Hundreds of millions for NC children's hospital caught in budget battle

A plan to build North Carolina’s first standalone children’s hospital is emerging as a possible sticking point in state budget negotiations, with the House and Senate proposing vastly different sums for the multibillion-dollar project.

NC Children’s, to be built through a partnership between UNC Health Care and Duke Health, stands to create thousands of jobs in the Triangle and improve pediatric health statewide. The hospital is projected to cost at least $2 billion — a figure that could grow as the hospital is built.

State lawmakers find themselves disagreeing over more than half a billion dollars worth of potential hospital spending, with the Senate proposing an increase to its budget and the House instead wanting to take back money that was already promised.

The North Carolina Senate, which approved its $32.6-billion spending plan last month, proposed investing an additional $535.5 million in the planned 500-bed pediatric hospital, which is expected to be finished in the early 2030s.

If the chamber gets its way, the appropriation would bring total state funding to about $855.2 million — nearly 43% of the lowest projected cost estimate. It was one of the biggest earmarks in the Senate’s spending proposal, which covers the two years ending June 30, 2027.

The House budget proposal, filed Monday, seeks to reduce already-approved funding for the project by more than $100 million.

The chasm comes as lawmakers seek to boost pay for state employees and public school teachers while also keeping promises to reduce tax rates — all in the face of reductions in federal funding to the state.

The additional funding proposed by the Senate would enable the health systems to continue planning out the hospital, which aims to treat complex pediatric health issues.

Rep. Donny Lambeth, a key House Republican budget writer and a supporter of the proposed hospital, said Tuesday that some House Republicans were uncomfortable with the expenditure. But he predicted funding for the project would be partially or fully restored in the final budget deal negotiated between the House and Senate, even if it isn't included in the House's plan.

Lambeth, R-Forsyth, said lawmakers have asked UNC and Duke to revisit their cost estimate. "We have an information deficit,” he said. “Our caucus is saying, ‘With tight economic times, can we really afford the amount of money they're asking for?’ … We've got to do a much better job of explaining to them the economic benefits in North Carolina.”

The Senate’s proposed funding can only happen if the House agrees to let it in the final budget. The House continued to debate its spending plan on Tuesday and the chamber’s leaders want it approved by the end of the week. The House and the Senate would then negotiate a final spending plan. The new fiscal year starts July 1.

State leaders have credited Senate leader Phil Berger, the chamber’s top Republican, with pushing through the initial state pledge of $319.7 million, which was approved as part of the 2023 state budget. The House’s proposal would reduce that approved funding to $216.3 million.

A spokesperson for Berger didn’t immediately provide a comment when asked about the House proposal on Tuesday.

The university partners have said the fast-growing region is running out of pediatric hospital beds and doesn’t have enough specialty services to keep up with demand. Organizers expect the new hospital to bring more — and more advanced — medical care to more children.

To fund the balance of the construction costs, beyond state funds, UNC and Duke would likely have to invest some of their own money while also relying on donations from individuals or philanthropic groups.

“We appreciate that North Carolina Children’s is part of the ongoing budget negotiation and welcome support from state leaders,” UNC Health spokesman Alan Wolf said. “We remain optimistic that funding for this important project will be included in the final budget.”

A site for the new hospital, which would likely be built in a location that is central to the region with access to a robust road network, hasn’t been finalized. The UNC-Duke partnership has been scouting possible sites in Cary and Apex, people familiar with the matter have told WRAL.

The partners aim to break ground on the new campus by 2027. Construction of the campus is expected to take about six years.

WRAL Capitol Bureau Chief Laura Leslie contributed to this report.