RALEIGH — North Carolina Gov. Josh Stein released a proposed $1.4 billion “critical needs budget” he says is needed to address urgent shortfalls in state operations amid the General Assembly’s budget stalemate.
Released last Monday, the 12-page plan appears to be a mini-budget targeting specific areas. The plan document shows $1.37 billion in specific adjustments: $1.17 billion recurring and $200 million nonrecurring, primarily from the General Fund.
Stein said his plan prioritizes preventing service disruptions in health care, education, public safety and essential state functions, citing driving factors like persistent inflation, population growth of 326,000 residents since 2023, rising costs and shifts in federal funding.
“North Carolina has gone nearly two and a half years without passing a new state budget — the only state in the country to finish 2025 without one,” Stein said in a press release. “While lawmakers work toward a full, fiscally responsible budget this spring, there are urgent needs facing our state right now like fully funding Medicaid and giving law enforcement, teachers, and other public servants a long-deserved pay raise. This budget invests in critical public safety, education and health care services for the people of North Carolina that cannot wait.”
Key elements of Stein’s plan include:
- $397 million (recurring) for teacher and instructional support raises; a 13% increase in starting pay to at least $49,518 including supplements
- $319 million (recurring) to fully fund Medicaid rebase
- $241 million (recurring) for 2.5% raises for other state employees to offset inflation and vacancies
- $99 million (recurring) for 10% raises for certified public safety and law enforcement officers like state troopers and correctional officers, plus 6.5% pay increases for probation/parole officers and juvenile counselors to combat shortages and turnover
- $28 million (recurring) for 10% raises for nurses and health care personnel in state facilities to assist in the state’s nursing shortage
- $99 million (nonrecurring) for a one-time 2.5% cost-of-living adjustment for state retirees, who have not received an increase since 2023.
The plan also includes additional investments in child care subsidies ($20 million recurring), Department of Adult Correction operating needs ($80 million nonrecurring), UNC System enrollment growth ($46 million recurring), and other operational fixes like utilities, State Bureau of Investigation needs, veteran scholarships, winter storm costs and DMV shortfalls.
Demi Dowdy, a spokeswoman for Speaker Destin Hall (R-Granite Falls), issued a statement on Stein’s proposal, saying it “raises serious concerns.”
“His healthcare plan refuses to include basic cost controls and guardrails to protect taxpayer dollars. Instead, he proposes directing funds toward high-cost initiatives, like GLP-1 drugs, and programs with a history of fraud and abuse,” Dowdy said. “The House has committed to making necessary investments in healthcare, but it must be done in a way that ensures transparency and responsible stewardship of taxpayer funds.”
Dowdy’s reference to fraud and abuse in her statement links to a March 3 ABC News report about the owner of a Minnesota autism center pleading guilty to a fraud scheme involving $6 million dollars. Just days later, sentencing in a $12.7 million Medicaid fraud case in North Carolina was announced by the U.S. Attorney’s Office for the Eastern District.
The Eastern District’s press release said four North Carolina individuals were involved in a “Minnesota-Somali-style fraud.” The defendants in the case were sentenced for involvement in a scheme that “paid more than $1 Million in kickbacks to drug addict patients.” The press release also said two of the defendants “deceived the North Carolina Medicaid in multiple audits.”
On March 10, the N.C. Joint Legislative Oversight Committee on Health and Human Services heard a report from Auditor Dave Boliek on the N.C. Department of Health and Human Services (NCDHHS). His report included NCDHHS failing to follow recommendations from a 2021 audit, which Boliek said leaves the state’s Medicaid system “vulnerable to fraudulent and potentially dangerous behavior.” Boliek was asked about Minnesota-style fraud in that agency and said his office had not seen anything of that magnitude but was keeping an eye out for it.
Dowdy also said Stein’s raises for teachers and law enforcement “are less than those already passed by the House,” adding, “These critical investments cannot wait, and we urge the Senate to join us in passing these raises for all our state employees.”
Dowdy also cited that the House had passed an average 8.7% pay raise for teachers, compared to Stein’s proposed 6%; an average 13% raise for law enforcement officers plus additional bonuses versus Stein’s proposal of 10%; and a 2.5% raise for state employees, which matches Stein’s proposal.
“According to Gov. Stein’s own administration, the General Assembly has funded the state’s Medicaid rebase through at least April,” said Dowdy, referring to an Oct. 9, 2025, letter from NCDHHS confirming rebase funding was valid through April 2026. “Speaker Hall has publicly committed to ensuring that additional Medicaid funding is provided if necessary to maintain access to care for North Carolinians.”
Last fall, lawmakers rejected Stein’s call for a special extra session to address Medicaid rebase funding, and members of the House Health Committee refuted Stein’s Medicaid actions like slashing provider rates as a “manufactured” crisis.
Dowdy said the House will continue its work when the short session convenes.
