After leaving North Carolina without a state budget for over 1000 days, lawmakers have sent a budget to Governor Josh Stein, who has been urging them to pass the critical legislation since they missed the original deadline to do so in July, 2025.
The 634-page bill, drafted by a few hand-selected legislators without public comment and the regular committee process, was revealed to lawmakers just one day before they had to vote on it. They also passed a corrections bill shortly after, which made revisions to the original budget.
The bills passed with bipartisan votes, but Democrats in both chambers took time on the floor to speak against some of the provisions.
Governor Josh Stein signed both the budget bill and the corrections bill into law just days after lawmakers passed them, but noted the budget has “some real flaws.”
Below is a breakdown of the new $34.4 billion state budget, from state worker and teacher raises to the new state cookie.
State workers
When a state goes without a new budget for a fiscal year, they operate on the same funding allotments as the previous state budget, with the exception of funds marked as non-recurring. This means that as gas, food, and housing prices skyrocket, state workers have gone without a raise since 2023, the last time lawmakers passed a budget.
The new state budget authorizes a 3% pay raise for all state employees. This covers individuals who work in state agencies like the Department of Health and Human Services and Council of State members elected by the public, like the State Treasurer, Attorney General, and the Governor.
Teachers
Earlier this year, thousands of teachers gathered in Raleigh to march for raises and better funding for public schools, as well as a state budget.
The new state budget gives new teachers a pay raise from $41,000 to $48,000, a 17% increase, which puts the state just below the national average for starting teacher pay. Veteran teachers, those who have been teaching for over 25 years, get less than a 6% raise, bringing their pay to $59,000. Principals, central office staff, and noncertified staff also received a 3% pay raise.
Teachers with 15 to 24 years of experience receive no raises and would make the same amount as a new teacher.
This comes after North Carolina was ranked 46th in teacher pay in the country, with the average teacher making $60,000.
School Vouchers and School Choice
Republican lawmakers have often pushed for a continuous growth of funds being directed to the controversial Opportunity Scholarships, which allow students to attend costly private schools using vouchers paid by tax dollars.
Republican lawmakers have poured millions into the program, and the new state budget solidifies a funding schedule that lifts the program’s annual appropriation toward $825 million by the early 2030s. The budget also changes the application window and clarifies residency requirements for the program.
In 2023, lawmakers pledged to reinvest money saved from a public school student transferring to a private school via the Opportunity Scholarship, sending those funds back into public schools, starting in 2025. The new budget reinvests that money, which comes out to $35,751,409.
The money will be invested in locally and federally funded school nutrition and custodial personnel, middle school literacy professional development, and the North Carolina Collaboratory to adopt a mathematics curriculum from a different state and adapt it for use in K-8 North Carolina mathematics classes.
The budget provides $1 million to implement administrative tasks related to the federal School Choice program. Additionally, $750,000 in recurring funding for the UNC System Office to coordinate with a nonprofit called Parents for Education Freedom in North Carolina (PEFNC) “to offer families marketing and outreach services related to school choice offerings in North Carolina.”
Public Safety
North Carolina police departments have been understaffed and overworked for some time now, and this has been a cornerstone in Gov. Stein’s plea to lawmakers to pass a state budget.
“Keeping people safe is job #1. That’s why we need more well-trained officers on the beat and more behavioral health options for people who need urgent care,” said Stein.
The state budget calls for double-digit raises for law enforcement and includes funds for the Department of Adult Corrections staff as well. Department of Adult Corrections Secretary Leslie Dismukes said the funds will help them recruit staff during a period of critical staffing shortage, as they haven’t had the funds to adequately pay officers, fix prisons or rehabilitate inmates.
“Over the course of this budget cycle, our agency has lost more correctional officers than we have hired, while the prison population has grown by more than 1,000 people, decreasing our ability to run safe prisons,” she said.
Tax Cuts
Tax cuts have been something Republican lawmakers have been honing in on in recent months, passing constitutional amendments that cap property tax and income tax rates if voters approve the measures in November.
The budget slows down the rate at which income taxes are reduced, leaving the personal income tax rate at 3.49% for the next two years instead of dropping in 2027 and 2028. Additionally, the rate cuts that were to happen if the state reached a specific threshold of General Fund revenue will now happen in increments of ¼ of a percent rather than ½ of a percent. Data gathered from the North Carolina Budget and Tax Center shows that these cuts benefit the wealthiest few in the state with little relief for the average family.
The reduction and eventual elimination of income tax in the state are leaving some economists wary, as income taxes provide funds for meaningful services across the state, from upkeep of public schools to road construction. The income tax cuts laid out in the budget could mean a loss of over $8 billion for public services by 2034, with FY 2027 seeing a loss of $900 million for the state and then $2.6 billion in FY 2028, and will grow onward. Under the new budget, North Carolina’s corporate income tax is on schedule to be eliminated by 2030.
Helene Recovery
As parts of western North Carolina continue to recover from the devastation of Hurricane Helene that tore through the state nearly two years ago, the budget includes funds to continue the rebuilding efforts.
The budget allocates some $700 million to recovery efforts:
- $450 million to meet state and local governments’ matching requirements for federal disaster recovery programs, which include FEMA Public Assistance and Hazard Mitigation grants.
- $65 million is directed to projects local governments are completing that won’t be matched by FEMA;
- $43 million for housing and private road and bridge recovery projects completed by nonprofits;
- $40 million to temporarily relocate displaced families;
- $22 million for state-supported repairs to private roads and bridges.
State Programs
Included in the state budget is funding for many of the state-run programs in North Carolina. Of those, the Medicaid program was a major talking point as lawmakers went years without passing a budget, leading to the program being set to run out of state funding last year.
In the recently passed budget, lawmakers have put forward $1 billion for the Medicaid program and the rising associated costs of healthcare. It also includes almost $60 million in expected administrative costs to implement the new federal Medicaid work requirements outlined in President Trump’s “One Big Beautiful Bill.”
More than $5.3 million was allotted to aid in the state’s adjustment to federal changes to the Supplemental Nutrition Assistance Program (SNAP), also stemming from the “One Big Beautiful Bill.”
The budget also includes $6 million for crisis pregnancy centers and an additional $3.3 million for Human Coalition, a controversial national anti-abortion advocacy organization. But not all allotted funds in the budget are growing; some funds are shrinking or being done away with completely.
The budget disrupts funding from crucial programs like IOLTA, or Interest on Lawyers’ Trust Accounts, a way that lawyers gain interest on money paid to them that then can be used to provide legal services to those who otherwise could not afford it. In another provision, the budget abolishes the Office for Historically Underutilized Businesses, which connected businesses owned by Black, Hispanic, Asian American, American Indian, female, socially or economically disadvantaged, or disabled North Carolinians with contracting opportunities with the state.
Outside of these top ticket items, the budget formally authorizes and taxes prediction markets, calls for tolls on North Carolina’s free ferries, designates the Moravian cookie as our state cookie, along with several other provisions that might not make headlines.
Andy Bowline, the Democratic candidate for North Carolina’s Senate District 31, created a dashboard that allows users to browse through provisions in the budget by topic.
Though we have a state budget, Gov. Stein urges lawmakers to continue to work with him and other state officials to make North Carolina a place where everyone can thrive.
“Going forward, there is more work to do. We must continue to invest even more in public safety, public education, and other public services to be competitive with other states and to serve our people well,” stated Gov. Stein. “As today’s budget proves, we can work together to get things done. I am eager to keep at it with the General Assembly to keep building on our momentum to create a North Carolina that’s safer, stronger, and more prosperous with opportunity for every person.”
