Medicaid

The legislature passed Medicaid expansion in March, but Republicans tied its official implementation to the budget, which means that as they took their time, 300,000 low-income North Carolinians waited for health insurance. Another 300,000 have been or are in danger of being removed from the rolls because of procedural reasons, a loss they would have avoided if Medicaid expansion had been implemented in the spring, soon after the bill passed.

Late last week, an argument among Republicans about casinos, of all things, threatened to decouple Medicaid from the budget, but that proved a brief idea. Medicaid expansion is in the budget.

As soon as the legislature passes the budget, it will go to Cooper. If he signs it, state health officials will need 30 days to prepare for and implement the expansion. If Cooper vetoes the budget and it goes back to the legislature for an override vote, then expansion will be further delayed. 

But after years of being one of the only states unwilling to expand Medicaid, more than 90% of which is paid for by the federal government, North Carolina is poised to extend a much-needed lifeline to 600,000 of its most vulnerable residents. 

Expansion will also be a boon to rural hospitals, which lose money if—as is often the case in these areas—too many if their patients lack insurance and can’t pay for any emergency care they received. Seven hospitals in rural North Carolina have closed since 2014. 

So by December, hundreds of thousands of people who have been unable to go to the doctor or afford life-saving medication could be able to get the care they need. 

That’s the good news. 

Public Schools and Private Vouchers

The budget is full of bad news, however, for public education. 

The budget significantly increases the money diverted from public schools to private schools. It also expands a private school voucher program, which previously was limited to low-income families, so that even wealthy parents can use tax-payer money to send their kids to the private schools they already attend.

By 2032, the budget says, North Carolina will spend more than five times the amount it spent on the vouchers in the 2022-23 fiscal year, moving from $94.8 million annually to more than $520.5 million.

The budget is not as generous to public schools. 

Adequately funding the public school system is perhaps a state budget’s primary responsibility, but it’s a responsibility the legislature has fallen far short of meeting for decades, according to reams of state data, rulings from state courts, and accounts from the schools themselves.

North Carolina public schools face severe teacher and staff shortages, especially in rural areas, and the state ranks dead last or near last in several national categories charting public education spending. 

As the budget negotiations stretched through all of July and August, schools prepared to reopen without knowing how much money they’d have to operate with.

All public schools in Alamance County delayed the start of the school year for two weeks because of widespread mold infestations in schools where roof damage and other issues have persisted for years, amid inadequate funding. 

These decades of underfunding were so pronounced that several courts, including the state Supreme Court last year, ordered the General Assembly to spend more money on public schools. Judges even devised “the Leandro” plan, an equitable-funding roadmap, to show them how. 

Republicans have ignored those court orders and this budget doesn’t come close to providing Leandro-level funding. 

Teacher Pay

The budget provides small raises for teachers, bus drivers and other school staff, but they do not keep pace with inflation.

There are extra supplements and bonuses depending on a teacher’s experience, but it makes for a rather mottled patchwork.

The budget gives a bigger boost to starting salaries for new teachers than it does for veteran educators, which Republicans say is necessary to fill the teacher shortages.

A teacher starting under this new budget would see a $350 a month bump in salary over the 2021-2022 salary schedule. A teacher with a dozen years of experience would only get $263 more a month. Republican leaders say this amounts to a 7% average raise across the experience levels.

The budget also includes a $30 million supplement to increase pay for teachers in rural areas. 

An analysis by North Carolina public school teachers, however, shows that inflation has ultimately cost teachers money each year since 2011, with experienced teachers once again bearing the brunt of the consequences.

State Employees

State agencies also face severe staffing shortages that are a direct result of low pay. A quarter of all state jobs are vacant, the State Employees Association of North Carolina (SEANC) says.

That means delays in issuing driver’s licenses, inspecting nursing homes, and making sure elevators and amusement park rides are operating safely. 

The heads of several state agencies held a joint news conference in the spring to warn lawmakers that the inability to retain talent was putting the public’s health at risk.

The budget increases the salaries of state workers 7% over two years, 4% this year and 3% next year. 

That is not going to fix the problem, Ardis Watkins, SEANC’s legislative director, told WNCN in Raleigh on Wednesday

This increase “would be a decent raise in a normal time, but this is not a normal time,” she said, citing the scope of the shortages.

“The state will continue to lose employees … and we all have to pray that these vacancies do not cause loss of life. It’s that serious.”

Transparency

In this document written behind closed doors, the General Assembly gives itself more power to evade public scrutiny. One provision says lawmakers, and former lawmakers, would become the sole decision maker of what is and what is not a public record. This effectively gives them the power to withhold evidence of wrongdoing from the public and keep their internal communications secret, even when it’s about public business. 

This power to keep things hidden  could be especially important during the state’s redistricting  process, when Republicans will re-draw the election maps, and almost certainly gerrymander them, in an attempt to ensure they hold their supermajorities in what is a swing state.

“The proposed amendment comes without forewarning and poses a significant threat to the public’s right to see public records,” Phil Lucey, executive director of the North Carolina Press Association, told reporters in an email. 

The provision, he said, “is [an] unprecedented and unjustified attempt to change the public’s right to know in North Carolina.”

Taxes

Republicans have a long-term goal of lowering state income taxes to the bare minimum. This budget speeds up existing timelines. 

The state income tax rate, currently 4.75%, will drop to 3.99% after 2025.

Previous legislation established a plan to eliminate state corporate income tax entirely by 2030. That date remains unchanged. 

Some Loose Ends and Rather Odds

The budget also: 

• curtails the state Board of Education’s ability to hold charter schools accountable.
• prevents local governments from issuing their own child-labor protections or banning plastic bags in grocery stores.
• allows judges to bring guns into their courtrooms.
• extends the mandatory retirement age for some judges, so that conservative Chief Justice Paul Newby doesn’t have to leave the Supreme Court anytime soon.
• allows the General Assembly to appoint the judges who would hear any legal challenges to laws legislators pass. 
• bars lawyers from the Legal Aid Society, which serves low-income residents, from getting state aid to repay their law school loans. They are the only group singled out. This raises the possibility that lawyers will be unable to afford to work for the Legal Aid Society, depriving a vulnerable population of needed legal help.
• Provides $2.7 million to the state board of election to help inform the public about new voter ID laws.