North Carolina House Speaker Destin Hall (R-Caldwell) speaks to reporters after a vote on the state budget on May 21, 2025. (Photo: Galen Bacharier/NC Newsline)
The state House budget proposal drew broad bipartisan support Wednesday after Gov. Josh Stein, a Democrat, said he liked a lot of it.
The House gave its budget preliminary approval with a vote of 93-20 after hours of debate on proposed amendments. Thursday’s vote will start negotiations between House and Senate Republicans on a compromise spending plan. The Senate passed a budget last month that is significantly different from the House plan. A final vote on the House plan is expected to take place on Thursday.
The House Republican-authored budget would significantly increase beginning teacher salaries. It also gives state employees 2.5% raises, though House Republicans said workers will get more because agencies will be able to use money from the elimination of thousands of vacant jobs to fund wage hikes.
Rep. Donny Lambeth (R-Forsyth), a House senior budget writer, called it a “well-crafted plan” that builds on the state’s “strong fiscal management.”
Stein praised the House budget for these proposed salary increases and, in a statement, highlighted the differences between the House and Senate tax policies.
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 a reduction in the personal income tax rate and likely delay a cut.
Rep. Julia Howard (Photo: NCGA)Rep. Julia Howard (R-Davie) said the increased revenue amounts needed to trigger tax cuts were based on inflation and population growth.
The House budget also increases personal income tax standard deductions and restores a back-to-school sales tax holiday. An income tax deduction on tips of up to $5,000 would begin in the 2026 tax year.
Nonpartisan economists in the state budget office and the legislature have projected state revenues will drop in 2026-2027 as planned tax cuts take effect. In addition to cuts in the personal income tax rate, the corporate income tax is being phased out.
The Senate budget proposal took the opposite approach, adding more triggered cuts.
Senate leader Phil Berger (R-Rockingham) told reporters he did not believe the revenue forecast.
Stein wanted to freeze income tax cuts, but among the Republican options, he prefers the House approach.
“Importantly, the House budget cuts taxes for working families while recognizing that North Carolina is a growing state and reduces personal income tax rates after this year only when the economy is growing,” Stein said in a statement. “In contrast, the Senate’s fiscally irresponsible revenue scheme will result in fewer teachers and law enforcement officers and diminished services that would harm our people.”
North Carolina House Minority Leader Robert Reives II (D-Chatham, Randolph) (Photo: NCGA)In an interview, House Democratic Leader Robert Reives (D-Chatham), said the state is in tough fiscal shape because of cuts to revenues and overspending on vouchers that rural students don’t even have the chance to use.
Republicans are protective of vouchers, and the House rejected amendments that would take even modest amounts from voucher reserves to fund other education needs. They also rejected an amendment that would restore family income limits, require schools accepting vouchers to limit their annual tuition and fee increases to 5%, and require teachers in voucher schools to hold a bachelor’s degree or a teacher license.
The House budget is a negotiating document, a counterproposal to the Senate budget, Reives said in the interview.
“Our ultimate goal is we have got to get a budget that is responsible,” Reives said. “The Senate budget is completely irresponsible. We’ve got to get a budget that recognizes the fiscal position that we’re in, and we’ve got to get a budget that starts talking about the tough questions.”
Reives and 26 other Democrats voted for the budget. Reives said during the floor debate he wouldn’t vote for it if it was the final bill.
“There is a lot of work that has to get done before we have a bipartisan budget,” he said.
House Speaker Destin Hall (R-Caldwell) acknowledged that it was unlikely the final budget would earn such broad support.
“Both sides got a chance to put forth their amendments,” Hall told reporters after the vote. “And I think that … made up most of the reason why you see a bipartisan vote today.”
Meanwhile, the House budget faced resistance from outside conservative voices.
Club for Growth, a national group that focuses on tax cuts and often spends big in elections, sent out a public threat to anyone voting for the House budget. Those who support it “should expect to be held accountable on election day, and kiss their political future goodbye,” the group wrote on social media.
And the Carolina Partnership for Reform, in its newsletter and blog, decried the plan as a “Republican-sponsored tax increase.”
“Having no budget deal is a better outcome than this one,” the group wrote.
Rep. Keith Kidwell (R-Beaufort) (Photo: NCGA)Rep. Keith Kidwell (R-Beaufort), leader of the body’s hard right Freedom Caucus, sought to counter any criticism of the House approach to taxes.
“We’ve got one of the best bills from a tax perspective I’ve seen,” he said. “Let’s send a message to the Senate that we have one heck of a bill here, and they need to pass it.”
Hall remarked that he believed the critical conservative groups “like the Senate budget, and would prefer House members to like the Senate budget.”
The House rejected 40 amendments offered by Democrats over hours of debate. The House adopted four amendments, including one that would kill tolling a portion of Raleigh’s Capital Boulevard to pay to widen it. The state Department of Transportation is planning to toll the road from I-540 in Raleigh into Wake Forest.
“We do not tax free roads in North Carolina,” said Rep. Mike Schietzelt (R-Wake). The amendment will prevent using public money to study, design, build, operate, or implement tolling on Capital Boulevard.
Two Wake Democrats said shutting down the option for tolls would curtail efforts to improve the highly trafficked thoroughfare
“We need to have the conversation with the communities to get to the right solutions,” said Rep. Maria Cervania (D-Wake). “This is not going to get the outcome that you need.”
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