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Budget stalemate impacts Medicaid expansion, state employee salaries

North Carolina Legislative Building - August 19, 2023.
The North Carolina Legislative Building is pictured on Saturday, August 19, 2023.

The N.C. General Assembly has yet to pass the budget for the next two fiscal years, which began nearly two months ago on July 1. 

Discussions between House and Senate leaders led to this stalemate, as they worked to reconcile disagreements on funding Medicaid expansion, state employee salaries, infrastructure and other issues.

“It's frustrating as a legislator, because I do believe that deadlines should have meaning, and a lot of states have already finished a budget,” N.C. Rep. Donny Lambeth (R-Forsyth), senior chair of the House Appropriations Committee, said. “North Carolina is still trying to cross the finish line.”

According to data provided by the N.C. Office of State Budget and Management, the General Assembly has passed seven annual budgets after the July 1 deadline since 2011.

Medicaid expansion

Medicaid expansion, which was approved by Gov. Roy Cooper in March, was originally planned to take effect on July 1 after the approval of the budget for the current fiscal year.

According to the N.C. Department of Health and Human Services, Medicaid expansion in North Carolina will grant eligibility to those making up to 138 percent of the federal poverty level, or about $20,000 per year for a single individual. The federal poverty level varies based on the number and ages of people in a household.

“The longer you have this process waiting to happen, you might actually lose some people in the process,” Anca Grozav, the chief deputy budget director of the OSBM, said. “They might fall through the cracks and not realize that, ‘Hey, I'm eligible for for Medicaid expansion, I need to get back on.’”

Due to the budget stalemate, thousands of residents were disenrolled from Medicaid on June 30 without an insurance plan to transition onto.

The NCDHHS announced an anticipated Medicaid expansion start date of Oct. 1, contingent on action by the General Assembly. In order to launch Medicaid expansion by October, the General Assembly will either have to pass a budget by Sept. 1 or “de-couple” expansion from the budget.

De-coupling expansion from the budget means passing Medicaid expansion on its own, apart from the approval of a budget.

State employee salaries

As the 2023-24 fiscal year begins without a budget, state employees have yet to receive salary increases. 

North Carolina is currently operating under continuing authority, meaning the government can operate on recurring funds from the previous fiscal year’s budget.

Through continuing authority, the General Assembly cannot increase salaries. This includes step salaries, which are periodic salary increases that are already set in law for state employees.

“How can you retain and recruit teachers, hire bus drivers and school nurses if you're unsure of your budget, and what you will have for the entire year?” N.C. Rep. Renée Price (D-Caswell, Orange) said.

According to a report from the N.C. Department of Public Instruction, the state had about 5,000 vacancies on the 40th day of instruction for the 2022-23 school year. 

Price said each month without a new budget is delaying around $60-$200 in raises for teachers. 

“That’s real money to people, and we know very well that teachers spend a lot of their own money on school supplies to help their students,” Price said. “It makes a difference, at the end of the day.”

Benefit increases for retired state employees are also contingent upon an approved budget. All benefit and salary increases are retroactive, so retirees and employees will be compensated for time since July 1.

Lambeth said pre-planned vacations and meetings of General Assembly members have caused further delays in passing the budget.

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He said the discussion process for the annual budget begins with the area committee working out differences between the House and Senate budget proposals. 

Those decisions are then sent to the committee chairs, which include Lambeth and other members of the House and Senate. Unresolved portions of the budget then go to the House and Senate leaders.

“The process works for a big organization, very bureaucratic, but it does take time,” Lambeth said.

N.C. Rep. Allen Buansi (D-Orange) said the negotiation process is concentrated in a few people and that a lot of North Carolinians are not being heard.

“We've got a diverse state, population-wise, but then also geography-wise, infrastructure-wise,” he said. "And the needs of the people of North Carolina are buried."

Lambeth said the legislature is on track to vote on the budget starting on Sept. 11.

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