North Carolina Governor Stein Passes Stopgap Budget, Veto School Choice Bill

North Carolina Governor Signs Stopgap Budget Amid Legislative Deadlock

North Carolina Governor Josh Stein recently signed a stopgap spending measure, marking a temporary resolution to the state’s budget impasse. However, the decision came with significant reservations, as Stein vetoed a separate piece of legislation that would have allowed the state to participate in a federal tax credit program aimed at expanding school-choice options. His actions reflect concerns about the rushed nature of the Republican-led initiative and its potential impact on public education.

The governor had already indicated his intention to sign the so-called “mini-budget” that was sent to him by the Republican-controlled General Assembly. This short-term measure is meant to keep government operations running while lawmakers continue negotiations on a full two-year budget. However, Stein emphasized that this plan does not adequately address the needs of the state’s residents, particularly when it comes to funding for education, healthcare, and public services.

Stein criticized the budget for failing to provide meaningful pay raises for teachers and state employees, as well as for not covering the full costs of rising Medicaid expenses. Health and Human Services Secretary Dev Sangvai highlighted that the additional $600 million allocated annually for Medicaid falls far short of what is needed, potentially leading to cuts in optional services or provider rates.

“This Band-Aid budget fails to invest in our teachers and students, fails to keep families safe, fails to value hardworking state employees, and fails to fully fund health care,” Stein stated in a news release. Despite these shortcomings, he chose to sign the bill to ensure that essential services remain operational.

The new law includes provisions to cover changes in enrollment for K-12 schools and community colleges, as well as experience-based pay raises for teachers. It also allocates over $800 million for state construction projects and funds for state employee retirement and health care. Additionally, it creates a new agency led by State Auditor Dave Boliek, tasked with recommending which state offices and positions should be eliminated by year’s end.

Some Republican budget-writers have suggested that Medicaid spending could be adjusted later in the fiscal year. However, Stein’s veto of the school-choice tax credit bill highlights a broader disagreement over how to allocate resources and support education.

The vetoed legislation sought to enable North Carolina to join a federal tax-credit program included in President Donald Trump’s recent tax and spending bill. The program, set to begin in 2027, offers a one-to-one credit of up to $1,700 for donations to certain scholarship-granting organizations. These groups distribute scholarships for private K-12 education.

Stein argued that the program shifts federal funding away from public schools and benefits wealthier families who can already afford private education. He expressed support for the program but insisted that it should only be implemented once the federal government provides clear guidance on its rules. Until then, he deemed the current bill unnecessary.

The vetoed bill now returns to the General Assembly, where lawmakers may attempt to override Stein’s decision. Republicans are just one House seat short of a veto-proof majority, and they previously managed to override eight of Stein’s 14 vetoes last week. Two House Democrats supported the tax credit bill, indicating some bipartisan interest in the initiative.

Republican Senate leader Phil Berger criticized Stein’s veto, claiming it attempts to undermine the legislature’s authority to set tax policy. He anticipated a potential override to allow North Carolina to participate in the school-choice initiative.

In addition to the budget and school-choice measures, Stein signed a new law creating an expedited removal process for homeowners and landlords to remove unauthorized occupants from their properties. This follows his previous veto of a similar bill that included controversial provisions related to pet shop animal sales. The revised legislation, without the contentious language, was passed by the legislature and signed into law.

As the state continues to navigate its budget challenges and political divisions, the actions of Governor Stein and the General Assembly will have lasting implications for education, healthcare, and public policy in North Carolina.