NC lawmakers go home without a budget, leaving raises and taxes unresolved

Luciana Perez Uribe Guinassi, The Charlotte Observer on Jun 26, 2025

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After months of bill filings and back-and-forth negotiations, North Carolina lawmakers have ended the primary portion of this year’s legislative session — without passing the state budget, one of their most important tasks.

As a result, thousands of state workers and teachers won’t see salary increases and the state will keep running on funding levels set by the prior budget.

The state’s fiscal year runs from July 1 to June 30, and before the new budget year starts, lawmakers are expected to pass a budget to guide spending for the next two years. But on Thursday, they left for a break of at least two weeks — with no budget in place.

While it’s not unusual for lawmakers to miss the June 30 deadline, House and Senate leaders have signaled they remain locked in a stalemate, including over issues like taxes and raises. Both chambers hold Republican majorities.

Republicans also did not pass an adjournment resolution, which formally ends the session and limits what actions lawmakers can take. The Senate passed a resolution, but the House did not take it up.

Here’s what House and Senate leaders had to say on Thursday about where things stand on the budget.

Tax cuts

Senate leader Phil Berger blamed the stalemate on “an insistence on the part of the House to try to renegotiate agreements that we’ve made in the past.”

The Senate wants further cuts to personal income tax rates, while the House prefers a more cautious approach — delaying those cuts set in a previous budget unless the state’s revenue reaches certain set levels, known as “revenue triggers.” The state could be facing a tight budget, according to an updated revenue forecast .

Berger said revenue projections can vary widely from actual collections, especially several years out, and relying on those forecasts to change previously agreed-upon tax policy was “inappropriate.”

He said the Senate offered to move forward based on the original agreement on income tax cuts, telling the House it didn’t need to commit to new reductions.

“Neither of us would touch the triggers — and they rejected that,” he said.

Not fully done

House Speaker Destin Hall wanted to leave things open-ended.

He said the House didn’t want to be limited by an adjournment resolution to only conference reports, which are negotiated compromises both chambers must approve. Any budget deal will come through a conference report, since neither side has accepted the other’s proposal.

Asked about the possibility of no budget deal being reached this biennium, the next two years, Hall said, “I think we will get one done before the end of the biennium.”

“Obviously, there are some philosophical differences on a number of matters in the budget,” he said.

The Senate could get its way on taxes if it holds out on a budget so that existing revenue triggers can take effect. Hall acknowledged that disadvantage for the House negotiators, saying: “anybody can look at the situation and can kind of see what the effects are.”

“At the same time, there are a lot of capital projects that are important to a lot of members across the state, really, that will need additional funding,” he said.

“If we’re going to continue down the road of a policy that we think ultimately may put us in a position, at least not to be able to do the investments we would like to do in education, in the university system, then we have to tighten our belts right now,” he said.

“If you want to invest in things, you’ve got to have the money to do that.”

The Senate passed its budget in April. Then the House passed its budget in May.

With no compromise in sight, the House this week passed two mini-budget bills that included average teacher raises of 6.4% for 2025-26 and a 2.5% annual salary increase for most state employees starting July 1. Meanwhile, the Senate passed its own spending bill, a 44-page measure that funds agencies and programs. Neither chamber approved the other’s more limited spending proposals.

Hall added that senior appropriations chairs plan to meet during the upcoming break to discuss the budget and attempt to resolve differences.