The N.C. House convenes for the legislative "short session" on April 21, 2026. (Photo: Lynn Bonner/NC Newsline)
The North Carolina legislature has agreed to shore up the state’s Medicaid program with a $319 million infusion, but disagreements between Republicans in the House and Senate on the rest of the state budget remain unresolved.
Republican legislators and Democratic Gov. Josh Stein had been jousting for months over filling the state’s Medicaid funding gap.
Republicans in the House and Senate failed to agree on a bill last year that would have provided the money. Some Republicans doubted that the $319 million the state Department of Health and Human Services said it needed was accurate. But House and Senate Republican leaders said Tuesday they have agreed on the figure.
House Speaker Destin Hall said the $319 million intended to get the program to the end of June will be included in a bill that also looks to control costs.
The bill was not publicly available at 4 pm Tuesday.
Medicaid cost increases over the last two years are unsustainable, Hall said.
“If it continues on, the debates about all these other issues we’re talking about are not going to matter, because Medicaid’s going to swamp it all out,” he said. “So we’ve got to get our arms around it.”
North Carolina was the only state in the country that didn’t pass a comprehensive budget last year. State employees and teachers haven’t received raises, state agencies are having trouble recruiting for crucial jobs, and state universities are living with budget uncertainty.
“The budget talks continue,” Hall told reporters. “I’m optimistic, more so than I have been in the past, that we’re going to get a budget done and a good budget done.”
While he did not offer specifics, Hall said “some progress has been made” on what he identified as three budget negotiation sticking points – future income tax cuts, salaries, and funding for a new children’s hospital in Apex.
NC lawmakers return to Raleigh with teacher pay high on the agenda
Likewise, Senate Leader Phil Berger declined to offer details on the progress of budget negotiations. But he was more guarded than Hall about reaching a deal.
“Something that may be okay today ends up being less okay tomorrow,” he said. “Probably best to just leave it at ‘We’re working on it and we’ll see where we go.’”
House and Senate Republicans disagree on the timing of automatic personal income tax cuts, baked into the budget, that are triggered when the state hits given revenue targets.
The individual tax rate is scheduled to fall from 3.99% to 3.49% in 2027. The rate is to fall again to 2.99% in 2028. The reductions mean the state will have less to spend in future years.
House Republicans want “responsible” cuts, Hall said, which could involve pausing the cuts to address revenue needs.
“When we pass a budget, I anticipate it continuing to contemplate reductions in the income tax rate over some period of time,” Hall said.
At a news conference presenting his budget, Stein said the planned tax cuts will result in a $5 billion shortfall. He too is calling for state lawmakers to pause the scheduled cuts.
But Senate Republicans want to stick with the reductions as planned.
“We’ve made a promise to the voters in North Carolina,” Berger told reporters Tuesday. ”I don’t think we should go back on that.”
Berger said he believes Stein’s projections are wrong.
“It’s my belief that we will have more money than is projected, and that if we control the growth in state spending, the state budget will be just fine,” Berger said.
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