Senate Budget Release Details
North Carolina Senate Republicans said they would raise teacher pay by a few percentage points over two years, with smaller raises for most state employees, and replenish the state’s rainy day fund in the budget bill they unveiled Monday evening.
Republican leaders spoke to reporters about the budget Monday evening ahead of the legislation being made public, and about 10 minutes after announcing highlights via an emailed news release. Budget documents were posted online after the news conference ended.
Senate leader Phil Berger told reporters that the budget will take on “obsolete programs” and “bloated bureaucracy.”
Republicans did not offer specifics beyond Berger saying there will be some consolidation within community college programs. But the budget would eliminate a slew of positions and programs, like an agency that helps businesses owned by minorities, women and people with disabilities, and one that focuses on environmental education.
Senate Republicans want to spend about $32.6 billion in the first year, and about $33.3 billion the second year.
Republicans also said that they would raise the amount of money in the state’s rainy day fund to $4.75 billion, the amount where it stood before Helene hit Western North Carolina. That’s an increase of about $800 million from this year, Berger said, and about $700 million more in the second year. Also, the Senate proposal adds another $700 million to the Helene reserve fund, Sen. Ralph Hise said. Hise is a Republican from Spruce Pine, in the area hit by Helene.
“We must prepare to fend for ourselves,” Hise said, even though they “remain hopeful that the federal government will provide increased and expedited reimbursements” for Helene recovery.
Teachers would get 2.3% the first year on average, and 3.3% average over the two years, along with a $3,000 bonus, legislative leaders said. The budget would give most state employees a 1.25% raise and a $3,000 bonus over two years, they said, with law enforcement and corrections officers set to receive higher raises.
The plan would add $3.5 billion over two years to the State Capital Infrastructure Fund, which pays for construction projects at universities, Sen. Brent Jackson, a top budget writer, said.
The budget ramps up investment in North Carolina Children’s, a pediatric hospital network being developed by Duke Health and UNC Health. After lawmakers allocated $320 million to the project, the Senate budget proposes another $638.5 million. A children’s hospital is expected to open in the early 2030s.
Under previous budgets, the individual income tax rate dropped to 4.5% for the 2024 tax year, then dropped in 2025 down to 4.25%. The rate was set to drop after that to 3.99%. The Senate budget would cut the rate to 3.49% in 2027 and 2.99% in 2028 and eliminate previous “triggers” that determined the rate.
Berger told reporters last week that the budget bill would include policy from a bill the Senate passed expanding the office of Republican State Auditor Dave Boliek. Republicans said Monday evening that the budget appropriates $6 million to Boliek’s office to establish a Division of Accountability, Value and Efficiency.
Berger said Monday that new division “will be charged with the responsibility of looking for state programs, state agencies, and coming back to the legislature. Where it is different is that, unlike the DOGE effort at the federal level, where the executive branch actually purports to eliminate programs and pull money back, the auditor will not have that authority. That authority will continue to be with the General Assembly.”
The budget also requires state agencies to eliminate some long-vacant positions to achieve budget reductions, and to issue a report by Oct. 1 this year and again in 2026. With a state agency vacancy rate of 20%, that could mean many positions eliminated.
Senate Republicans want to expand funding for a program that provides teachers additional pay of up to $10,000 a year if they take on extra leadership duties, such as mentoring other educators. The budget would give an additional $16.2 million this year and $20.1 million next year to the Advanced Teaching Roles program. The budget also would provide an additional $6.5 million in grant funding so more school districts can apply for the program.
In other education items, the budget would:
- Require K-12 schools to adopt policies restricting the use of cellphones in class. The Senate already passed this bill, but it’s awaiting a vote in the House.
- Eliminate funding for the Plasma Games grant that few schools have used. Since 2020, lawmakers had approved grant funding for the science-based video game company, which has ties to Republican state Supreme Court Justice Paul Newby.
- Limit eligibility to a program where the state has paid the costs for high school students to take Advanced Placement, International Baccalaureate and Cambridge Advanced International Certificate of Education exams. It would now be restricted to economically disadvantaged families
- Provide science of reading literacy training to language arts teachers in low-performing middle schools.
- Make permanent a pilot program in which schools can apply for funding to purchase feminine hygiene products for students.
- Prohibit schools from serving a different meal to students who have unpaid school meal debt.
The Senate’s budget bill would also raise the unemployment insurance benefit to $400 a week. The state currently pays a maximum benefit of $350 a week, and a House bill would raise that to $450.
A big chunk of spending in the budget proposal is allocated to health care, as is typical — but it also includes policy changes that could spark debate. The budget would repeal North Carolina’s Certificate of Need (CON) law, which controls where health care facilities can open or expand.
It would also incorporate what appears to be the full text of a Senate-passed bill aimed at increasing transparency in health care billing, reducing costs, and accelerating prior authorization for medical services. That bill has not yet received a hearing in the House, which introduced its bill more narrowly focused on expediting the process of prior authorization.
The state treasurer’s job could change under the Senate’s budget. It would end the state’s “sole trustee” model, removing the treasurer’s sole investment authority — a change Republican Treasurer Brad Briner campaigned on and has requested. It establishes the North Carolina Investment Authority to independently manage state investments, such as pensions and highway funds.
In a news release, Briner said the budget proposal would boost the State Health Plan by 5% over last year’s contribution, surpassing the recent 3.3% annual average, and would provide funding to reinstate GLP-1 weight loss drug coverage.
Once the Senate takes final votes on its budget, about a month later, the House will pass its own budget bill. Then the two chambers will negotiate a final budget bill to send to Democratic Gov. Josh Stein.
Stein’s budget proposal includes raises of 2% for most state employees, an average 10.6% raise for teachers, a moratorium on private school vouchers and a freeze on the cuts to the individual and corporate income tax rates. Stein’s proposal would spend $33.6 billion in the first year of the two-year plan and $34.3 billion in the second.
The House is expected to release its own budget bill in late May. Already, House Speaker Destin Hall told reporters that he thinks they’ll propose higher raises for state employees than Stein’s 2% pitch.
Mecklenburg Transit
Mecklenburg’s only Republican House member’s take on Charlotte’s transportation plan offers a glimmer of hope for a long-awaited light rail project. Rep. Tricia Cotham introduced a bill Thursday that would allow Mecklenburg County to put to a vote a sales tax increase to pay for road, rail and bus projects and establish a new public transit authority for the region.
Similar bills were introduced in recent weeks in the state Senate after a majority of Mecklenburg leaders endorsed a draft plan.
Officials previously indicated the southeast Mecklenburg legislator, who narrowly won reelection last year in her first race since her controversial party switch, would shepherd the bill on the House side.
Fellow Charlotte-area Republican Vickie Sawyer has led efforts in the state Senate as the region’s Democrat-heavy delegation tried to woo a skeptical GOP conference. But Cotham’s version doesn’t include a cap on rail spending included in the Senate bill and local draft legislation. That cap made it impossible to build the full Silver Line, originally slated to run from Belmont to Matthews, as light rail in the next 30 years.
The House bill also calls for the new transit authority to study the feasibility of the eastern leg of the Silver Line, including potential additional funding sources.
Cotham’s district includes Matthews — where some town leaders have vocally opposed Charlotte’s plan over the Silver Line’s fate.
Asked about Matthews’ opposition the same day the first Senate bill was introduced, state House Speaker Destin Hall mentioned Cotham’s ties to the southeast Mecklenburg community. “Tricia has a voice that carries great weight in our caucus, and I imagine that her opinion on this bill is going to carry a lot of weight with members of our caucus,” he said.
Motorist Bills
A slew of North Carolina bills related to road safety and the state’s Division of Motor Vehicles are illuminating the tricky situation state lawmakers find themselves in as they seek to improve safety for drivers while also trying to reduce the workload of the agency in charge of that goal.
It all comes as the state is conducting an intensive audit into issues at the DMV, and how to improve service at the agency that many lawmakers say is understaffed and responsible for more complaints than any other part of state government.
A group of lawmakers filed a bill Tuesday to let people keep driving on an expired license for up to two years, with a stated goal of cutting down on lines at the DMV. The agency has seen offices around the state plagued by long lines and hard-to-find appointments, and it has reacted with extended hours and other tactics.
On Wednesday, the House Transportation Committee signed off on two bills that will add to DMV’s workload, requiring it to create new forms and classes — one aimed at crash responses; the other aimed at reducing drunk driving — and to do all the background work required to compile the extra data and ensure compliance with new rules.
But in the same committee, lawmakers also tried pushing another bill aimed at cutting down demand for appointments at the DMV by making it easier for teen drivers to transition from a learner’s permit to a regular license. That proposal was met with strong opposition from those with safety concerns.
The committee ultimately decided not to hold a vote on the proposal.
License expiration: House Bill 821 would allow people to keep driving with an expired license for up to two years. It would apply to most drivers but has some exceptions. “There is a backlog of drivers unable to renew their driver’s licenses in person,” the bill states. “It is the intent of this act to eliminate that backlog.”
Efforts to stop DUIs: House Bill 217 would require adults who are seeking a driver’s license for the first time to first take a class on drug and alcohol abuse, distracted driving, aggressive driving and other safety concerns. The class would likely be offered online or at a local driving school, not the DMV itself, but the DMV would be in charge of creating the class and ensuring compliance. “I spoke with a group of mothers who have lost some children due to drunk driving,” Rep. Jarrod Lowery, R-Robeson, said. “And looking around at some other states, Maryland and Virginia also require this.”
Emergency contacts: House Bill 218 would require the DMV to ask people if they want to leave an emergency contact when they get or renew their driver’s license. Rep. Carson Smith, R-Pender, is a former sheriff and said the change would help emergency personnel reach family members of crash victims.
Teen driver changes: House Bill 584 would eliminate a requirement that people under 18 seeking a license have to get a letter from their school vouching for them, an attempt to stop teens from dropping out of school. It would also eliminate other requirements for teens to go from a learner’s permit to a regular license, including additional DMV appointments and a 90-day waiting period.
Rep. David Willis, R-Union, said the effort to stop school dropouts doesn’t appear to have worked, and that the other requirements only add to the volume of people seeking DMV appointments. “If you’ve been to the DMV recently, or tried to get an appointment in the DMV, or you got a kid go through drivers training or driver's education, you realize how painful this process has become,” Willis said.
It faced opposition from those concerned with the safety implications of making it easier for 16-year-olds to get on the road with less supervision or experience than is currently required.
Rep. Zack Hawkins, D-Durham, said he can’t vote for a bill that would make it more likely for young people to die or be seriously hurt. “The worst thing in the world is for an investigator or a police officer to knock on your door to say that something has happened to your child,” he said. “And that's something that we can prevent.”
Other lawmakers, however, said it should never have been the state’s responsibility to say whether or not a 16-year-old is ready to start driving.
“I controlled my children until they were capable of going on their own,” said Rep. Mark Pless, R-Haywood. “And I see no reason why a person in the state of North Carolina that has a child can't take their responsibility and actually keep them from driving by themselves until they're capable of doing it.”
Auditor Powers
The Republican supermajority in the N.C. Senate cleared Tuesday a controversial bill that would create a state DOGE division that would use artificial intelligence to review state agencies’ performance and staffing levels. Senate Bill 474, titled “The DAVE Act,” was passed by a 29-17 vote with Sen. Dan Blue, D-Wake, the lone Democratic supporter.
The bill has been sent to the state House for consideration.
Several Senate Democrats have criticized SB474, claiming Senate Republican leaders want to establish an N.C. version of the controversial federal DOGE initiative being led by billionaire Elon Musk.
The acronym DAVE stands for Division of Accountability, Value and Efficiency, which would be housed in the State Auditor’s office of Republican Dave Boliek.
Senate leader Phil Berger, R-Rockingham, the primary bill sponsor, has said he expects the language to be inserted into the 2025-26 state budget bill because of the need for additional state Auditor’s Office job positions.
“Funds sent to state agencies come out of the pockets of North Carolinians,” Berger said in a statement. “Requiring a review of state agency operations and staffing is the right thing to do to ensure that those tax dollars are not wasted.”
Sen. Caleb Theodros, D-Mecklenburg, said there needs to be firm restraints and transparency on the use of artificial intelligence in evaluating the performance of agencies and their employees.
Berger said legislators will employ artificial intelligence as a tool in determining funding appropriation levels and whether state funds are being wasted or not. “Your comments point out exactly why we need something like this,” Berger said.
According to a news release from Berger’s office, the legislation is designed to “get a complete picture” of how state agencies are utilizing taxpayer funds “and determine if the agency should continue to exist.”
Bill sponsors say the key areas for state agency review — so far — include: amounts spent, including the entities receiving funds and the intended purpose of the amounts spent; effectiveness of any amount spent in achieving the intended purpose of that spending; and duplicative spending.
Sen. Lisa Grafstein, D-Wake, said the auditor’s office focuses on accounting functions and is not meant to be a program evaluator of the work of state employees and “whether they are necessary.”
Berger responded by saying Boliek “has no authority to discharge anyone. He has the authority to identify problems in any discharge.”
“Any elimination of positions would be left up to the General Assembly.”
Floodplain Rules
A federal statute outlining floodplain management criteria is standing in the way of Senate Bill 266, a proposal that would create exemptions to ease the rebuilding of structures in floodplains in the aftermath of Hurricane Helene. Passage of the bill would mean North Carolina would be violating federal law.
Sen. Timothy Moffitt, R-Henderson, said the one-size-fits-all regulations from the federal government doesn’t work for a community that experienced a “1,000- year -flooding event.” He added that SB 266 won’t advance in the General Assembly until his “good partners” at the federal level change the current statute.
Six and a half months ago, flooding reached levels that would require rebuilding efforts to be up to 12 feet above previous construction levels. Future construction projects would require rebuilding at that elevation guideline. Moffitt, one of the primary bill sponsors, is trying to create an exemption for this “regulatory quagmire.”
“By not creating this exemption, which does challenge basic federal law in regards to the way FEMA [and] the National Flood Insurance program operates, we will not be able to rebuild,” Moffitt said to the Senate Regulatory Committee on Wednesday.
Moffitt has taken colleagues to Biltmore Village in Buncombe County, which was devastated by the storm. He has shown them the height differences between historic buildings and newer structures built to the base flood elevation requirements at the time they were established. While building is easy in the rolling and coastal plains, Moffitt said, mountain folks are stuck building between mountains and along waterways.
“If we cannot get our federal partners to also work on this at the same pace that I’m working on it, then probably 20% of the mountains will never return,” Moffitt said. “I think that’s too steep of a price for us to pay. I don’t think that’s in the best interest of our community and I don’t think that's the intent of trying to manage floods from a national perspective … We’re 201 years into [adopting flood regulations] and I think it’s fair to say our attempts to tame a planet are probably futile.”
The bill defines a “historic flood event” as a 200-year flood that has a one-half of one percent probability of being equaled or exceeded in any given year. Moffitt said that number is narrow enough to apply to future disasters in other parts of the state.
“I’m building this airplane as I’m flying it,” Moffitt said. “Staff has been great to caution and notify me that I am challenging basic tenants of federal law.”
Sen. Lisa Grafstein, D-Wake, said she is worried that the bill, while targeted at helping those who are trying to stay in the community and rebuild, could provide an opportunity for outsiders to come in and try to take advantage of a different building code.
Chairman Sen. Tom McInnis, R-Moore, said it’s expected this bill will return to the Senate Regulatory Committee before it advances any further.
Wetland Protections
With North Carolina recently suffering historic flooding damage, in the east from 2016's Hurricane Matthew and 2018's Hurricane Florence and in the west from last year's Tropical Storm Helene, officials have repeatedly stressed the importance the state's wetlands play in acting as natural sponges and flood-control devices.
But environmentalists fear upcoming moves in Washington and Raleigh could further water down the regulations covering these vital water-control features have even as officials are still dealing with a U.S. Supreme Court decision that saw isolated and semi-dry wetlands lose their federal protection.
In May 2023 the U.S. Supreme Court ruled that the definition of Waters of the United States, commonly known as WOTUS, only includes navigable waters, their tributaries and adjacent wetlands, but excludes isolated wetlands, which are wetlands without a surface connection to the jurisdictional waters. The federal definition is part of a decades-long discussion, and, in some cases, disagreement, linked to the federal Clean Water Act enacted in 1972.
Prior to the ruling, isolated wetlands and wetlands that are only wet for part of the year, like pocosin wetlands that are common in many areas of Eastern N.C., had been protected in many states, including North Carolina, through a broad interpretation of what WOTUS covers.
The Sackett case decision has ramifications for the Tar Heel State's wetlands because the language in a 2023 bill, commonly called the Farm Bill, passed by the GOP-controlled N.C. General Assembly over a veto by then-Gov. Roy Cooper, a Democrat, says state regulators can't adopt more stringent protections than those under federal law. While federal rules are the minimum requirements, states have the option of adopting additional protections and requirements that go above and beyond what Washington mandates.
For years, farmers and developers have claimed the environmental community has overstated the economic, wildlife, water quality, and flood-control benefits of isolated and "pocket" wetlands that aren't part of larger natural systems. They also said the old interpretation of which wetlands, like manmade drainage ditches, should receive federal protection made life difficult for farmers and limited what property owners could do with their land, hampering economic development opportunities in many communities.
On March 12, Lee Zeldin, President Trump's pick to the run the U.S. Environmental Protection Agency, announced plans to review the definition of "waters of the United States" to reduce red tape, cut permitting costs, and lower the costs of doing business.
If the EPA takes a very narrow approach in interpreting the rule, such as saying a wetland needs to have a "continuous" surface connection to a federally protected wetland or navigable waterway to receive protections, that could see millions of acres of wetlands lose regulatory oversight, said Kate Boicourt, director for the Climate Resilient Coasts and Watersheds team at Environmental Defense Fund. "It's pretty devastating, potentially," she said.
North Carolina has millions of acres of isolated and semi-dry wetlands that will see their protections watered down when the N.C. Environmental Management Commission finishes the rulemaking process this summer and the state officially starts to follow federal law when it came to what is and isn't a regulated wetland. According to the Southern Environmental Law Center, that included an estimated 527,000 acres of wetlands in the Cape Fear River watershed.