‘Less revenue, greater demands’: NC Gov. Josh Stein cautious ahead of budget work
North Carolina’s state budget will be different this year. Democratic Gov. Josh Stein said Tuesday that the state is heading toward “an era of fiscal tightness.”
Usually it is Republicans, not Democrats, who talk about being more conservative in state spending. But after Hurricane Helene, and recovery in Western North Carolina that is expected to cost tens of billions of dollars, things have changed. Stein is also worried about the impact of President Donald Trump’s tariffs on the cost of building supplies.
And it won’t be for another week or two that the state’s consensus revenue forecast — a joint estimate from the Legislative Fiscal Research Division and the Office of State Budget and Management — is revealed. OSBM is a Cabinet agency of Stein’s administration, and fiscal research is a nonpartisan division of the General Assembly. They typically release the forecast in mid-February.
Stein told reporters after the Council of State meeting on Tuesday that the forecast “will come once we get a better sense of what the tax flow is. We’re heading towards an era of fiscal tightness. There’s going to be less revenue, greater demands.”
The state has had a sunny revenue forecast for several years, and surpluses in the billions, thanks to a thriving economy. Most years, the state budget battle between the Republican-controlled House and Senate and Democrats, and between the chambers, has been over how big of a raise to give teachers and state employees or how much to lower the income tax rate.
Generally, Senate Republicans favor lower raises and taxes, and adding more to the state’s Savings Reserve Fund, known as the rainy day fund. Sen. Ralph Hise said in December that they might want as much as $10 billion in it.
Tariffs and cost of NC supplies
Just in the past few days, Trump’s tariffs on China, Canada and Mexico have raised questions about how that will trickle down to consumers.
Stein told reporters on Tuesday that the tariffs issue that gives him “great concern” is the potential impact on the cost of construction materials needed for rebuilding in Helene-devastated areas.
“There’s going to be incredible amounts of building materials needed in Western North Carolina. This is going to be an incredibly expensive endeavor. If we have tariffs raising the cost of building supplies, that’s a concern of mine,” he said. “I was obviously grateful to see that those tariffs with Canada were averted yesterday. I hope that we’re able to stay in a place where we can get these products for as cheaply as possible.”
When to expect a 2025 NC state budget
Rep. Donny Lambeth, a Winston-Salem Republican and one of four top budget writers in the House, was at the legislature Tuesday to meet with one of the Senate’s top budget writers, Sen. Brent Jackson. The House’s Appropriations Committee chairs will meet Wednesday, and state agencies will give their budget proposals over the next month, he told The News & Observer.
Lambeth said while he’s always optimistic that the budget process will go smoothly, he’s also realistic. He thinks there will be more of a focus on deadlines this session.
New House Speaker Destin Hall shared a calendar with lawmakers through the end of June for what days will have committees and voting sessions, which is a stark shift from the tenure of former speaker and now U.S. Rep. Tim Moore, who would announce schedules week to week, and sometimes day to day. That doesn’t mean the budget will be done by June, but optimism at the start of the budget process, on all sides, is an annual tradition.
“We’re going to have some bumps along the way, and we’ll have to work through those bumps,” Lambeth said.
The fiscal year begins July 1. If the state does not pass a budget into law by then, the spending levels stay the same as the previous year. If a budget deal is reached later in the year that includes, raises, those raises have been retroactive to the start of the fiscal year, once the budget becomes law.
When the consensus revenue forecast comes out this month, budget writers will need to consider how much to spend overall, and then get down to how exactly to spend the money, from raises to taxes to projects — and Helene recovery.
In the meantime, a Helene disaster relief bill is being discussed in committee on Wednesday. On Monday, Stein sent lawmakers his proposal to spend about $1 billion on the first Helene disaster bill for “immediate needs,” he said, and would be asking for more again soon.
This story was originally published February 4, 2025 at 3:08 PM with the headline "‘Less revenue, greater demands’: NC Gov. Josh Stein cautious ahead of budget work."
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