Stein signs ‘mini-budget’, squatters bill into law, vetoes school choice bill

Gov. Josh Stein signed the North Carolina General Assembly’s “mini-budget” into law on Wednesday.

He once again called it a “Band-Aid”  budget in a press release, as he did at Tuesday’s Council of State meeting, because it doesn’t fully cover the state’s needs.

“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,” the governor said. “With federal cuts on the horizon, the legislature’s forced $319 million cut to Medicaid will be particularly painful. Despite these serious reservations, I am signing this bill into law because it keeps the lights on.”

Stein, a Democrat, said while the state has so much going for it, “we cannot just rest on its laurels, do the bare minimum, and expect to continue to thrive.” He concluded, “The General Assembly needs to get serious about investing in the people who make this state great.”

North Carolina Department of Health and Human Services also issued a press release, saying that while $600 million was included in the mini-budget to support both the Medicaid rebase and the Medicaid Oversight Fund, it’s not enough, adding that the appropriation equates to a shortfall of $319 million for the Medicaid rebase.

NCDHHS said that, despite careful efforts by NCDHHS to avoid disruptions to service, fully funding the rebase is necessary to maintain the current level of care across the state. To remain within budget, NCDHHS said they now have two options to address a shortfall from an insufficient rebase; reduce optional services and/or reduce provider rates.

“More than three million people in North Carolina depend on Medicaid for comprehensive care that is life-changing and in many cases lifesaving,” NCDHHS Secretary Dev Sangvai said in the release. “Underfunding NC Medicaid now, after years of building a nationally recognized program that delivers real outcomes for the people we serve, is a serious setback. The forced cuts from the budget shortfall threaten care for those who need it most, and include some of North Carolina’s most vulnerable populations.”

He said that over time, the combination of underfunding, the loss of key initiatives like the Healthy Opportunities Pilots, and administrative budget shortfalls risk a fundamental erosion of the NC Medicaid program.

“Despite these challenges, the mission of the North Carolina Department of Health and Human Services remains unchanged — we will continue to work to improve the health and well-being of all North Carolinians,” Sangvai said. “We will continue the essential work that NCDHHS does every day with determination, compassion, and a focus on the people we serve.”

Squatters bill signed into law

The governor also signed SB 55, Expedited Removal of Unauthorized Persons, an anti-squatting bill, into law. He originally vetoed HB 96, Expedited Removal of Unauthorized Persons, the House version of the bill, because it added a provision that would prohibit local governments from regulating pet stores and would facilitate inhumane puppy mills in North Carolina.

“I’m pleased the legislature has improved this bill by removing the problematic puppy mill provision and concentrating on protecting property owners from squatters,” Stein said in the release.

Vetoed School-choice tax-credits bill

He also vetoed HB 87, Educational Choice for Children Act (ECCA).

The measure would enable North Carolina to take part in a federal tax-credit program authorized under the Big Beautiful Bill Act recently enacted by Congress. The program would be associated with contributions made by individuals to designated Scholarship Granting Organizations (SSOs), which in turn issue stipends to students for private school expenses, including tuition and other allowable costs.

A key feature is that donors receive a dollar-for-dollar reduction in their income taxes, effectively making the donation cost-free. Taxpayers could donate up to $1,700 per year.

The program, set to begin in 2027, allows families earning up to three times the median income for their area to qualify for scholarships. While the legislation provides significant funding — estimated to cost nearly $26 billion through 2034 — its implementation largely depends on whether individual states and their governors opt into the program.

“School choice is good for students and parents, and I have long supported magnet and accountable charter schools because public schools open doors of opportunity for kids in every county of the state,” Stein said in the release. “Congress and the Administration should strengthen our public schools, not hollow them out. Cutting public education funding by billions of dollars while providing billions in tax giveaways to wealthy parents already sending their kids to private schools is the wrong choice.” 

He concluded by saying that he sees opportunities for the federal scholarship donation tax credit program to benefit North Carolina’s public school children.

“Once the federal government issues sound guidance, I intend to opt North Carolina in so we can invest in the public school students most in need of after school programs, tutoring, and other resources,” Stein said. “Therefore, HB 87 is unnecessary, and I veto it.” 

Senate Phil Berger, R-Rockingham, issued a statement regarding Stein’s veto.

“Either you support school choice, or you don’t,” he said. “Gov. Stein could have made North Carolina a leader in school choice and parental freedom by signing the Educational Choice for Children Act, but instead, he’s attempting to usurp the General Assembly’s authority to set tax policy. I look forward to holding Gov. Stein accountable and overriding his veto to ensure North Carolina can participate in President Trump’s signature school choice initiative.” 

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