On The Record: NC lawmakers prepare for 2026 legislative session

It's time to go on the record with WRAL News

State lawmakers are getting ready to head back to the

capital downtown Raleigh for the start of the legislative session

on April 21st

Good evening

I'm Ashley Rowe

Thank you for joining us as we get newsmakers on

the record about this crucial session when lawmakers plan to

revive negotiations over a new state budget

Hanging in the balance are raises to hundreds of thousands

of state workers and funding to ensure healthcare doesn't run

dry for millions of people

This session might also bring a change to who controls

our property tax rates

We're going to tackle all of these issues here with

the people who know them better than anyone

Coming up a live interview

Interview with the State Employees Association of North Carolina executive

director and my exclusive interview with North Carolina's DHHS secretary

Dev Sanbai

One of the major sticking points for this budget has

been what to do about the income tax rate

The House and Senate haven't been able to agree on

this for some time

North Carolina hasn't passed a full budget since 2023

In that time the state has seen immense growth

Between 2024 and 2025 North Carolina gained a net 84,000

more people more than any other state

Raleigh was a top 10 city nationally for new growth

and a short drive to the south Lee and Harnett

Counties they're home to some of the nation's fastest growing

small towns

Great more people paying property taxes more people paying income

taxes more money for the state to spend

But it also puts new pressure on public services higher

costs for healthcare education and transportation infrastructure

And it's one of the reasons why the House Speaker

says his chamber is not willing to cut income taxes

the way that the Senate wants

The House proposes keeping the personal income tax rate at

3.99% while slightly increasing the standard deduction

Meanwhile the Senate is taking a more aggressive approach proposing

to cut personal income tax by 0.5% each year for

three years

That means by 2028 it would be 2.99%. This tax

cut debate was a big part of the exclusive interview

WREL state government reporter Caroline Yffa had with House Speaker

Dustin Hall in late March

Here's part of that interview

North Carolina is a destination state

Uh we've got a great tax policy

We've got a great business environment

That's the reason people are moving here uh in droves

and so uh we don't see that we we should

risk that

We should risk funding to the UNC system or the

community college system

So that's the House's position and you can watch the

full interview on WREL's YouTube page

He addresses Helene recovery funding and what Phil Berger's concession

means for state Senate leadership

Search for Destin Hall

I invited Senate Leader Burger for an interview on this

program about their budget proposal

His office declined

They did provide a statement from Senator Brent Jackson a

chairman of the Senate Appropriations Committee

It says Senate budget writers are already engaged in conversations

with our colleagues

In both the House and Senate we need to remain

committed to keeping our spending in check eliminating bureaucratic bloat

reducing the tax burden on our citizens and ensuring our

state has the adequate funding necessary to provide services and

pay our hardworking state employees

So what will it take for the House and Senate

to reach a deal There are a few things that

could be bargaining chips like the additional $103.5 million the

Senate wants to fund the planned children's hospital in Apex

The House has had a problem with that since last

year

But remember what doesn't get done without a full budget

Hundreds of thousands of people including teachers don't get raises

My first guest is the executive director of the State

Employees Association of North Carolina Artis Watkins

Artis really appreciate you being here

Thank you so much for having us to lend the

voice of state employees and retirees to the conversation

The last time the legislature let consecutive years go by

without salary increases for state employees was in 2009 through

2011

We were coming out of a recession then but what

did we learn from that experience that can inform today's

situation Well we learned that we if we do that

if we go without giving an increase to state employees

we'll see them leave and when they leave what will

happen is The budget won't keep up with population growth

That's what happened in 2009

There were the same amount of employees as we have

today basically but we have 2 million more North Carolinians

So every single North Carolinian gets less services

If you don't take care of your personnel they leave

and if you don't fund them they can't be there

So that's seeing that Are we seeing that that employee

retention is an issue Oh it's been terrible

I mean since COVID it's never bounced back and those

levels are absolutely atrocious

In 2324 $1.2 billion reverted back to the state from

vacant positions lapsed salaries from vacant positions

And so $1.1 billion was used just to keep agencies

going to pay the bills

Now this is employees doing extra work

But the state funded the agencies with that money that

was meant for salaries

And then of what was left 2/3 of the only

raise they've gotten in recent years state employees paid for

themselves with vacant salaries vacant positions

You've been talking about these vacancies

What do you say to the lawmakers who feel there

is too much bloat in the workforce and and maybe

those vacancies shouldn't be filled I have no idea how

you could look at a taxpayer and tell them they

have too much bloat in state government when you have

2 million more taxpayers served by the same number of

people you were serving them in 2009

People know there's not too many state employees

They know

When they try to register a new business and there's

not enough people so it takes them longer they know

through DMV lines

They know through things that they see but there's things

they don't know about like uh you know newborn screening

being delayed or autopsies being delayed that affect the public

health and safety

The state is North Carolina's largest employer

You've got to think that state workers are in every

district

In an election year you have to think this is

something that lawmakers are getting pressure about

But you argue this isn't just an issue that state

employees should care about that there's a larger community economic

ripple effect here

Absolutely

I mean state employees are paying for their own raises

make no mistake with what's reverting to the state so

that's bad

You never want that situation but the highest price is

being paid by the public

They really are not getting things timely if at all

that affect public safety and public health

And you know I gave the the examples a minute

ago but in addition there's simple things that mean so

much like people at the Department of Agriculture scientists who

make sure a label of chemicals contains what it says

it does or folks who make sure there's the newborn

formula

Has in it what it's supposed to and nothing it's

not supposed to

Those are state employees in part

Artis appreciate your time

Thank you

Thank you so much

Every day that North Carolina goes without a new budget

is a day closer to a dire deadline

The state Department of Health and Human Services says Medicaid

will run out of money in May

Think about that

A program that 3 million people in North Carolina rely

on is about to run dry

Just like with private health insurance when a Medicaid patient

visits the doctor the provider bills the state for that

service and the state pays that provider back

But there isn't enough money to pay the bills

There's currently a $319 million funding gap between the costs

of running Medicaid and the amount of funding Medicaid gets

That funding gap led the state's Secretary of Health and

Human Services to cut reimbursements to health providers by 3

to 10% in the fall

Providers sued and those cuts have since been reversed but

now they're barreling towards running out of money

And the State Department of Health and Human Services says

the whole infrastructure that relies on Medicaid for a portion

of the patients they serve is at risk of collapse

That's a lot to throw at you so I wanna

sum it up

Without a state budget Medicaid doesn't get new funding and

without that new funding those cuts continue

And if those cuts continue the concern is that people

who rely on Medicaid could see their healthcare coverage and

services gradually wear away

But there's also the issue of fraud

Last year for example the US Department of Justice charged

more than 300 people in an alleged fraud scheme involving

nearly $15 billion

Some of those people were in North Carolina

After the break my exclusive interview with North Carolina's Department

of Health and Human Services Secretary Doctor Dev Sanbai

I asked him about the future of Medicaid and what

he'll do to make sure the money Medicaid gets will

be spent properly

Medicaid faces a $319 million funding gap

Lawmakers agree that Medicaid needs to be funded but until

they come to an agreement on the budget that funding

gap and the risk to 3 million people on Medicaid

continues

I sat down for an exclusive interview with NCDHHS Secretary

Dev Sanbai about the current climate concerns about fraudulent Medicaid

spending and what he'll do to make sure that the

money Medicaid gets will be spent properly

Secretary Medicaid is facing a $319 million funding gap back

in the fall

You tried to put in some reimbursement cuts to providers

That has since been reversed

You can't be doing that now but

That doesn't change the financial situation with Medicaid

So what is the reality here as the legislature still

does not have a full budget passed One of the

important things to really appreciate is what are we talking

about when we say $319 million

So let's take a step back

Medicaid is a program that serves 3.1 million people in

North Carolina

That's families

That's children

That's members of the uh disability community

Uh that's a lot of people

That's one out of 4 individuals

It's a $35 billion program and as a healthcare

Program costs go up every year

We all know that individuals your viewers are seeing that

their own individual costs are going up so the total

program costs also go up every year

We call that rebates and every year we rebase what

the cost of the program will be to be able

to think about the rising cost of health care and

maybe some people coming in and out of the program

as well

So in fiscal 26 the rebate is $819 million

In July we were given $500 million and so that's

how we have this $319 million gap that everyone has

been talking about

And you're exactly right

In the fall we aim to close the gap by

trying to reduce provider rates and later realized

That there might be a better way to be able

to do that

So we've been working in a very collaborative fashion with

the General Assembly

We've got great alignment on the need to make sure

that we continue to make Medicaid sustainable

And so what we now need to do is before

the end of the fiscal year get an additional $319

million into the program

So that we can continue to pay providers that people

can continue to get the essential healthcare that they need

through the Medicaid program

What kind of runway are we looking at here as

you don't have that money and you've only got a

certain a finite amount of it right now to be

able to pay those providers Yeah that's a really important

question

The sooner we get the dollars appropriated the better

We want to run the programs in a very solvent

fashion so we need to have the money as soon

as possible but we also need confidence confidence for the

people who get care out of Medicaid and we need

confidence for the providers who rely on Medicaid to be

able to pay for the services they provide

So it is essential to not only make the financial

numbers work but also to build confidence in the program

to make sure that people can continue to get the

healthcare that they need

One of the months that I have heard is May

floating around as to when Medicaid kind of runs out

of money

Is that still a reality or is that a bit

of a loose date Are we able to work beyond

that One of the things we do in the Medicaid

program is every month we look at What has occurred

in all the periods prior kind of forecast what's going

to happen in the future and so every month we

try to anticipate when we're going to uh if you

will run out of money

And so for a while now we've been talking about

that May timeline and it still is May

So right now we're pretty well appropriated through the end

of this month but then starting next month we'll need

to make sure that we have the money to be

able to pay our bills

That is coming very quickly

It is

How do you prepare for that Well it goes back

to what I said earlier

We've been having really good dialogue with members of the

General Assembly

We have really good alignment on the number and what

I've been really happy about is that everyone understands the

urgency of what we have

So we're hopeful that when the General Assembly gets back

into session later this month that one of their top

priorities is to fund the $319 million

Do you have confidence that they will get this done

that you will be able to continue to fund Medicaid

I am incredibly optimistic

I go back to what I said earlier

This is something that everyone has rallied around as a

point of urgency now that we have common

A common understanding around how much money we need because

there was some difference and debate earlier in the year

I'm incredibly optimistic that we're going to be able to

close the gap by the end of this month

I imagine though you still have to prepare for contingencies

So what is the contingency here One of the real

risks is we won't be able to pay our bills

and so it's one of the things we don't want

to have to think about is

What happens if you're not able to get that $319

million and again it goes back to everyone appreciating the

urgency of that

What does happen if you can't pay your bills Well

providers have a risk of potentially not getting paid and

then you know what happens if a provider can't get

paid when you're providing services There's a real risk to

access in the Medicaid program for the 3.1 million people

who need it

Could that lead to lawsuits Well you've seen what's already

happened yeah

Does that keep you up at night or is that

something that you just say it'll get dealt with You

know what really keeps me up at night is the

fact that there are 1 out of 4 million or

1 out of 4 of the 11 million people who

live in the state of North Carolina that need the

Medicaid program

And when you think about the beneficiaries these are pregnant

women elderly veterans families and others

What keeps me up is the worry that people are

not getting the essential health care that they need

What do you say to the argument that has been

made that the department

Could have saved money could not be in this position

of running out of money next month had there been

closer scrutiny on fraud on administrative costs

We have consistently focused on making sure that the dollars

in the Medicaid program go to beneficiaries so around 98%

of the entire Medicaid budget really goes to programs and

services

That's pretty impressive

And so we are doing everything we can to make

sure

We control administrative costs including looking at things like fraud

waste and abuse

We call that program integrity for us

It's not separate from the work we do

Program integrity is vital to actually delivering on the Medicaid

program because every dollar that doesn't go to a beneficiary

is that much less healthcare that they need

So we have an incredibly robust fraud waste and abuse

program that takes in complaints from a variety of different

sources processes those appropriately

If it rises to the level of fraud we send

them to law enforcement and if it's an opportunity to

help providers and others understand how the program can work

better there's systems in place to be able to do

that as well

You feel confident

In those systems that are in place we have a

really good fraud waste and abuse integrity program and the

numbers back it up

Not only are you dealing with this issue of the

budget gap but you're also dealing with the HR 1

implementation that's coming up

How can you assure People who are on Medicaid as

you said 1 in 4 that the expansion will stay

in North Carolina that they will still get their Medicaid

coverage

Yeah this again is an area of common understanding with

all the stakeholders whether it's beneficiaries this agency the General

Assembly

We all appreciate the importance of Medicaid expansion

So some of the things that HR 1 requires us

to do around work requirements and so forth as early

as July when the law was passed we've been we

were starting to think about what does the agency need

to do to ensure that we don't put the 725,000

individuals who now have Medicaid services through expansion at risk

And how do you do that Part of it is

to make sure we fully understand what the law requires

of us communicating consistently as we've done with with stakeholders

working with our counties in North Carolina so much of

that work happens at the county level

So we've been working very closely at the county level

Understanding where we may have some gaps and risks and

finding what we can do to close them

So it's been a lot of work

I'm not I'm not going to sugarcoat it and say

we're just rolling into it

It's been a lot of work but we're going to

do everything we can to ensure that those individuals who

have coverage through expansion are able to keep it

Quickly getting back to this budget gap are you already

having conversations with providers Are providers reaching out to you

saying what are we going to do here We are

barreling towards this

In order for me to continue serving these Medicaid patients

I need to have assurances that I'm going to get

paid on the other side of it

What are those conversations like The conversations have been equally

collaborative

The provider community has been with us lockstep as we've

gone through some of these challenges over the last 6

to 8 months

They too understand the importance of making sure that we

get these dollars appropriated as soon as possible

They too are talking to lawmakers and other stakeholders to

stress the importance of getting the money appropriated even as

early as the end of this month when they get

back into session

Thank you very much

I appreciate your time

I appreciate it

Thank you

Coming up on the records panel of insiders our NC

Capital team breaks down why this legislative session is so

important

Here with me now is our panel of insiders from

the NC Capital team Will Dorn and Caroline Yofffa

Guys this legislative session is an important one for this

Republican-led legislature uh in part because we're in an election

year

Walk me through that Will

Yeah we are an election year coming up in November

and if you look at the national polling statewide polling

things are looking good for Democrats

Republicans if they're being realistic with themselves are gonna be

worried about losing some seats

The House has already lost its supermajority

The Senate is only hanging on by a thread already

as it is

If Democrats can flip even one seat in the Senate

they're going to give Josh Stein's veto a whole lot

more power coming up in 2027

The next session yes and adding on to what Will

just said I think something that's really important is 3

Democrats who have notoriously voted for a lot of Republican

past legislature or legislature

I think it's important to say that Governor Stein supported

their opposition and they all lost their Democratic primary

So after November or after this short session they will

no longer

Be in the legislature so that will really affect the

supermajority of Republicans

Let's talk about the policy

Just this week there was a significant momentum forward with

who controls our property taxes

That could change

Well what's going on there Yes constitutional amendment and again

this is something that actually the governor can't veto specifically

but does require a supermajority to pass

So if Republicans are thinking that this is going to

be kind of a party line issue like we've been

seeing in some of these committee hearings then they do

probably need to go ahead and get this on the

ballot now

It's not necessarily a now or never kind of thing

but it might be now or wait at least a

few years to be able to control property taxes limit

how much local governments can actually set the property tax

rate in all of the cities and counties in North

Carolina

Walk me through Will how exactly that would work

Because this still would wind up on the ballot in

November if it does move forward

Correct yeah it's got to pass the legislature both chambers

the House and the Senate with a supermajority and then

it would be put on the ballot for voters to

decide OK do we think this is a good idea

or not We've heard from a lot of local leaders

who say it's a very bad idea

We've heard from a lot of folks like senior citizens

folks on a fixed income say this is a great

idea

Our property tax has been going up way too much

and we need to rein this in

Now we've talked a lot about fiscal policy especially with

everything going on with the budget but you know that

there will be some social issues that try to get

addressed some social policy if you will

Caroline you just did a story this past week regarding

one bill that they're hoping will move forward

What's going on with that So basically there's kind of

like a book ban bill that's going on right now

So it's not exactly legislation yet but we're expecting it

to be rolled out next

Week maybe even in the next coming weeks and so

this is about um House Majority Leader Brendan Jones is

going to be the main sponsor of this and House

Speaker Dustin Hall said that he has full support and

this is a top priority for the House and this

bill will actually ban certain books that have themes like

LGBTQ plus and um sexuality and gender identity from elementary

school libraries

So right now according to the

The Parents' Bill of Rights that's in North Carolina law

um they're not allowed to talk about books that have

these themes in curriculum for K through 4 students um

but it's going to be in elementary school libraries if

this bill is passed and they're saying that there could

be financial implications for certain school districts if they don't

comply

So this is the House uh you know on on

the House priority list is it that for the Senate

Well

Well you know one thing that's important to note is

you know these politicians are pretty serious

They know what they're doing

They're gonna play their cards close to their chest so

there's absolutely things that are in the works that are

happening that we don't know about that frankly probably a

lot of lawmakers themselves don't even know about are getting

worked on uh that is coming up in this session

and we'll just

Have to wait and see what exactly they end up

rolling out

It seems like it's polling well and might help turn

out voters in November

Well guys I appreciate all of your insights

April 20th that's when this mini session gets underway and

of course we will be bringing you up to speed

on all of the latest developments here at in big

part thanks to these folks and the entire NC Capital

team

Thank you for joining us here tonight on the Record

If you have something to say about tonight's discussion please

do email us

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