- Governor Josh Stein requests $1.4 billion in a new critical needs state budget.

And Medicaid faces an ongoing state funding shortfall.

But what if the funding runs out next month?

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(upbeat music) ♪ - Welcome to State Lines, I'm Kelly McCullen.

Joining me today, Skye David of New Frame Incorporated.

To her right, Representative Allen Buansi of Orange County, and a Democrat, Republican Senator Brad Overcash.

Comes over from Gaston County.

Senator Overcash, good to see you, thank you.

And Michael McElroy of Cardinal and Pine, reporter extraordinaire.

Mike, good to see you.

- Thank you.

- You know, we got a lot to talk about.

We have, well for Allen Buansi this morning, a one and a half billion reasons to talk to him first, because Governor Josh Stein says this state needs $1.4 billion in new state funding.

What he's actually proposing, he's calling a stripped down critical needs budget that would include $319 million to fill Medicaid's state funding gap.

It's part of the deal, law enforcement personnel, teachers, other public workers could receive pay hikes.

The state house speaker's office that I saw said the budget will certainly be discussed during the 2026 short legislative session.

But Representative, that's still, that's beyond April, that's going into May and June.

So, it looks like Mr.

Stein said thank you for the request to pass a short session budget, we'll get to it.

- Well, at this point, we're the last state in the union without a budget.

And it's really a disservice to our taxpayers.

We've got folks who are in critical need, especially folks on Medicaid.

We've got over three million North Carolinians on Medicaid who have access to healthcare thanks to that, who are now in jeopardy.

And then also to our state workers, you know, our law enforcement, our teachers, they haven't seen a pay raise in over a year.

And they're dealing with higher costs with their state health plan, they're dealing with higher costs at the pump, food.

And so, this critical needs budget is really just an effort to make sure that we are taking care of those folks.

And I'm hoping that this short session, we will see some help and some relief for them.

- Senator Overcash, of course, I've never been to a short session that didn't involve budget tweaks or a budget.

So, Josh Stein getting out there in March, ahead of a May, April, when you go back to work.

Does it do any good to help you, remind you that you need to pass a budget or maybe you wanna pass a budget?

Or how does this play out?

- The legislature is gonna handle budgeting and appropriations bills in the short session.

This is classic from the governor's office.

They do not have to, or the governor does not have to balance the budget.

It's a fiscally irresponsible proposal.

And notably, right before our consensus revenue forecast.

So, I'm not sure how you can put out a proposed budget without that consensus revenue forecast.

But we'll be back on April the 21st and we'll talk about budget and appropriations bills at that time.

- Would that be enough to dominate the entire session?

I mean, in theory, it runs from mid April till about June 30th.

And if everything works well, you do get half a summer off.

At least that's the way the rules have historically been played.

You feeling good about the economy with that revenue forecast coming in or is it cautious going right now?

- I'm looking forward to seeing it and our appropriators have been hard at work.

They've continued to look at this during the interim session.

And I think most certainly, this is gonna be the top topic for the session.

- How are you feeling about that Representative Buansi?

See the economy going into the short session, at least the state's economy.

- There's a lot of uncertainty to be quite honest.

And given the uncertainty, I mean, this stripped down budget that we see proposal from the governor is really meant to address some of the more immediate needs.

It's not comprehensive by any means.

But yes, there's no doubt, there's a lot of uncertainty, but the point is to give people we need some certainty.

- Michael, this is Politics in Action.

Governor Stein gets a headline out of it.

Of course, everyone, he's a former state senator.

He knows they're gonna talk about budgets in the spring.

Why do this now?

- Well, I think this is a really important point to make is that this isn't new funding we're talking about.

This is the funding that was due almost a year ago.

This is a budget that hasn't come yet.

He wouldn't have asked for an emergency funding if there had been a budget.

So this is stuff that we are hurtling toward a cliff on a lot of things.

And even if we don't get there, even if we pull away at the last minute, we are still on the moment on the road toward this cliff.

And these are really important things that we've talked about.

These are lives.

Just for teachers.

Teachers have been waiting for these raises.

Their backs are up against the wall.

The lack of a budget is keeping them there.

And it's just odd to expect folks to believe that the people who have been unable to come to an agreement over a year are suddenly magically gonna find resolve and find something.

I mean, the reason this budget, the governor has issued this emergency request is because we're a year late in the budget.

- Is this really an emergency, Skye, or is this the governor getting ahead of the budget?

Now, he has his budget request.

Every governor does it.

And then whoever's in charge of the legislature takes it and does what they will with it.

- Yeah, I think Governor Stein has proven himself to be very strategic.

And I think this was a strategic move.

So the governor usually submits a budget to the General Assembly in the long session.

And that is a full comprehensive budget, kind of playing with monopoly money, because you can put whatever you want in the governor's budget and it's gonna look really good.

And whatever the legislature does is probably not gonna add up to what the governor's budget does.

But only submitting certain critical needs to the legislature, I think is smart, because then if they fund any of those things, it looks like the governor wins.

- Is that how it looks, Senator Overcash?

- No, I think the people of this state realize that governors make these proposals, they're political statements.

It's not a serious budget proposal.

And I think the people in North Carolina understand that.

- What is the biggest difference between what Governor Stein is asking for right now versus what you, your advisors, and the financial folks over at the legislature, what they're telling you about the spending needs of this state, the critical needs, if you will?

- Yeah, we're continuing to deal with those.

I mean, North Carolina, unlike the federal government, unlike other states, we have a law in place where the recurring expenses and the recurring operations of this state will continue until a new comprehensive budget is enacted.

We had several appropriations bills last year.

In the short session, you'll either see a new comprehensive budget, or you'll see a series of appropriations bills to deal with that.

- Representative Buansi, not Senator just yet, what do you think of the state budgeting through continuing resolutions, through mini budgets, versus the old school way, which was pass a big budget, go home for several months, and come back?

This seems like the new way.

Ask in the spring, see what we can get done in the summer.

- Well, this new way, supposedly, is causing a lot of strain for our counties.

They're causing a lot of strain for our local governments.

That depends on state government to give them certainty of funding.

And if it is passed on mini budgets, we are not assuring the people on the grounds of funding that they need over a year, over two years.

And so I just don't think that's a good way to run state business.

We ought to be passing comprehensive state budgets.

- Let's dive a little deeper into the request for extra spending.

Last fall, Governor Stein called for preemptive state Medicaid funding cuts.

Republicans said all along, Medicaid, yes, it was short-funded for the budget year, but had enough cash to run operations fully through spring 2026.

Well, there is no revised or new state budget, but it is now spring 2026, so the conversation is back on the table, per Mr.

McElroy's comments earlier.

The Stein administration says state funding is $319 million short.

Republican advisors, Senator Overcash, at least to me, have questioned that high of a dollar amount.

So, talk about the numbers, the deficit, and then what happens if, in a budget negotiation, things slow down and we supposedly pass that deadline where Medicaid runs dry.

- Well, Kelly, let's pull this back a little bit.

The state obligations to Medicaid, every single year, is $29 billion.

And so this, we're talking about a small percentage of that overall Medicaid budget.

If you look at 2025, the legislature passed a supplemental $600 million to shore up Medicaid.

And so we're committed to funding Medicaid as is appropriate, but we wanna make sure the numbers are right, because every dollar in the state is critical.

Taxpayer dollars should be spent wisely and appropriately, and we need to make sure they're right.

And I'll give you an example.

Just this week, my colleague, Senator Benton Sawrey, and his oversight committee did some really good work in looking into the rebase number, and it came out during that hearing from a deputy secretary of DHHS that part of that rebase number included non-recurring funding.

- What is rebase for folks who are not inside Raleigh?

- It's basically, the most simple way I can put it is, what is that amount of funding that's gonna be needed to continue Medicaid program as it stands?

Because, like I said, it's a $29 billion total obligation, but that comes in different pots and in different forms of the program.

And so we're basically, for your viewers, when we talk about the Medicaid rebase, we're talking about the appropriate level of funding that's needed to continue Medicaid services.

And you can't include non-recurring dollars in that because it's a recurring program.

- Allen Muansi, what do you weigh?

How is there a partisan difference in counting money for Medicaid?

It does seem to be slightly partisan.

Not nasty by any means, but there are different dollar figures and the fact that federal grants sometimes have been counted as part of recurring funding when they were one time or time limited.

- Well, I think it's important to note that the predictions or the assessments that actuaries made last year, I mean, they remain the same today.

And there's a process in place for accurately assessing how much is needed for Medicaid rebase.

And we've got experts, we've got staff, with our governor's office, Department of Health and Human Services that are hired for that reason to figure out those accurate estimates.

And I mean, we ought to be trusting them.

- Skye, what's the difference in someone from DHHS telling legislative budget leaders, this is what we need versus legislative oversight, their analysts saying to Republican leaders, this is what they should have?

- Yeah, well, I think that goes back to what you just said.

It's a little bit partisan if you're feeling like it's coming out of the agency, which is coming out of the Stein administration versus the nonpartisan staff that are giving you what you would think would be just a clear statement of how much is needed.

There's always going to be that little bit of politics that plays into anything.

- Mike, how do you see this playing out?

Is it $319 million in deficit?

Will that be proven true?

Will it be somewhat less than that?

As I was told in a year-end interview with Senator Phil Berger, I don't think it's that high, but let's see what happens come April.

- Well, I just think that let's see what happens is not a very useful approach when the consequences involve potentially folks losing access to services or losing their Medicaid entirely.

And I'll tell you, the political game of saying, is it 319, is it less?

Like that is an important conversation to have in the offices of politics, but out there in the folks who get Medicaid, whatever the number is, they're in danger of losing their access.

And their math is, if my Medicaid goes away when I've got a kid who has had a heart transplant and needs Medicaid to stay alive, if I've got a kid who needs an incubator, not an incubator, excuse me, a ventilator, and 24-hour home care, that Medicaid is the only way I can pay for those things, and that suddenly goes away, then we're talking about cataclysm.

We're talking about bankruptcy.

And these are the things on people's minds when they think about this issue.

They're not talking about numbers.

- These kind of scare tactics are ridiculous.

Again, $29 billion state funding for Medicaid every single year.

The General Assembly has already proven we are going to fund Medicaid as is appropriate.

We've already done a $600 million appropriation.

We will look at, and we will have the appropriate appropriation.

None of your viewers on Medicaid should be afraid that someone's gonna be taken off a ventilator, Medicaid's not gonna be there.

That's just demonstrably false, and you can see it by the actions taken by the General Assembly already.

- If a clean Medicaid funding bill comes out this spring, would Democrats in the House and Senate at the state level, I won't say play games with it, but would they debate it?

Would they force it, fight it, stall it, slow it in some way?

- There are too many people hurting in North Carolina right now for us to be playing games with Medicaid.

I mean, I just wanna remind folks that back in the fall, there was agreement among many of our state lawmakers to pass a clean Medicaid rebase bill, but it got caught up in these other conversations about other expenses and things.

I mean, we would love to have a clean bill to fund Medicaid rebase.

That's what the people need.

That's what people are clamoring for.

- And a court said that they have to continue to fund Medicaid, and that is why that funding is still at full price, and so I don't think that the funding is going to run out because a court has already ordered that that cannot happen.

- How does that court, I don't even understand how that would work.

If money's not there, it's not there.

They can't spend money not appropriate, or can a judge just make it happen?

- Well, I mean, the state law also says that Medicaid program can't operate on a deficit, and whether it does or doesn't happen, I mean, these aren't scare tactics.

These are people who are worried about the coverage.

We've got people out there who are rationing the devices that they need, and the best way to make people not afraid of the worst case scenario is to pass a budget that does it.

The House passed a budget.

They sent you a clean Medicaid bill, and it just sat there, so I mean, you can clear this up right now by passing a budget that covers all these things.

- I mean, let Representative Buansi fight the senator on that.

We're journalists watching this as spectators, not-- - I do not, because he said-- - I don't know if he's quite the same on journalists.

- Just because he said scare tactics, I felt that I had to address it.

- Well, that's exactly what they were, and it's irresponsible.

- Got it.

Well, state auditor Dave Boliek says he'll be reviewing the growth in state Medicaid spending on autism services, at least a subset of it.

The auditor told lawmakers his team has noticed a spike in spending for what's called applied behavior analysis therapy.

North Carolina's Medicaid spending on these autism services under that umbrella is believed to have grown from $121 million in 2022 up to $639 million in 2026, Mike.

It's very complicated.

There's a certain subset autistic children can get services out in the world.

That's where the growth is, and we'll just hold it right there because they're going after it in Minnesota, and it's sparking at least Republicans and other states to audit and look for things.

This is funding growth.

I mean, is that accurate?

- Well, it's definitely funding growth, and it's a big spike, but a lot of context 'cause it's a completely separate situation from what's happening in Minneapolis, and a couple of reasons why.

Spending on these services or comparable services across the country was 300% over the same time period.

That's a little bit less than it was in North Carolina, but it's still a huge spike, so it's not just a North Carolina problem, but there are a lot of small reasons that explain part of it, which is there are a lot more providers offering these services, and the General Assembly gave those providers a rate raise of 15% two years ago.

So that explains part of it.

That does not explain all of it, and so an audit, I think, is appropriate, but as always, I think that I hope that the audit takes into account the people who do need the services.

The DHHS did a report on this in October, and they said that part of the problem is that these services do a lot of good, but that not everybody who gets these services may need them, so I hope that the focus is on the people who do need these services and for whom these services are making a huge difference, because throwing money at a program that has issues is one thing, an issue, but so is taking too much money from a service without a plan for the people who do need the service who may be in danger of losing it.

- Senator Overcash, but off the bat, the man elected to chase the money has chased it, and it's about a five-fold increase for a service, and now it's, wait a minute, now it's on your radar, it's on Representative Buansi's radar.

How do you ensure, if it's gonna grow that fast, that it's money well spent?

Let's not use waste and fraud, but make sure it's spent wisely.

- I think it's appropriate for the auditor to take a look at this.

Absolutely, we need another set of eyes on it, not just DHHS, it's so important, and I'm looking forward to seeing what the auditor's office comes up with.

- What do you make of this, Representative Buansi, the auditor goes in and says, and he comes to you and says, I hear him often say in your committee hearings, I'm not here to pass judgment on this, I'm here to tell you what the numbers are.

What do these numbers mean to you when it grows five-fold, four-and-a-half-fold?

- Yeah, well, I think it's perfectly appropriate to make sure that money that is being spent by government is being done efficiently and in a way that's addressing the problem.

So, yep, certainly it's within the state auditor's purview to do that.

I do look forward to seeing the results of the audit.

But I think one thing is pretty clear, when it comes to serving our children with autism, that we've gotta make sure that they've got access to the proven therapies.

And we also gotta be cognizant, too, that there is a need for adequate DSPs, direct support professionals, and when folks don't have that access, they then would jump to more costly programs.

And so, making sure that the money's being spent the right way, making sure that other folks, other programs serving people with intellectual and developmental disabilities, making sure that they also have the program funding that they need, and not wasting it is also important.

- Skye, the math, $121 million for applied behavior analysis therapy just four years ago.

$639 million expected this year for that genre.

- I think over a billion by 2027.

- So let's just say, even if you double state spending for legitimate high-quality services for autistic patients or clients, doesn't that fill that Medicaid gap?

And there's $300 million in there.

- There definitely is.

- Am I wrong?

Am I mathing incorrectly?

- But I don't know the numbers on health services, they seem to be quite a large number in comparison to what we were just talking about, the 319 million, that seems like nothing now that we're looking at one point some billion on autism services.

So where those cuts are gonna need to be made, or if that money is not being spent efficiently, then yeah, maybe you could use that to backfill Medicaid funding.

- Mike, would a good audit of DHHS solve the Medicaid state funding gap for services and keep those folks thriving?

As you say, they will need that funding to do so.

- I mean, an audit is only gonna say where the problem is, and there are problems probably that we don't know of that need to be solved, but we also know where some of the problems are now.

I mean, I think audit done in good faith is never a bad thing.

- North Carolina and national Republicans are suing to prevent a group of voters called Never Residents from casting ballots in North Carolina elections.

A Never Resident, if I've got this correct, is a person living in a foreign country who registers to vote in North Carolina, having never lived in North Carolina, but possibly have parental ties, so there is a claim that this is the home state.

The issue was raised in that contentious state Supreme Court race between Allison Riggs and Jefferson Griffin.

I have to say, Skye, this one confused me.

How are people casting ballots in North Carolina, and they can't really prove they've never lived in this state?

- So the federal law has been silent about this.

It doesn't say whether or not you can cast a federal ballot if you are a Never Resident, but our state law is clear that you cannot, and a court of appeals in the fall ruled that if you are a Never Resident, you've never lived here, you're not a North Carolinian, you cannot vote in state elections.

So this specific case is now about being a Never Resident but voting in federal elections.

So the state elections have been taken care of.

So the GOP attorneys are asking for summary judgment and just not allowing those same people to vote in federal elections.

- That's why I love having attorneys on.

You read a news article, this is a complicated topic.

Is there a universal agreement that North Carolinians should be casting North Carolina ballots, even if they live overseas and can claim to be a North Carolinian, representative?

- Yeah, I mean, one of my big things is, with our elections, voters, we all have to have a clear sense of what the rules are.

I think one issue we had last year with that Supreme Court race was that we had valid votes that were being attempted to be thrown out after the fact, after an election was done.

And so my hope is that whatever the outcome of this case is, that we all emerge with a very clear set of expectations for our votes and how they count.

There's no doubt in my mind that there have been efforts afoot to try to disempower or put up restrictions on voters, on North Carolina voters.

But ultimately, we need to be about the work of preserving the right to vote for our US citizens in North Carolina and overseas.

- Senator Overcash, it does say that the Board of Elections has been working toward election integrity on this platform.

But then we have Republican consultants, even Democrat consultants saying, "We hire lawyers to go through a recount to challenge ballots.

We're there to win, even if that's against state agency."

So how do we balance the idea of candidates fighting for every vote versus making sure every vote gets counted?

- Yeah, I mean, we'll start with the never residents.

I mean, these are folks that were not born in North Carolina have never lived in North Carolina.

There certainly should not be deciding elections in North Carolina.

And so you go through these processes and you make sure that you know who should and shouldn't be voting in this state.

- Mike?

- Well, in the Jefferson Griffin case, we're talking about 260 voters total that he was challenging.

And Brian Anderson and other groups found that 65 of those voters actually did have-- - He's a reporter.

- Yeah, Brian, a reporter.

Yeah.

And a very good one.

And that they were mistakenly among the ballots cast.

So we're talking about less than 200 voters.

But state law, I'm not sure it was so clear.

State law said that folks who were overseas, whose parents were born and who were not registered in other states, used to be that they could.

So clear that up.

And - I don't think many people would argue that people who don't live in North Carolina and have no intention shouldn't be allowed to vote.

But at one point it was clear they did.

And we're talking about a very small number of people.

- Senator, I wanna hit this last topic where House and Senate Republican leaders are joining with Governor Stein to launch a blue ribbon commission on North Carolina public education.

It's an executive order filled with business leaders.

I think Peter Hans, the UNC system president, other leaders are on this 30 seat, 30 chair commission.

So teacher training, student advancement, administrative operations, accountability appear to be on the agenda.

Very quickly with you two, last minute we have.

Tell me about the blue ribbon commission.

We're gonna wait to see what you do before we talk about what you do.

- Well, I'm excited to serve on that.

I'm appreciative to be able to participate in that process.

Look, my children are in public schools in North Carolina.

I'm a product of it.

My mother taught third grade in public schools in the state her whole career.

And it's just such an important topic.

It touches every North Carolinian.

And I'm excited to be a part of this blue ribbon commission.

- And representative, by George, it's bipartisan.

- Yes.

- Can it stay that way or will it stay that way?

- Oh, I anticipate it will.

Now I'm also a proud son and nephew of public school teachers, got my kids in public school.

But I do want to say too that we have had an order from the court for the past few decades, spelling out what is needed.

I think we've got a pretty good sense of what we need now.

I'm looking forward to the results of the commission, but we need to also put in a plan that-- - When does work begin?

10 seconds, five seconds.

- Very soon.

We don't have the first date, but we have to report out by the end of the year.

So very soon.

- Email me at statelines@pbsnc.org.

I'm out of time.

See you next time.

(upbeat music) ♪ - Funding for State Lines is made possible in part by.

- Across North Carolina, strong communities begin at home.

The North Carolina Realtors represent more than 55,000 professionals statewide, focused on expanding housing attainability for all.

- Quality public television is made possible through the financial contributions of viewers like you who invite you to join them in supporting PBSNC.