North Carolina House Speaker Destin Hall (R-Caldwell) holds a press conference with House Republicans to outline their state budget proposal on Tuesday, May 20, 2025. (Photo: Galen Bacharier/NC Newsline)
The state House is on track to pass its proposed budget that includes substantial raises for beginning teachers while cutting thousands of vacant jobs and delaying future tax cuts.
The House votes this week are a prelude to the coming negotiations between House and Senate budget writers who must reconcile the differences between two distinctly different spending proposals before sending a compromise plan to Gov. Josh Stein.
“We continue to give that tax relief while also making sure we’re investing in the state’s most important asset, which we believe are its people,” said House Speaker Destin Hall (R-Caldwell) during a press conference Tuesday morning.
The House budget includes a 2.5% raise for state employees, with some of the money for raises coming from the elimination of thousands of jobs. Though the vast majority of the job cuts are to positions that are currently vacant, the total also includes about 62 currently filled positions, lawmakers said.
In addition to the 2.5%, the House budget allows state agencies and universities to use money saved by cutting vacant jobs for raises and retention bonuses.
The State Employee Association of North Carolina urged its members to tell legislators to reject that plan.
“Employees are stressed and burned out from trying to fill the gaps, ensuring citizens receive the services they pay for with their tax dollars,” SEANC posted on Facebook. “Robbing Peter to pay Paul is no way to run a state government and no way to treat dedicated career employees.”
Hall said the cut vacancies would free up money for agencies to use as needed, including to amp up pay for current workers. He said the decision to eliminate the jobs “doesn’t mean we can’t come back later and add those positions” back.
Contrary to the proposal for most other agencies, the House budget adds more than 60 driver’s license examiner jobs at the DMV and provides money to open new DMV offices in Fuquay-Varina, and in Brunswick and Cabarrus counties.
Legislators had said they would wait for an auditor’s report on the DMV before they put more money into the agency. But they have been inundated with complaints about long lines at DMV offices and unavailable appointments.
“All the members get a lot of questions about DMV,” said Rep. Donny Lambeth (R-Forsyth), a lead budget writer. “We needed to respond to the needs that we’re hearing all across the state to get the wait times down.”
Nevertheless, the House Appropriations Committee rejected a proposed amendment from Rep. Mary Belk (D-Mecklenburg) for 10 more DMV self-service kiosks at a cost of $43,000, which would have doubled their number.
The House budget raises beginning teacher base pay from $41,000 to $48,000 in 2025-26 and to $50,000 the following year. The increases would rank the state first in the Southeast in beginning teacher pay. Average teacher salaries would increase 8.7%.
The House budget also restores salary supplements for teachers who hold advanced degrees.
When they get to the negotiating table, lawmakers in the House and Senate will have to talk through their different perceptions of revenue growth and related tax cuts.
The state’s 2023 budget built in up to three automatic personal income tax cuts in tax years 2027 to 2034 that depend on the state meeting revenue targets. The House budget changes those targets, meaning the state would need to bring in more money to trigger the next cut. That plan could delay future cuts.
“When we ran the numbers, Mitch and I had true concerns that we needed to adjust those numbers,” said Rep. Julia Howard (R-Davie). She and Rep. Mitchell Setzer (R-Catawba) are senior co-chairs of the House Finance Committee. “The first trigger is okay. The second trigger could create some problems, and that’s why we adjusted it so that second trigger is most likely not going to click in,” Howard said.
Population increases and inflation “caused enough concern” to make the change, she said.
Nonpartisan economists in the state budget office and the legislature have projected state revenue to drop in 2026-2027, as planned tax cuts take effect. Republicans have focused on cutting taxes since they took control of the legislature in 2011. In addition to incorporating graduated cuts in the personal income tax rate, Republicans are phasing out the corporate income tax. Corporations will pay no income tax after the 2029 tax year.
The Senate budget proposal added more revenue-triggered tax cuts. Senate leader Phil Berger (R-Rockingham) told reporters last month that he did not believe the forecast and anticipated revenue will continue to grow.
House Republicans were less rosy in their assessment of the state’s financial future. “We’d need about an hour” to discuss the challenges they face, Lambeth said Tuesday morning. Chief among those challenges is uncertainty out of Washington.
North Carolina Rep. Donny Lambeth (R-Forsyth), a lead House budget writer, outlines the chamber’s state budget proposal at a press conference on Tuesday, May 20, 2025. (Photo: Galen Bacharier/NC Newsline)“We made a strategic decision — let’s just assume that we’re going to continue business as usual,” Lambeth said. “When something comes down the road, we may have to reconvene and deal with those changes.”
In his budget request, Gov. Josh Stein, a Democrat, froze the tax rate and urged Republicans to do the same. The governor has repeatedly warned of a coming fiscal cliff.
House Democratic leader Robert Reives (D-Chatham) said Tuesday that the plan was a step in the right direction, getting “closer to what Gov. Stein proposed” on teacher pay and revenue concerns. But he criticized “cuts to public safety, public services and negative impacts on clean air and water efforts,” and the continued funding of school vouchers.
“Democrats will be offering amendments to improve our public schools, invest in health care for working families and protect public safety and clean air and water,” Reives said in a statement.
In the Appropriations Committee, Republicans took care to protect the voucher reserve fund, rejecting Democrats’ requests to shift relatively small amounts of money to support a program for high school students who aspire to teach, or for a pilot on sustainable teaching practices within the New Teacher Support program.
Democrats condemn corporate tax cuts, call for health and education funding
House Democrats took aim at the budget plan in a Tuesday afternoon press conference for spurning increases to health and education funding in favor of corporate tax cuts.
Putting forward their own proposal, entitled “Make Corporations Pay What They Owe,” the representatives focused their criticism on Republicans’ plan to lower the corporate income tax to zero by 2030, which they said will cause the state to lose about $2 billion annually. They also criticized the elimination of thousands of positions under the House budget plan, which they said will make North Carolinians less safe, healthy, and educated.
Rep. Maria Cervania (D-Wake) took aim at proposed cuts to health care positions around the state, which she said put North Carolinians’ lives at risk. (Photo: Brandon Kingdollar/NC Newsline)Rep. Marcia Morey (D-Durham) condemned the plan for corporate cuts as a “house of cards” that “cannot be sustained.”
“This shortfall is not because our state spends too much taxpayer dollars on handouts to the poor or to our public schools or to immigrants — it’s because we have eroded revenue and put corporate interests over people,” Morey said.
Rep. Maria Cervania (D-Wake) focused her criticisms of the budget on health policy, calling out the House’s plan to eliminate 50% of funding for community-based mental health crisis services. “We cannot build a healthy economy by gutting the health of our people,” she said.
State employees also gave remarks during the press conference, including Charles Owens, a health care technician at Cherry Hospital, a psychiatric facility in Goldsboro. He singled out increases to state employee health care costs, including higher co-pays, premiums, and deductibles, despite health benefits being a key incentive to join the state workforce.
Charles Owens, a state health care worker, said increases to employee health costs were unacceptable. (Photo: Brandon Kingdollar/NC Newsline)“We could deal with some of the wage problem, but now you increase our health care costs to the point where employees can’t afford to get sick,” Owens said. “It’s time to stop taking care of corporations and giving them tax cuts and start taking care of the people that take care of this state.”
Owens added that cutting positions at facilities like his, which house “the most vulnerable, exploited, and some of the most dangerous people in this state,” endanger the lives of state employees.
“It’s a safety issue. We’re understaffed, and as we were saying, 300, 400 positions — it may [not] sound like a lot to most people, spread across the number of hospitals, but for me and my staff, that’s one less person watching your back, that’s one patient that could sneak up and smack you in the back of the head with no recourse,” he said.
Rep. Laura Budd (D-Mecklenburg) said Republicans’ lack of funding for public education runs counter to their stated aim of making North Carolina more attractive destination for corporate investment. She pointed out that the quality of local school systems is a key factor businesses rely on to determine the suitability of a location, in order to attract a skilled workforce willing to raise their families in the community.
“How do you attract qualified workers to move from other states to North Carolina if the school system where you’re going to put that entity isn’t very good?” Budd asked. “Put your money where your mouth is, pay for what you need, not for what you want.”
Nicole Price, associate executive director of the North Carolina Association of Educators, said it is critical for lawmakers to halt the cuts to corporate taxes and instead “reinvest in the future of our state.” She cited a petition that has garnered more than 1,800 signatures calling for the protection of public schools, health services, and other vital programs.
“Now is the time to invest in students’ future by investing in our schools,” Price said. “We can prepare every child regardless of gender, race, ability, family income, to reach their potential, but only if we truly commit to investing in our students.”
House Democrats registered some amusement that a few of their past proposals that had been derided when they submitted them had now made their way into the budget bill. Rep. Deb Butler (D-New Hanover) noted that she had proposed reducing the triggers for income tax cuts in March, citing the state’s revenue shortfalls, a change House Republicans have now adopted as their own. Likewise, Cervania had previously proposed a back-to-school tax holiday that’s now in the budget bill.
“Let’s be clear: there’s still a structural deficit. The triggers may have been adjusted, but the damage of revenue erosion continues,” Butler said. “We’re still asking our state to do more with less, and we’re doing it with a straight face. Meanwhile, the federal government has been quietly shifting costs to the states.”
Butler and Morey also expressed dissatisfaction with a lack of transparency and bipartisan engagement in the budget-writing process. Butler noted that she only gained access to the bill at 3:30 p.m. Monday when she was due to discuss it in committee at 8:30 a.m. the following morning. And Morey noted that the first item lawmakers received in their subcommittees was “an entire page” of restrictions barring amendments that would increase overall funding, allocate money to Helene relief, and make numerous other changes.
“They set the lines and we can’t draw out of the box,” Morey said.
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