State legislators left Raleigh in late June for their summer break without having passed a budget for the next two years. That’s become the norm since Republicans took control of both chambers in 2011. Of eight tries, they’ve hit that start-of-the-fiscal-year target
only twice.
The exceptions were 2011 and 2017, both times after overriding gubernatorial vetoes. In 2011, Gov. Beverly Perdue’s influence was ebbing quickly. In 2017, the GOP enjoyed its largest supermajorities in both the House and Senate and didn’t need to worry much about Gov. Roy Cooper’s opinion.
Four other times, the budget became law between late July and mid-November. In 2019, legislators weren’t able to finish the job at all, as Republicans lacked the votes to override a Cooper veto amid a deadlock on Medicaid expansion. The budget for 2018-19 continued as the framework for another two years, though many revisions occurred as the pandemic struck in early 2020.
This time around, the jury’s still out. Just before heading for a break, House Speaker Destin Hall said he’s “confident we’ll get a deal done on it at some point.”
This begs questions about how the process works, or doesn’t work. For answers, we consulted former Republican Rep. Jason Saine of Lincoln County, who was a senior chair of the House Appropriations Committee before resigning last year. That made him one of the so-called “Big Chairs” driving the process.
There are some built-in reasons for legislators to temporize, says Saine, who now lobbies for a wide variety of public and private sector clients.
Three key checkpoints occur early. Lawmakers schedule public subcommittee briefings with the leaders of various executive branches and Council of State offices. Then the Governor’s Office of State Budget and Management and the legislature’s Fiscal Research Division issue a joint revenue forecast indicating how much money will likely be available. Then the House speaker and Senate President Pro Tem have to agree on the overall spending target.
Legislators also often prefer to see the state’s revenue results after the April 15 tax-filing deadline. “Everything kind of somewhat stays on hold until you get that revenue number,” Saine says. “From the prognosticators, they’re giving you a decent idea. But no one really knows until you get those final numbers.”
This year, there was a further reason to wait: the federal government’s so-called “One Big Beautiful Bill,” had massive implications for Medicaid and other programs. It became federal law in July.
Each session, the governor takes the first crack at drafting a budget proposal. It’s widely assumed that this is an empty exercise, even if the governor’s party matches the affiliation of the legislative majority, because the N.C. Constitution provides the legislature with vast powers.
But Saine says it actually does matter because the budget process doesn’t really have definite starting and ending points. There are always conversations between legislators, staffers, their counterparts in the executive branch, and officials in semi-independent agencies like the UNC System and State Ports Authority.
The governor’s influence weighs heaviest through his or her appointees. Their behind-the-scenes conversations with the legislative side mean there are a lot of things that “are widely agreed upon because we’ve known for years where agencies are headed and some of their pressure points,” Saine says. “As much as it may disappoint some who are looking for a lot of high intrigue, the differences many times aren’t that great.”
There are differences nonetheless, even within the chambers. The easiest disputes get handled at the subcommittee level. The harder ones land on the desks of the Big Chairs, and the hardest go to the “corner offices,” meaning Hall and Phil Berger, who has led the Senate since 2011.
The House and Senate take turns every biennium in drafting the first legislative budget proposal. The Senate led this year. The initial proposal is about laying down markers about key priorities, with the understanding that the other chamber will disagree, and negotiations will follow.
This year, the chambers broadly agree that they’ll claw back part or all of the $500 million endowment provided in 2023 to a new state initiative, NCInnovation, to subsidize commercialization of university research.
The Senate wants to divert $400 million of that money to help pay for a new $2 billion children’s hospital in Wake County. But the House has questions about that project, Hall says. Its counterproposal omits the allocation.
Saine notes there are also broader, persistent differences in budget strategy between the chambers. The House tends to be more generous in raising state-employee pay;
the Senate tends to favor deeper tax cuts.
As for negotiations, “a lot of it is driven by personalities,” he says. Democrats aren’t necessarily frozen out, despite the chambers’ supermajorities. There are effective Democrats and ineffective Republicans, Saine says.
He cites Rep. Pricey Harrison, a Guilford County Democrat, as capable of influencing legislation because she has subject-matter expertise on environmental issues and is willing to work constructively with her Republican counterparts.
Still, “personal fights” rear up in the committee process, he notes.
“You get days where people get up and leave for meetings because they’re upset, or they’re not agreeing, and it’s exhaustive,” Saine says. “And sometimes, you know, it goes to the weekend and people go home, take a couple days and then come back to the table to try to resolve it. So it’s a process.”
Unlike Congress, the General Assembly doesn’t have to worry about a government shutdown because unlike some states, there is no limit on the length of sessions. If there’s no new budget, state agencies continue to function under the
old one.
Any deadline pressure is mostly linked to mostly linked to construction budgets, which require replenishment to keep contractors paid to keep cranes and bulldozers moving. State employees, meanwhile, have repeatedly had to wait months to receive retroactive pay raises, which is a real cost for corrections officers, teachers and others making relatively modest salaries.
Overall, Saine describes the state budget as “an elongated process, and it’s designed that way … kind of building the ship while you’re floating down the canal.” ■
