‘Have to get a budget done’: Hall says spending plan, property taxes, Medicaid are goals for House

North Carolina lawmakers are due back in Raleigh next month, when they’ll try again to pass a state budget after a year-long long standoff over key spending priorities. 

Senate leader Phil Berger says the House hasn’t been willing to budge on its stance on tax policy. House Speaker Destin Hall says the Senate has likewise been unwilling to move in his chamber’s direction, but he’s hopeful the coming session will yield an accord. 

“What we do here is work out compromises,” Hall told WRAL this week. “We have always been able to do that in the past.”

But while a compromise has been out of reach, caught in the middle are hundreds of thousands of state workers who are going without promised raises, and millions of North Carolinians who rely on Medicaid for health coverage but could soon be unable to go to the doctor if that program runs out of money. As for the broader budget, Democratic Gov. Josh Stein has outlined his own proposal to spend $1.4 billion toward raises and Medicaid. 

In an exclusive interview with WRAL, Hall discussed budget negotiations and other priorities — including state employee raises, property tax reforms and public safety — and his reaction to Berger’s surprise defeat in the primary elections.

He also reiterated claims that Stein’s administration hasn't done enough to rein in Medicaid spending and possible fraud — allegations that Stein’s administration denies, pointing to fraud investigations and cost-cutting moves.

Here’s a transcript of the conversation. The transcript has been edited for clarity and brevity. 

WRAL: How important is it to get a budget passed by the end of the short session? And do you think you can do that?

DESTIN HALL: I think we will, and it's absolutely critical. It's our No. 1 priority in the House. We have state employees, teachers and law enforcement who need a pay raise, and that's what the House has been fighting for now during this entire biennium. And we want to make sure that they don't just get pay raises, but they get meaningful pay raises. 

In the last five years, we've seen a lot of inflation. Joe Biden had 15 months left in his presidency when we last had a comprehensive budget, and inflation raged. North Carolina is the third-fastest growing state in the country, and we've got to make sure that we're taking care of our regular state employees and teachers. The House proposed an 8.7% average increase for teachers, 2.5% for state employees. Those were generally higher than the governor or the Senate, and so now fast forward to the short session. We'll look to see what makes sense now, but we think it's a matter of making sure we're staying with the market for our employees and treating them with the respect they deserve

WRAL: What is the holdup in negotiations and what needs to happen to come to an agreement with the Senate?

HALL: The big debate has surrounded the salary increases and on the issue of taxes. Both sides — the House and the Senate — want to continue to cut income taxes in this state. It's not that we want to stop income taxes or freeze those. But we want cuts to continue at the same pace that we've been doing it now for 15 years, since Republicans took control of the General Assembly in 2010. The Senate plan would go much quicker than that, and the danger in that is that the state's growth may not keep up with those cuts in a way that we would wind up with deficits. 

North Carolina is a destination state. We've got a great tax policy. We've got a great business environment. That's the reason people are moving here in droves. And so we don't see that we should risk funding to things such as the University of North Carolina System or the community college system. 

So there's that and there's the salary piece. We've been a little bit higher than what the Senate wants to do. We need to make sure we're keeping up with the market, because if not those folks who work for the state, they're going to go work in the private sector. 

Those have been the main contentions in the budget, and both sides have their sincerely held beliefs on those things. But what we do here is work out compromises. We have always been able to do that in the past. As we come into the short session, there is enough effort and enough folks who want to get something done on those things that we’ll get it done.

WRAL: Phil Berger has one more session as Senate leader. Do you think his loss in the Republican primary will affect budget negotiations or the willingness for compromises?

HALL: Perhaps it's possible. Whether Senator Berger won or lost, at the end of the day we have to get a budget done. And I know my caucus agrees with that. I know that the Senate caucus agrees with that as well. And that's what we're here to do. Whatever the outcome had been in that primary, we would have gotten a budget done. 

WRAL: The Senate says they're waiting on you to negotiate. Have there been any efforts since you adjourned in the fall to negotiate a budget?

HALL: We've talked a number of times. Our long session was extended for a little while as we continued to attempt to negotiate. We've made efforts with their chairs, with their leadership, to try to have a negotiation, particularly on raises and the tax issue. They've not really wanted to move on those things. 

The issue that we face right now is that if we look at what's outstanding in the budget, that's largely salary increases. We've passed many smaller budgets on other things, but we basically have enough money right now if we use the recurring dollars left that we can only do a 1.5% or 2% raise, and that's not something that the House side is going to settle for. We could dip into savings to pay our recurring bills. But just like a family wouldn't do that, it wouldn't make sense for the state. We have made efforts to negotiate. And I hope that as we get back into the short session, those efforts will be responded to in kind. 

WRAL: Many people are affected by the lack of a budget. As you mentioned, state workers are waiting for raises. And some people on Medicaid worry if they could afford healthcare. Are you worried about possible blowback from voters in the fall elections, if a budget isn't passed by then?

HALL: I think anybody would be, but it's more so about making sure we're taking care of our state employees, and it's something that we will get done. 

When you think about Medicaid, for example, everybody understands that we're going to have to provide some additional funding. This is the way we've handled Medicaid ever since I've been here. Now we've got to also provide some oversight. Medicaid costs in this state are out of control. We've seen some other states where massive fraud has gone on.

North Carolina has a 99% renewal rate for folks on Medicaid. It's basically impossible to get off Medicaid in this state, so our theory is: Medicaid is for folks who need it, who are in a bad situation and they're not able to go out and work and provide their own health care. And the goal should be to provide that safety net. And for those folks who can get off of it, help them get in the workforce and be able to pay for their own health insurance. 

And it seems like in this state right now, the goal has been through Governor Cooper and now Governor Stein to get as many people as possible on Medicaid, and we've seen billion-dollar cost overruns, and that's just not acceptable. It's something that we're getting our arms around. We're going to probably move some legislation in the short session that's going to deal with some of those cost overruns, because at the end of the day, every dollar that goes into Medicaid that goes to somebody who really doesn't meet the program's requirements or who doesn't need it, is $1 that can't go to those folks who truly do need the program's assistance. 

I think that we'll get the Medicaid funding done as well. But at the same time, long term, the cost overruns have got to be dealt with, because if not, they're going to eat up such a great share of the state budget that we're not going to be able to do much else.

WRAL: Another one of your top priorities has been passing a constitutional amendment about property taxes. What else are you going to focus on? 

HALL: We put together a committee to deal with property tax. One of the things that our constituents are telling us is that property taxes are out of control. Property values have gone up. The state's growing. And in some counties, they're staying within inflation, plus their population growth. But in some counties and some municipalities, their rate of increase and spending of their budget is over and above that. And so we're trying to make sure that those local governments — who are perhaps spending too much, resulting in them having to substantially raise property taxes — that we tamp down on that. I never hear anybody talk about a half percent income tax reduction. I hear people all the time talk about their property tax going up. If you're paying more in property tax, it's going to eat up — for most people in the state — the half percent income tax reduction that they get. So we're going to try to deal with that through an amendment and perhaps some other legislation. That's why that committee is continuing to meet. 

We're also continuing to look at public safety issues. We saw the tragedy on the Charlotte light rail where a young lady was murdered. The person who murdered her had obvious mental health problems. He should not have been on the streets. So we put together a committee dealing with involuntary commitment, because what we hear from law enforcement over and over is that it has become really difficult to get somebody with a mental health issue off of the street. They're a danger to themselves or others. They need to be in a facility getting health care, and they're not going to get that into jail, and they're not going to get that on the side of the road. 

We're trying to reform that involuntary commitment process to make sure those folks who are out on the street, if they're a danger to themselves or to others, that we're not just leaving them there. We're not putting them in a jail somewhere to sit, but we're sending them somewhere to try to get health care and at least keep the public safe during that time. We've made progress with that committee. We've got to continue to focus on public safety. We can have a great business climate, but if you're having folks stabbed on the light rail at some point, that catches up with us, and public safety is the No. 1 job of government, and we've got to make sure that we solve those problems in this state.

WRAL: Gov. Josh Stein has said one of his top priorities during the short session is more Helene funding. He called on lawmakers this week to approve another $792 million for Helene recovery. Is the House supportive of that, or is there something different that you want?

HALL: When we started this long session last year, I said on Day One, our top priority was going to be Helene recovery, and we maintained a committee on that during the entire session. Members who are from western North Carolina, who are most affected by this, passed a number of bills. The state to date has spent about $1.4 billion on Helene relief. And, of course, it's a federal and state joint effort. 

This is going to end up being probably a $60 billion plus cleanup. The state's budget that we control is about $35 billion. Obviously, the state alone can't do that, and so we've been working with our federal partners, our U.S. senators, our folks in the U.S. House, to try to continue to get more funding from the federal government. I know the Federal Emergency Management Agency has had a leadership change recently with Sen. Markwayne Mullin taking over. He’s going to be helping with some of those things related to storm relief, and so excited about that. 

We have gotten quite a bit of money from the federal government, but it's such a huge problem on the ground in western North Carolina. It's going to take many years to fix it. But people like me, who are from there — and our entire caucus — we're entirely committed to making sure that we're able to rebuild the western part of the state. We've worked well with the governor on those issues in the past. I think the first bill he signed into law was another Helene relief bill, and so we'll partner with the governor wherever we can. But we what we want to do is make sure the dollars that are going to the western part of the state, they're going to put people back in their homes, they're repairing their homes, and they're not going to wasteful things, that they're actually going to help folks out there, and so I imagine you'll see another Helene relief bill from the General Assembly in this short session.

WRAL: Stein has proposed an additional $1.4 billion for Medicaid and state employee raises. Does the house support that plan? Or do you all have a new one of your own?

HALL: We've been higher than the governor on proposed state employee raises in our initial budget, and I imagine we'll continue to be on Medicaid again. We all know that we're going to have to put some additional money into Medicaid in the short run. Right now it looks like the cost overrun is about $1 billion dollars. They've gone over the estimated amount to be spent, and it's a problem across the country. 

It seems like certain states are worse than others, and again, we have a 99% renewal rate for workers on Medicaid in this state, and we've got to get our arms around that. It's a social safety net program. The goal is not to get every person possible on it, and so we're taking a look right now at the data to determine where we can find areas of inefficiency. We've seen places like Minnesota where massive fraud was going on. And we suspect, based on what we've seen thus far in this state, that there's some of that potentially going on here. We're continuing to look at that and make sure that that doesn't happen here, and we're going to have to do some reforms on the program in this state. Because at the rate that it continues to overrun their expected cost, it’s not sustainable long term. 

I think you'll also see in the short session, an effort to move some legislation that really deals with some of those Medicaid cost overruns.

WRAL: The state auditor has mentioned recently an audit they’re conducting related to potential Medicaid fraud. Are there adequate safeguards to protect against misspending and fraud?

HALL: There are not adequate protections against those things. The auditor has worked very hard on this as well, and I think he'll be coming out with some findings before too long. A number of our members are working on it as well. But there's no question that within a system where folks send in payment requests, and we're over-running by billions of dollars, there's a problem. And you can see a spike in certain provider areas for certain types of treatments. And if you look at what's happened in other states, there's perhaps some overlap in that data where you see a spike. So if folks are defrauding Medicaid in this state, then they ought to be prosecuted. We're going through that data now. 

It's a huge problem financially for the state. And we all agree — we're going to help folks who need it with health care, but at the same time, we've got to use these taxpayer dollars wisely, and to the extent fraud and improper payments are going on, we're gonna have to put a stop to it.

WRAL: Governor Stein has said Medicaid funding is going to run out by June. Do you think that's accurate? And how much is it on the legislature to provide more money versus for the Stein administration to make more cuts?

HALL: I doubt seriously they're ever going to cut anything over there. Their goal seems to be to spend it as quickly as they possibly can. In some sense, every fiscal year it runs out of money. We pass budgets, and usually we do that on a fiscal basis, but with Medicaid in particular, we typically don't do the entire fiscal year at one time. We'll do a big chunk of it, then we'll provide oversight, and then we'll come back and provide additional monies. Which is why it was such a shock this fall when the governor just arbitrarily cut the rates under some theory that they were going to run out of money as early as the end of April, just a couple of months before the end of the fiscal year. 

That was a real change from what we saw under Governor Cooper. There was some litigation, and we were glad that those cuts were reversed. But it was completely unnecessary. It was a complete change in the way that we've operated under prior governors. So I hope that the Stein administration will do some things to try to fix the cost overruns there. This body is highly interested in making sure that we put a stop to these cost overruns.

WRAL: And let's go back to Senate leadership. Who do you expect to replace Senator Berger as Senate leader? Is there anybody you have in mind that you would prefer?

HALL: I know all the Senate Republicans, and I like every one of them. I've worked with just about everyone. They've got many folks who could do the job. And, you know, it's really a question of who has the time to do it, who has the desire to do those things. I've seen some names emerge, and they'll go through that process, and whoever they pick over there I'll be able to work with. I don't think there's anybody over there that I would say, “Well, I just can't work with and they'll figure it out for themselves.”

WRAL: You’re in charge of a caucus. What does it take for someone to have that kind of leadership position?

HALL: Whoever does replace Senator Berger, in many ways, I'm going to have somewhat of an understanding of what they're they're dealing with, because Speaker Tim Moore was the longest serving speaker in our state's history. I knew that I had big shoes to fill when I came in. Some of the best advice I got from folks was: “Just be yourself. You're never going to be the person who came before you. You shouldn't try to be. Your caucus selected you for one reason or the other.” 

It's an honor to get to do this. It's a huge duty, a huge responsibility, because you've got to think about the entire body. I work with members on both sides, and it's not always on legislation. Sometimes it's on a parking issue, or it's on an office issue, or whatever the case may be, and they're all elected members. I'm grateful every day that my colleagues in the House let me do this job, and I get to do a lot of interesting things as a result of it. I know whoever they pick in the Senate will have that same experience. Your life changes in many ways, because this takes up a lot of that time, but no greater honor that I know of than to get to serve in one of these roles. 

WRAL: Three sitting House Democrats have voted with the GOP in the past. They're all leaving the legislature before the next session. How important is it to get the constitutional amendment on property taxes and your other priorities passed while they're still in the legislature?

HALL: The constitutional amendment on property taxes is something that should really cut across party lines, because this is the case in Republican areas or Democratic areas. And I've not done a vote count. I don't know where the other caucus is on those things, but I'm confident that we'll get a number of folks on the other side to vote in favor of that. I certainly hope we will. 

We've got two members of the Democratic caucus now who lost primaries because the governor and other members of their leadership were mad at them that they voted to override vetoes. They felt like they were doing the best thing for their constituents. And so I hate to see that; they're great members. We've got several more months left where we'll be enacting legislation, and they're going to be members of the House and wish them well, certainly afterwards. I hope that when we come back after November, and we get back in January, we're going to have 72-plus Republicans so we won't have to create a primary for any Democrats who may want to help us next time around.