Brooks Pierce Capital Dispatch: Legislature Begins Moving Medicaid Bill; Governor Proposes Budget

The North Carolina General Assembly started its 2026 session on Tuesday. Both houses gave preliminary approval to a Medicaid bill. Gov. Josh Stein also presented his 2026 budget recommendations for legislative consideration.

Medicaid Bill

After months of discussion, both houses gave initial approval to H 696, which among other things, provides $319 million to fund Medicaid through June 30, the end of FY 2026.

Over 3 million North Carolinians receive health insurance through this program.

Other Medicaid provisions in the bill include strengthening beneficiary documentation standards, directing the State Auditor to audit the Medicaid program and related work programs, and requiring the Department of Health and Human Services to identify program cost savings.

The bill also increases funding for the Department of Adult Correction, the Division of Motor Vehicles, the State Bureau of Investigation, and scholarships for children of wartime veterans.

Legislators are expected to pass the bill next week and send it to Gov. Stein for his consideration.

Governor’s Budget Recommendations

Gov. Stein on Tuesday released his budget recommendations for FY 2027, which begins July 1.    They are in addition to proposals he made in March for to fund “Critical Needs” and Hurricane Helene recovery.    

Legislators did not reach agreement on a budget bill last year and considering a budget is the primary agenda item for the 2026 session. Although some of the Governor’s ideas may be considered by legislators, it is important to remember that legislators write the bill and will include many of their priority items.

The Governor’s recommendations were presented under these categories:

• Improving public education, early education, and childcare

Recommendations include increased salaries for educators, funds for technology devices for students, public school renovations, funding enrollment growth at UNC campuses, and increasing funding for childcare provider subsidy reimbursement rates.

• Putting money in families’ pockets

Recommendations include increasing the standard deduction, creating a Working Families Tax Credit and a Child and Dependent Care tax credit, establishing a sales tax back-to-school holiday, and leaving personal and corporate income tax rates unchanged (current law would continue reductions in personal income tax rates contingent on meeting certain state revenue collection goals).

• Building a strong economy and workforce

Recommendations include funding the Community College system’s Propel NC plan for workforce development, increasing apprenticeships, supporting small business through loans and start-up funding, increasing funds to the Housing Trust Fund to support homebuilding, and reducing the rate of unemployment taxes paid by employers.

• Keeping North Carolinians Safe and Healthy

Recommendations include salary increases for state public safety, law enforcement officers, probation and parole officers and juvenile court counselors, increasing funding for law enforcement equipment, including body cameras and the VIPER communications system, increasing funding for behavioral health units in state psychiatric hospitals, funding more school resource officers, increasing funding for clean drinking water and PFAS testing, and providing free breakfast to all public K-12 students.

• Modernizing government

Recommendations include increasing funding for DMV, providing more funds for state IT cybersecurity, increasing pay for state employees, funding the Repair and Renovations Fund for state agencies, and transferring funds to be available for future natural disasters.

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