Gov. Josh Stein says federal government is 'dumping expenses' on North Carolina

Dawn Baumgartner Vaughan, The Charlotte Observer on Jul 8, 2025

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While North Carolinians wait for state lawmakers to pass an already late budget, Democratic Gov. Josh Stein said the federal government is just “dumping expenses onto the state.”

The state’s fiscal year began more than a week ago, but raises for state employees and teachers are on hold until there’s a new state budget. This is week two of the General Assembly’s summer recess, and there is no set date to return. Meanwhile, there are new costs the state may be expected to pony up for, in the wake of Congress’ recent legislation.

Stein told reporters on Tuesday that he urges Republican leaders who control the legislature — and who are often the ones calling for more fiscally conservative policies — to be “fiscally prudent” as they negotiate a final budget deal.

The House wants higher raises for public employees than the Senate, and the Senate wants to cancel future tax cuts unless state revenue is high enough. Those cuts are beyond the coming individual income tax rate reduction to 3.99%, which they agree should stay in place.

In recent years, the chambers, even though they are both controlled by Republicans, have not been able to reach a budget deal on time. That goes for this year, too — though now the delay means they can take new federal cuts into consideration.

President Donald Trump’s major spending bill, which he signed into law on the Fourth of July as the “One Big Beautiful Bill,” cuts federal funding for Medicaid, which states would have to then compensate for.

Medicaid cuts are ‘dumping expenses’ on NC, Stein says

U.S. Sen. Thom Tillis broke with Republicans in his vote against the bill, mainly because of the impact on North Carolina’s recent expansion of Medicaid, The News & Observer previously reported. “So what do I tell 663,000 people in two years or three years, when President Trump breaks his promise by pushing them off of Medicaid because the funding is not there anymore?” the North Carolina Republican said.

Stein told reporters on Tuesday that the bill “poses an incredible risk to the health care system of North Carolina,” saying he had “real concern” about people who could lose coverage. He credited Medicaid expansion with “many more health care providers in rural counties, and the rural hospitals, many of which have been struggling, have been solidified.”

“All of that is at risk, so we’re going to have to think very creatively with the legislature to protect the gains that we have made in North Carolina,” he said.

“There’s no question, but that the federal government is just dumping expenses onto the state, whether it’s health care or whether it’s SNAP benefits, and what we have to do as a state is make sure that we do not abandon our people the way that the federal government is abandoning our people,” Stein said.

Trump’s bill also puts responsibility for funding of food benefits onto the state, as part of the Supplemental Nutrition Assistance Program.

Republican Senate leader Phil Berger posted on social media on June 28, after lawmakers began their break, that he supported Trump’s “Big Beautiful Bill and the legislature will work through any implementation issues.”

Stein said Tuesday he has not talked with Berger and Republican House Speaker Destin Hall about the delayed budget yet. The two top Republicans have not yet come to an agreement on when lawmakers will return later this month, if at all.

Because of the federal bill, Stein said, “the state has to be exceptionally conservative fiscally, meaning that we have to preserve the revenue sources we have to so that we can deal with issues like feeding hungry children, or ensuring that our health care system works for everybody, that there are doctors in rural counties,” Stein said.

He also urged them to quickly pass a budget so the state can give raises, recruit new state employees and fund more employees at the Division of Motor Vehicles.

Agriculture Commissioner Steve Troxler, a Republican, said during a Council of State meeting on Tuesday that the budget impasse is impacting farmers, too.

“We are all hands on deck trying to get out disaster payment checks from the 2024 disasters,” Troxler said.

“And unfortunately, we had additional crop loss money in the (proposed) House budget and the Senate budget. But of course: no budget, no money,” he said.