North Carolina legislature gives initial OK to budget, which also would start Medicaid expansion

The Republican-controlled General Assembly gave initial approval Thursday to a long-delayed North Carolina budget that speeds up individual income tax cuts, broadens private-school scholarships to all K-12 children and initiates other right-leaning changes.

If enacted the final plan also would trigger Medicaid expansion coverage to hundreds of thousands of adults — a longstanding priority for Democrats led by Gov. Roy Cooper.

The measure now needs another set of affirmative votes in the House and Senate — anticipated Friday morning — before it goes to Cooper, who will have to decide whether Medicaid expansion and other items are enough for him to sign it into law, despite many provisions he finds objectionable. But GOP lawmakers hold narrow veto-proof majorities, meaning any Cooper veto would likely be overridden.

“We have to weigh the sweet pills and the bitter pills to decide how to vote. And Medicaid expansion is definitely a sweet pill,” said Rep. Marcia Morey, a Durham County Democrat, who ultimately voted no on Thursday. Only five House Democrats joined the Republicans present to give the plan preliminary approval by a vote of 69-40. The Senate followed later Thursday with a party-line vote of 28-19.

Many items in the budget, which with a related financial document covers more than 1,400 pages and became public Wednesday, strengthen powers of the legislature and state courts at the expense of the executive branch. And the governor has adamantly opposed spending on private school vouchers.

The budget directs how $29.8 billion is spent this fiscal year and $30.9 billion next year. It was supposed to be in place July 1, but negotiations got bogged down over the extent of tax reductions and how to distribute billions of dollars in reserves.

The process almost got derailed as Republican legislative leaders tried unsuccessfully to get approved the authorization of new casinos and legalization of video gambling machines.

Legislation surfaced last weekend that would have made Medicaid expansion contingent upon passing the gambling provisions. That would have altered the landmark Medicaid expansion law Cooper signed in March, which only said enactment of the budget was needed to implement the coverage. After opposition to the switch by both Democrats and Republicans, efforts to advance gambling were set aside, opening the door to offer Medicaid to the first of potentially 600,000 adults as soon as December.

“Yes, this budget’s taken longer than necessary,” House Majority Leader John Bell of Wayne County said at the close of an over three-hour debate. But “this budget will make life better for everyday North Carolinians."

Republicans focused their budget pitch on tax reductions — which would lower the current rate of 4.75% incrementally to 3.99% in 2026, with potentially a 2.49% rate in later years — as well as on $2 billion for water and wastewater projects and $620 million for mental health programs. Rank-and-file state employees would get a 4% raise this year and a 3% raise next year, while average teacher salaries would grow by at least 7% over two years.

The Opportunity Scholarship program, which began nearly a decade ago, gave taxpayer-funded scholarships last school year to over 25,000 children in low- and middle-income families to attend private schools. But the measure would expand the scholarships to all students, with the wealthiest families receiving awards equal to 45% of what the poorest would receive.

School-choice proponents have praised the expansion, which they say will help all children succeed in the classroom. But Democrats complained the huge investment into the program could have been used to raise even further teacher salaries that aren't keeping up with inflation. And they said qualifying private schools aren't required to enroll children with disabilities or whose families don't hold certain religious views.

“The school voucher program purports to allow families to choose, but in reality those choices are only real for some students and some families," said Rep. Ashton Clemmons, a Guilford County Democrat.

A policy provision would prohibit Cooper or his administration from making agreements with other states that would force utilities to purchase allowances to release pollution as a way to reduce carbon dioxide emissions. And state and local governments would be barred from firing someone because they won’t get a COVID-19 vaccination.

The budget also directs the General Assembly to elect more state community college board appointments and take appointments away from the governor. And legislative leaders would gain the power to pick some members of the Judicial Standards Commission, which investigates ethics complaints against judges.

With these and other alterations affecting the courts, the budget writers seek “to consolidate power, compromise our independent judiciary and dismantle the very checks and balances that are supposed to safeguard our government,” Democratic Sen. Mujtaba Mohammed of Mecklenburg County told colleagues.

Another provision would give the General Assembly’s chief panel for overseeing state government more investigative powers, which Democratic Sen. Graig Meyer of Orange County said would turn the commission into the “legislative secret police."

Senate leader Phil Berger defended the changes to the Joint Legislative Commission on Governmental Operations, saying lawmakers have a constitutional obligation to scrutinize the executive branch and that the panel is being “modernized to actually function in an environment where we likely will have divided government.”