NC lawmakers return to session this week. What top insiders are pushing for

State lawmakers expect to be incredibly busy when they return to Raleigh on Tuesday for a short legislative session ahead of this fall’s midterm elections.

There’s no new budget in place, meaning that state employees are going without promised raises and the source of health care for 3 million North Carolinians is projected to run out of money next month. Meanwhile, the annual Farm Bill affecting the state’s biggest industry has so far failed to become law, disagreements over tax policy continue to divide Republican leaders, and broader political battles over guns, diversity efforts and other social issues remain unresolved.

That makes for a long to-do list even in a full year of legislative work. And it’s possible the General Assembly might have just two or three months to try tackling it all.

The state legislature works in two-year-long cycles. In odd-numbered years, when there aren’t any elections to distract them, lawmakers are expected to spend most of the year in Raleigh hammering out a budget and tackling policy issues. The sessions in even-numbered years are much shorter, due to the primary elections in May and general elections in November. Those short sessions are typically dedicated mostly to making some minor budget tweaks, and maybe passing a handful of other bills into law.

Last year, however, budget negotiations broke down amid fights over tax policy, funding for a massive new children’s hospital and other line items affecting billions of dollars in state funding. That impasse had a domino effect, chilling relations between the Republicans who lead the state House and Senate, and leading to a slowdown in other policy work.

But separate federal cuts to state programs, rising inflation, a booming population and other factors have increased pressure on lawmakers to get a budget deal over the finish line this spring to pay for services and programs that now cost more to operate.

It’s unclear at this point if lawmakers might attempt to pass a spending plan for the current fiscal year that’s nearly over, or for the next fiscal year that begins on July 1, or both, or neither.

Tax cuts

The tax policy debate is central to the budget impasse. The state’s personal income tax rate is scheduled to drop to 3.99% in 2026, with further decreases scheduled annually, until it hits 2.49% in 2030.

But multiple recent  bipartisan revenue forecasts, including one released last month, said North Carolina is heading to a deficit by this summer’s upcoming 2026-27 fiscal year unless those planned tax cuts are stopped. 

House Speaker Destin Hall says his chamber would support keeping tax rates at current levels, seeking to avoid large budget cuts. “We've got a great tax policy,” Hall said in an interview with WRAL. “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.”

But Senate leader Phil Berger, R-Rockingham, wants those future tax cuts to carry on as planned. He has repeatedly dismissed the warnings of a looming deficit, saying that the state’s fiscal analysts have been wrong before. And in an open letter Friday about the upcoming session — his first detailed public remarks since losing his primary election last month — Berger said he’s still eager to cut taxes further.

“The Republican caucuses approach issues independently, and policy differences do exist,” Berger wrote in the letter, which was issued Friday. “That reflects the diversity of thought and the sincerity of firmly held beliefs within our own party. And even though those disagreements can sometimes be heated, I remain convinced that most of us see opportunity for mutually respectful debate and principled solutions.”

As Republicans continue to fight over tax policy and delay any new spending plans, top Senate Democratic leader Sen. Sydney Batch, D-Wake, offered her own solution: Tap into the state’s multibillion-dollar savings account, which is well above required levels, and use some of that money to fund the state’s most urgent funding gaps.

“We have a rainy day fund,” Batch told reporters recently. “What's the point of a rainy day fund, if you just sit on the money when it's torrential downpouring in North Carolina? People are suffering.”

Medicaid concerns, pay raises

Medicaid funding is one casualty of the budget standoff those tax disputes have led to. . Department of Health and Human Services officials say they expect the program to run out of money next month and have requested more than $300 million to keep it running.

Medicaid serves about a quarter of the state’s population: More than 3 million North Carolinians, most of them with disabilities or from low-income families. 

DHHS Secretary Dev Sangvai said he’s concerned that delays in the budget process could endanger health care for millions of people. If the program runs out of money before lawmakers act, doctors might start to refuse to see patients on Medicaid. 

“What happens if a provider can’t get paid when you’re providing services?” Sangvai said in an interview on WRAL’s “On the Record” program, which aired Saturday, featuring interviews with him and other insiders about their expectations for the short session.

He answered his own question: “There’s a real risk to access in the Medicaid program for the 3.1 million people who need it. … These are pregnant women, elderly veterans, families and others.” 

Democratic Gov. Josh Stein has said fixing that funding gap needs to be a top priority for the Republican-led legislature, and lawmakers on both sides of the aisle agree.

Last year the House and Senate each passed standalone bills to fully fund Medicaid. But each chamber refused to vote on the other chamber’s proposal — another casualty of the budget standoff — and so nothing happened, and the program remains short hundreds of millions of dollars.

Hall told WRAL he expects the legislature likely will approve funding. But he expressed concerns that it’s not just inflation and population growth that’s driving higher Medicaid costs — but that the state is allowing too many ineligible people to stay on the rolls, and that investigators are failing to catch large amounts of fraud.

Those concerns were repeated at length during an oversight committee last week, when  Sangvai and Attorney General Jeff Jackson — whose office handles Medicaid fraud cases — were hauled in by GOP lawmakers to testify under oath about what they’re doing to catch fraud.

Jackson and Sangvai pushed back on many of the lawmakers’ concerns and accusations, defending their track record. It remains unclear whether lawmakers will agree to fully fund Medicaid with no strings attached, or if any bill to do so might come with additional requirements regarding fraud or eligibility checks.

State employee raises, vacancies

The budget delay is also putting a strain on state agencies and the people who make them hum.

And the lack of raises proposed in House and Senate budget proposals have made it harder for agencies to recruit and retain workers needed to serve this fast-growing state, agency heads have told lawmakers.

If the legislature does pass a budget during the short session, any raises would likely be made retroactive. The Senate has proposed relatively small raises for teachers and other state workers, preferring to focus on tax cuts instead, while the House favors bigger raises.

Ardis Watkins, who lobbies for state workers with the State Employees Association of North Carolina, said there are as many state workers now as there were in 2009. But in the meantime, she said, the state has added 2 million new residents. That’s causing delays at the DMV or to receive autopsies, as well as a shortage of thousands of teachers. Watkins said if state lawmakers would pay state workers better, it would make those jobs more attractive and help solve the problems with vacancies. 

“The highest price is being paid by the public,” she told WRAL’s “On the Record” on Saturday. “They really are not getting things timely, if at all, that affect public safety and public health.”

Shifting political math

Adding to the complexities of what GOP leaders may choose to prioritize during their limited time back in session: Their potential loss of supermajority power.

The November elections are fast-approaching, and polls show a favorable year for Democrats. If Democrats flip even a few seats in the state legislature, they could effectively cement Democratic Gov. Josh Stein’s veto power.

So if Republicans want to pass policies into law that they suspect Stein will veto, this could be their last chance in at least a few years.

The Republican State Legislative Commission, which helps strategize and finance the GOP’s efforts to control state legislatures nationwide, made public a memo Thursday that listed North Carolina as one of a handful of states the Republican Party needs to play defense in, as Democrats threaten to eat into their majorities.

“The path to holding our ground in 2026 is narrow and unforgiving ... a stress test for Republican strength at the state level,” the memo concluded, citing large amounts of spending by Democrats and poor polling numbers for national Republican politicians.

Democrats already broke the House supermajority in 2024, but just barely, and they’re hoping to expand their leverage in November. In the Senate, meanwhile, Democrats need to gain just one seat to break the supermajority there. A district in the Rocky Mount area is their top target.

Hall and Berger have been relatively tight-lipped about what they may try pushing through in advance of the elections. But some priorities are known. Among them: 

Guns and DEI.

Berger’s chamber has already overridden Stein’s veto on a bill to eliminate concealed carry requirements in North Carolina and allow almost anyone above the age of 18 carry a concealed firearm without needing the training and background check currently required. But the measure stalled in the House, which hasn’t yet attempted an override vote of its own.

Hall hasn’t said why he never put that veto override up for a vote, or if one might happen in the short session, but when the bill passed originally several Republicans either voted against it or skipped the vote.

Several other veto overrides — for three bills seeking to ban diversity, equity and inclusion policies in schools and government agencies — also passed the Senate last year but are lingering in the House.

Hall found success convincing some Democrats to vote with Republicans on some other veto overrides in 2025, such as on immigration, transgender and energy issues. However, those Democrats are all Black, and they wouldn’t help Republicans also pass the anti-DEI bills into law.

All three of those moderate Black Democrats lost their primaries in March to more progressive challengers. That means veto overrides could be even harder for Republicans to accomplish after this year is over, even if Democrats don’t flip a single seat in November.

Property taxes.

The House has indicated property tax reform is one of its main priorities. Last week a new House committee advanced a proposed amendment to the state constitution that would restrict the ability of local governments to decide their own property tax rates, possibly forcing cuts in some situations.

It’s unclear, however, if the Senate is on board with that constitutional amendment. That chamber also has its own committee examining possible property tax reforms, and it never took up the idea the House is pushing forward.

Berger said in his letter Friday he likes the idea of “innovative and thoughtful reforms to ever-increasing property tax bills” but didn’t mention the constitutional amendment or any other specific ideas. He did previously voice support for pausing some counties’ revaluation process.