No deal on budget, raises or Medicaid as NC lawmakers leave town

The last day North Carolina lawmakers will be in town until late November — or possibly even before the new year — was marked again by disagreement over Medicaid funding and raises for public employees.

Both issues are tied to the broader budget negotiations between the House and Senate, which are both led by Republicans and have been at a months-long stalemate over the levels of state revenue that should trigger future tax cuts, as well as funding a new children’s hospital and raises. The budget is long overdue, as the new fiscal year began July 1.

After the House’s most recent session, the budget battle shows no signs of compromise beyond a third small spending bill the General Assembly passed on Tuesday.

The House on Wednesday approved raises for teachers and law enforcement officers — as well as more funding to reverse Medicaid provider cuts — measures the Senate isn’t expected to take up, as senators have already adjourned for the week.

Meanwhile, Senate leaders say they proposed tying funding for Medicaid to law enforcement raises.

The House and Senate each passed their own bills last month to fund the Medicaid rebase — the funding required to maintain current services and provider payment rates — but neither chamber took up the other’s version.

House raises in the mix

Another bill passed by the House on Wednesday would give teachers and state employees the same raises as in the spring House budget proposal, along with additional raises for law enforcement officers higher than the Senate’s most recent proposal.

Teachers would get raises this year of 6.4% on average, and most state employees and noncertified school personnel would get 2.5%. Other raises of 13% would be given to correctional officers, certain juvenile justice employees and state law enforcement officers. Bonuses are also in the mix.

But there’s a hitch.

The raises would only happen with “that comprehensive budget negotiation that we are all waiting on,” said Rep. Erin Paré, a Wake County Republican and budget writer.

The raises would only become law if the big budget does, too. The House also approved an amendment to the bill that would give retired state employees a cost-of-living-adjustment bonus.

Democratic Rep. Lindsey Prather of Buncombe County said because the raises wouldn’t go into effect until the comprehensive budget becomes law, “this bill is literally just posturing.”

“It means nothing. We are seemingly no close to passing a state budget than we were on June 30, but you don’t seem to care,” Prather said, referring to House Republicans.

Rep. Donny Lambeth, a top Republican budget writer, noted the tax cuts stalemate with the Senate and assured his fellow lawmakers “we are fighting for the House budget, and we’re taking a lot of criticism. ... We’ve always been able to get a budget done, but here we are going towards the end of October.”

The bill with raises passed unanimously, 110-0.

House says it's offered options

House Speaker Destin Hall has said that the House offered several ways to break its budget stalemate with the Senate and reverse Medicaid provider rate cuts triggered on Oct. 1 by state health officials who said funding would run short.

Those options included preventing Democratic Gov. Josh Stein from changing rates for a set period and tapping Medicaid reserve funds to provide additional money, he said.

“Thus far, the Senate has not wanted to do those things,” Hall told reporters on Tuesday.

And on Wednesday, the House took action on several Medicaid proposals.

It passed a bill that would use reserve funds to boost Medicaid funding, and another one that was added just an hour before the second House session of the day, which would provide more funding for Medicaid. It also passed a bill that would remove Planned Parenthood as a Medicaid provider.

Senate alternatives

The Senate disputes the House’s account of its not playing ball.

The Senate pointed to bills it passed earlier this year that include pay increases for law enforcement and that bar Planned Parenthood from the state’s Medicaid program.

The House and Senate on Tuesday approved a limited spending bill that, among other items, funds the State Highway Patrol and grants longevity-based step raises at certain agencies, The News & Observer previously reported.

The Senate sought to fold a number of things into that small spending bill: additional Medicaid funding, children’s hospital funding, rural health care money and raises for law enforcement.

Senators called for including half of previously agreed-to funding for a children’s hospital system being developed by UNC Health and Duke Health and the N.C. Care Initiative, a rural health care initiative — both sticking points in the budget and Medicaid talks.

In 2023, both the House and Senate approved nearly $320 million over three years for the hospital and $420 million for the N.C. Care initiative. Much of that money remains to be released. Hall has said he was not speaker when that deal was made.

Senators also pushed a tweaked “Back the Blue Act” to raise pay for state and local law enforcement officers. The changes included adding $2.8 million to the State Highway Patrol for civilian positions and extending 6.5% raises to General Assembly Police and Department of Insurance law enforcement officers, according to a Senate news release. The “Back the Blue Act” was passed by the Senate earlier this year but failed in the House.

The House would not agree to the proposal and ended negotiations, says the release.

Demi Dowdy, spokesperson for Hall, said the House offered a counter-proposal but did not provide details. She said they did not hear back on that counter-proposal.

Hall told reporters Wednesday that “the children’s hospital project is not going to receive any support over here unless we have a comprehensive budget deal.”

“That doesn’t mean that we’re just simply going to do, you know, what’s already been in prior bills, or what prior plans were. It needs a close look to determine the feasibility of that project, what the demand is, what the need is, “ he said.

At the end of the House session, Hall said there would not likely be any more sessions this year.

Democrats

Senate Democrats said in a news release on Wednesday that they were ready to return to Raleigh ”at a moment’s notice to pass urgently needed Medicaid funding.”

“Our communities are counting on us to make sure that they have a doctor to see when they need it and that critical services aren’t disrupted,” said Senate Democratic Leader Sydney Batch. “We are ready to come back to Raleigh and do our jobs. The real question is, are Senate Republicans?”

On Tuesday, Stein threw his support behind one of the Medicaid bills passed by the House, which pulls from reserve funds.

“People across North Carolina rely on Medicaid for their health care, and they need the legislature to step up. While the partial funding this House bill provides will not fix the Medicaid budget gap for the long term, it will allow us to delay the cuts as we work to ensure North Carolinians’ continued access to health care,” he said in a news release.

“The House has now acted on two clean Medicaid funding bills, and the Senate has left town without even considering this bill. The legislature has had months to fix this problem, and I urge the Senate to come back to Raleigh and fix this mess once and for all for the people who rely on Medicaid for life-saving health care,” he said.

“I think that the children’s hospital being in the middle of why we haven’t passed Medicaid” funding is “past disappointing,” House Minority Leader Robert Reives said Tuesday.

“I’ve actually had conversations with people and it’s easy to negotiate when you’re not being affected,” he said.

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