No new NC budget likely until at least 2026, as GOP leaders adjourn with no deal

Republican leaders in the state House and Senate continued talking past one another on their main job — passing a new state budget — when they returned to session this week. The faltering negotiations bottomed out Wednesday, when the state House of Representatives announced its members would be leaving Raleigh with no plans to return until sometime in 2026.

It’s a sign that North Carolina’s new state budget, already months overdue, is still at least several more months from becoming a reality.

In the meantime, teachers and state employees will continue going without promised raises, cuts to Medicaid rates are expected to hit local doctors and hospitals, and planned new construction projects on everything from roads to public universities will be delayed.

The current fiscal year started July 1. In the absence of a new budget, the state operates on most of the funding levels set in the most recently approved spending plan. But not all funding automatically rolls over. And every budget tends to include new projects that are, for now, caught in limbo.

Republican House Speaker Destin Hall reminded reporters Wednesday that the state has gone up to two years without a budget in the past, although he said he hopes it doesn’t come to that this time. He added that the House might even change its stance and come back for votes in the next few months if something drastic changes on the budget-negotiation front.

But neither legislative chamber’s leadership appears optimistic about reaching a new deal anytime soon, as the 2025 session winds down.

“It’s time to stop playing politics and come to the negotiating table,” the Senate’s top budget writers wrote in a joint statement Wednesday, issued to the media and aimed at their House Republican colleagues.

Hall on Wednesday noted that his chamber had just voted for several items the Senate also supports, such as raises and Medicaid funding, but with differences in the details. He welcomed the Senate to pass those new versions of the bills into law. That’s highly unlikely to happen at this stage, but Hall said it was worth sending the message. “Essentially, it’s trying to negotiate with the Senate that way,” he told reporters after the votes. “We’ll try anything we can to get a negotiation done.”

Democrats in the House said they were happy to vote on Wednesday to give state workers a raise. But several wondered aloud at the pointlessness of the vote, knowing the bill was doomed to be ignored by the Senate — just as the House has been ignoring the Senate’s bills.

“This bill is literally just posturing,” Rep. Lindsay Prather, D-Buncombe, told her Republican colleagues Wednesday. “It means nothing. We are seemingly no closer to passing a state budget than we were on June 30. But you don't seem to care.”

Wednesday’s breakdown came as Republicans were able to agree on one thing — redistricting — by voting this week to redraw the state’s congressional map ahead of the 2026 elections. The new map eliminates North Carolina’s only competitive seat for the U.S. House of Representatives, turning it into a seat that’s expected to favor Republicans by double digits in future elections.

Critics said Republicans had all the wrong priorities, gerrymandering the state’s districts while continuing to fail at negotiating a new budget.

“Instead of passing a budget to fund our public schools, strengthen public health and keep our community safe, we are fighting over maps that divide us even more,” said Rep. Rodney Pierce, D-Halifax. “While families are struggling, we are playing politics with people's lives.”

Communication breakdown

Republican leaders in the state House and Senate harbor deep disagreements on how much of a raise state employees should receive, what to do with future tax cuts, how much money to give an ambitious plan for a new, multi-billion dollar state children’s hospital slated to be built in Apex and how to handle the state’s Medicaid funding shortfall, among other topics.

Senate Republicans feel like House Republicans aren’t willing to negotiate. House Republicans feel like Senate Republicans are taking unrealistic positions.

“We have made multiple offers — including the offer we made earlier this week — in an effort to restart negotiations,” Lauren Horsch, a spokesperson for Senate Republicans, told WRAL Wednesday. “But the House has thus far refused to budge.”

Rep. Donny Lambeth, a top House budget writer, said Wednesday that the Senate has indeed made some efforts to negotiate. But he said they’re only willing to negotiate on spending items, and not on tax policy. House Republicans want to keep tax rates roughly the same. Senate Republicans want steep cuts, even despite a warning from the legislature’s own financial experts that doing so will lead revenues to decline by hundreds of millions of dollars next year.

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Lambeth, R-Forsyth, said the entire process is doomed if they can’t figure out the tax portion of the budget first. And with the two sides seemingly too dug-in, there’s little else to discuss.

“The Senate would like to talk about the expense side, and we would like to talk about the revenue side, and that's why we are where we are today,” Lambeth said Wednesday. “We cannot come together on the revenue side — which is critical that we resolve first, so that we know how much money we have to spend.”

The legislature’s own economists have warned that Republicans are pushing to cut taxes too aggressively, and that the state will soon be running a deficit unless lawmakers dial back tax cuts that have been planned for future years.

Hall and other House Republicans have put faith in that analysis. “We can’t cut taxes and then hope to have enough revenue,” Lambeth said Wednesday. But Berger says he doesn’t believe in it and has pushed to continue with aggressive tax cuts.

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Berger has led the state senate since 2011 and is currently facing a competitive primary election challenge for the first time in years, by Rockingham County Sheriff Sam Page, who has accused Berger of not being conservative enough.

While Republicans in the House haven’t publicly blamed Berger’s primary challenge for the Senate’s hardline position, Democrats are starting to.

“We are now in excess of 114 days overdue, with absolutely no budget on the horizon — until after the March primary, because that's what someone in the other chamber would like us to do, so he can win his election,” said Rep. Laura Budd, D-Mecklenburg.