No North Carolina budget vote until August, top House member says

North Carolina lawmakers are not expected to vote on a budget until mid-August, further delaying Medicaid expansion in the state as Republican leaders in the House and Senate seek compromise on tax cuts and other spending priorities.

Rep. Jason Saine, R-Lincoln, a senior chairman on the appropriations committee, said the ongoing negotiations combined with previously scheduled vacations and national conferences are likely to push any budget votes into the middle of August.

The House and Senate passed their own budgets earlier in the session, but now are working to reach a compromise version to send to Gov. Roy Cooper.

The fiscal year began July 1.

State government operates at last year's spending levels until a new budget is passed, meaning there is no shutdown or reduction in services. But raises for state employees, tax cuts and, this year, expansion of Medicaid are tied to a new budget.

What's the hold up?

Each chamber crafted budgets with the same $29.8 billion top-line spending number, but with big differences in how they reached that figure.

The Senate's budget calls for swifter and steeper tax cuts than does the House's version, which includes larger raises for state workers. The Senate's version would reduce individual tax rates from the current 4.75% rate to 3.99% in 2025, two years earlier than current law provides, and down to 2.49% in 2030.

House negotiators, Saine said, want to tie those tax cuts to state revenue figures. Holding off, for example, on lowering taxes until the state brings in a certain amount of money.

"Most House members in my caucus are not comfortable," Saine told reporters Wednesday. "They certainly love tax reform. They certainly want to reduce taxes. But without those triggers, they just want to make sure we aren't short-changing our responsibilities in the future."

Other negotiations surround giving $1.4 billion to NCInnovation, a Durham-based business-led nonprofit, which was included in the Senate budget.

"I wouldn't characterize it as divisive, as much as it is members not understanding it," Saine said. "It's long term, it's investment into future economic development. And that's not what's normal here in our budget, so it's something that takes a while to digest. I think members are still trying to come to a better understanding of it before they say yes or no."

North Carolina projected to have more than $3 billion revenue surplus for the fiscal year that ended June 30. The state has more $5.2 billion in reserves, including $4.75 million in a "rainy day" fund.

Democrats said that their Republican counterparts should be investing more in state workers to combat a high job vacancy rate, in the pension plan for retired workers and for education. And they criticized the delay, which comes as Republicans hold super majorities in both chambers.

"Instead of working to address these issues, Republicans are huddling in back doors, figuring out how they can cut our taxes even more when our state is already struggling to provide the basic needs our state citizens depend on," said Rep. Wesley Harris, D-Mecklenburg.

"Rome wasn't built in a day and it certainly didn't fall in one, either. How long can we expect to maintain our celebrated No. 1 state in the country for business when we don't have the money to invest in infrastructure and we don't have the money to put a quality teacher in every classroom and we don't have the political will to invest in opportunity instead of how low can you go tax policy and tax culture?"

Do casinos play a role in compromise?

House Speaker Tim Moore and Senate leader Phil Berger are negotiating major parts of the budget compromise.

Both have previously discussed further expanding gambling in the state, including brick-and-mortar casinos on non-tribal land and, potentially, video lottery terminals. The creation of legal casinos on the Virginia-North Carolina border, including one in Danville, have sparked conversations about allowing casinos in economically disadvantaged counties off tribal lands.

North Carolina has three casinos on tribal land currently.

But Berger's office said casinos are not the reason for the budget impasse.

"Given record revenue surpluses, Sen. Berger believes that the state budget must include substantial tax reductions for the people of North Carolina," Berger spokeswoman Lauren Horsch said in an email to WRAL. "Whether or not to expand gaming in North Carolina is not an issue holding up an agreement.”

Lawmakers legalized mobile sports gambling earlier this session.

Saine, too, made it clear that casinos and video lottery terminals are not the reason there is no state budget.

He said the expansion of gambling is looming over the debate. Saine said it is his understanding that the Senate wants to expand gambling and that additional revenue sources could help accelerate tax cuts. But no definitive proposal has been made by the Senate, he said, making it difficult for House Republicans to discuss the issue or consider its impact.

"We could do tax reform. We could do casinos. We could do them both," he said. "But until we know exactly what they're going to look like, it is a little difficult."

Moore said gambling expansion has been a topic of discussion.

"It might be something we do, but we just don’t know yet," he said.