McCrory: Medicaid costs making budget deal harder

"Since I did my budget three months ago ... we've had over $535 million of additional spending that was outside of projections made by last year's administration and legislature," McCrory said during a meeting of his Economic Development Council. "That's basically busted our budget already."

Lawmakers are well aware of the expanding Medicaid budget, including more money in their budget proposals and even an extra $45 million in the continuing resolution approved to keep government running through July.

Devoting extra money to Medicaid means less for education, transportation and other state programs, McCrory said.

"That's a pretty big hit, and thank God, the (fiscal) year ended July 1," he said. "But if we think that's going to end next year, we're fooling ourselves unless we make major reform in Medicaid."

McCrory in April rolled out his plans to shift Medicaid over to managed-care providers to better lock in state costs. Federal and state legislative approval would be needed for any changes.