Negotiation of a faculty position I've just started to apply for faculty positions and received an invitation for a phone interview scheduled for next week. I am not in rush at the moment to accept a faculty position. 

Earlier this year I had a friendly conversation with a chair at a school who I had an opportunity to work with in different capacities and discussed with him a potential faculty position at his department. He is the hiring person and it is a school that I am interested in. He suggested a few months ago that I can fit into a number of projects that are ongoing at the school. Back then I was not as advanced as I am today in my Ph.D. studies and since then I've defended my proposal and expect to graduate in seven months.

However, I expressed my interest in a faculty position and indicated that I expect to defend my dissertation in August this year. Few days ago, I've informed him that I've received an invitation for job interview and indicated that I remain interested in a position at their school. He stated that as of now, there might not be a position because they expect two new research hires and doesn't know how this will impact the school`s budget. Then he stated that if I don't like what I would be offered or don't receive an offer, we can discuss a position.

Just a small update, eight months ago I asked if I could receive a post-doctoral fellowship position at their school.

My question is: I didn't respond to him yet and I am confused how to understand this last statement that he made?. is this part of the negotiation process?. I prefer this school over other schools for now until i find something better.
FYI I am not in a medical school, but this seems relatively straightforward to me. Hopefully someone will correct if there is a different norm in those departments.

Most departments receive authorizations to hire faculty positions ("faculty [budget] lines") from entities that are higher up the organizational hierarchy, such as a dean or other central administration person. So even if this person is a department chair, they may not have the authorization to create new lines. They may have the authorization to create post-doc positions, since those can come out of shorter term pots of money. 

This person may be implying that a non-faculty (post-doc, perhaps) position would be possible, depending on how much of the budget gets sucked up in the two new researchers' salaries/packages. They seem to think you would not be a great fit for those two new research positions. But they won't know about the post-doc until later. They also assume you will also not be able to decide on this until you have explored your faculty positions, since, for most people, permanent/faculty positions dominate post-doc positions.