NC House proposes spending plan with raises, rejects Senate's Helene changes

The North Carolina House and Senate continue to clash on the state budget and Helene funding for recovery efforts.

House lawmakers voted unanimously on Tuesday not to approve changes made by the Senate to a Helene recovery bill initially filed by the House but later overhauled by the Senate.

Still, a top lawmaker involved in negotiations on Helene said talks were ongoing, with the possibility of a compromise being reached this week.

Meanwhile, hopes of passing a budget or other, more limited, spending proposals in North Carolina by the end of June have also all but faded.

Senate lawmakers on Monday proposed a spending bill.

And House members on Tuesday proposed two different bills that include funding proposals, including raises.

Helene bill

Senators on Monday unveiled a reworked version of a House bill to aid recovery in Western North Carolina.

The Senate’s version of the bill comes almost exactly a month after the House passed House Bill 1012, which outlined how the House would like to spend an additional $464 million on Helene recovery efforts.

Meanwhile, the Senate laid out how it would spend $465 million in state funds and $685 million in federal funds.

Rep. Dudley Greene, who represents various western counties, said the House passed its bill in May and sent it to the Senate “in hopes that it wouldn’t get tangled up and bogged down in the budget process.”

“But it wasn’t until yesterday, as the shot clock was running out on this session, that they finally decided to vote out a version. But to the surprise of probably no one in this room, it made some significant changes, many of which are important to the people of Western North Carolina,” he said.

Big-ticket spending items in the Senate’s version included $100 million for cash-flow loans to local governments and $221 million to North Carolina Emergency Management. Of that, $75 million is for repairs to private roads and bridges and $70 million to continue covering the state match for the Federal Emergency Management Agency.

Notably missing from the Senate’s proposal but included in the House’s bill were grants for small businesses affected by Helene.

But a deal might not be that far down the line.

Greene said “we’ve been working feverishly” to digest the Senate’s changes and find areas of compromise.

“We’re working on a proposal to hopefully get an opportunity for a conference as early as this week, if that could happen. We would like to see that happen, but whether it’s this week or sometime later in the month or later in the year, we remain committed to try to move this bill forward,” he said.

Going into conference means forming a conference committee to resolve differences between the House and Senate versions of a bill.

Democratic Gov. Josh Stein said on X that “Western North Carolina cannot afford for process to get in the way of progress. The legislature should work quickly this week to set aside their differences and do their job to support folks rebuilding after Helene. I stand ready to get this sorely needed relief out the door.”

Budget talks

While a compromise appears elusive, lawmakers in the GOP-led House and Senate are advancing bills addressing some of their priorities.

Areas of friction between the House and Senate center on tax cuts, raises and major projects, including a planned children’s hospital. Failure to pass a budget by the deadline is common in North Carolina.

Tax cuts, raises and the major projects causing debate were not included in the Senate’s spending bill released Monday, when senators transformed a bill about the state star into a 44-page measure that funds agencies and programs.

On Tuesday, senators passed their stopgap funding bill with bipartisan support on a 47 to 7 vote.

Then on Tuesday evening, House Republicans overhauled two bills and moved them through a committee after the House session that ended at about 7 p.m.

One of those overhauled bills, House Bill 192, was originally a bill to sharply raise teacher pay. Now it is a 33-page bill that appropriates and cuts funding across the two-year budget period to various state agencies and programs. It establishes a new teacher salary schedule for 2025-2026 based on experience.

According to a bill summary, the raises for teachers in the first year would average 6.4%, lower than what the House had proposed in its full budget plan.

HB 192 would also provide, effective July 1, a 2.5% annual salary increase to most state employees, as the House had proposed in its budget.

The other bill, Senate Bill 177, originally addressed Medicaid payments to psychiatric hospitals. It is now a seven-page bill that covers numerous issues, including providing Medicaid funds to address ongoing needs, funding new positions in the state auditor’s office and the state board of elections, and allocating $1.5 million to the State Board of Elections for litigation costs.

Appetite for compromise

Sen. Ralph Hise, an appropriations chairman, said after passage of the Senate’s funding bill on Tuesday that the bill is “what we felt as the Senate was what needed to continue.”

On the Senate’s appetite for any spending bill on raises, Hise said “we’ve had no discussion from the part of the Senate at this point on doing additional raises beyond where we currently are in the state.”

He added that as the state goes into what’s known as a continuing resolution — which keeps state government funded and operating when the state legislature fails to pass a budget — the Senate remains open to discussions with the House, including on what’s known as mini-budgets, or limited funding proposals.

But, “I’m holding very firm on the fact that we’re not trying to raise taxes in future years, but we’re willing to discuss anything the House would like to consider,” he said.

A key area of friction between the House and the Senate is taxes. The Senate favors further cuts to personal income tax rates while the House favors a more cautious approach, delaying cuts unless certain revenue “triggers” are met.

House Speaker Destin Hall said after the House session that the Senate proposal “is not a mini budget. It sort of creeps into trying to get as close to a comprehensive budget as possible without having one.”

“Our position is, is that if we’re going to do a comprehensive budget, then let’s do a comprehensive budget,” or otherwise, stick to more limited bills while budget discussions continue, he said.

Hall said it was a “safe bet” that the House would not agree to the Senate’s changes to the House’s bill originally focused on the state star.

He said it was “certainly possible” that lawmakers would leave Raleigh at the end of the week with no spending bills passed.

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