The North Carolina General Assembly on Thursday passed a comprehensive budget bill, the first since October 2023. The bill now goes to Gov. Josh Stein, who has 10 days to consider it.
State Budget Bill
Both houses passed the bill (S 257)—the Senate vote was 35 to 10 and the House vote was 88 to 21. It appropriates $34.4 million to the state’s General Fund for FY 27 through June 30 of next year.
Details about the budget bill are contained in a text bill (634 pages) and a committee report (often referred to as the Money Report since it contains spending details), which has 716 pages.
Notable items from the budget bill
Education
- Provides additional funds for math instruction and low-performing schools
- Provides additional funds for literacy instruction
- Provides funds to the Community College system’s Propel NC workforce-driven initiative
- Funds enrollment growth at UNC campuses
Economic development
- Provides $25 million for industry site selection
- Allocates $46.3 million in block grants for infrastructure, neighborhood revitalization, and rural development
- Provides $133.9 million for the JetZero project at the Piedmont Triad Regional airport
Health Care and Human Services
- Funds the state’s Medicaid program with an appropriation of over $1 billion and increases funding for Medicaid program integrity
- Supplies funding to improve county SNAP operations, which assist people with food purchases
- Repeals certificate of need laws for inpatient rehabilitation services, facilities, and beds
- Provides an additional $100.8 million from federal block grants to increase childcare subsidy rates
Transportation
- Increases funding for new road projects and existing road improvements by $122 million
- Increases road maintenance by $28.7 million
- Requires DOT to develop a capital infrastructure plan to avoid deferred maintenance costs
- Allows the DOT Board to establish tolls on state ferries
- Instructs DMV to develop a system to eliminate physical vehicle registration cards and stickers
- Raises salaries for DMV driver license examiners
Salaries
- Raises K-12 teacher pay by an average 8% and increases the base salary for beginning teachers to $48,000 before local supplements
- Increases salaries for state employees by 3% and pays a bonus based on their salary
- Raises pay for various law enforcement including SBI and ALE officers, Highway Patrol officers, correctional officers, and probation and parole officers
- Pays a one-time bonus of $1,750 for local law enforcement officers
Taxes
- Continues reduction in state personal income tax rates with a 3.99% rate in 2026, and reductions to 3.49% (2027), 3.24% (2030), and 2.99% (2032)
- Allows an income tax deduction for gambling losses
- Repeals the sales tax exemption on electricity used in data centers
- Increases the excise tax on sports wagering operators from 18% to 23%
Other items
- Appropriates $450 million to the state Rainy Day Fund, bringing the total to $4.2 billion
- Appropriates more than $700 million for Hurricane Helene relief
- Invests an additional $208.5 million in the N.C. Children’s Hospital
- Appropriates $1.6 billion for capital projects for state agencies and UNC System campuses
Legislators eligible to return July 27
Legislators passed an adjournment resolution (H 1244) authorizing their return to Raleigh on July 27. Pursuant to the resolution, they will be able to consider a limited list of topics including budget issues and vetoes.
For more information, contact the Brooks Pierce Government Affairs Team, linked below:
Ed Turlington, Partner
Drew Moretz, Government Relations Advisor
Katelyn Kingsbury, Government Relations Advisor