NC legislature releases $34B budget deal, expects votes this week

North Carolina legislative leaders unveiled the state’s long-awaited 2026 budget proposal on Tuesday after weeks of silence that followed the announcement of a framework agreement between the House and Senate in May.

House Speaker Destin Hall (R-Caldwell) said both chambers anticipate voting on the budget this Wednesday and Thursday.

“The House fought for and delivered one of the strongest budgets our state has seen in decades,” Hall said in a post on X. “We secured historic raises for teachers and law enforcement, cut taxes, and strengthened public safety. This budget was worth fighting for.”

The full 634-page text adds clarity to raises on teacher, law enforcement, and government employee pay that Hall and Senate President Pro Tem Phil Berger (R-Rockingham) made public last month.

“This is a responsible spending plan that takes aim at bureaucratic bloat without endangering core services,” Berger said in a statement. “This keeps our promise to reduce the tax burden for all North Carolinians, while expanding access to incredible educational opportunities, keeping our communities safe, and solidifying North Carolina’s status as the best state in the nation.”

Salaries

North Carolina teachers and state employees who have been waiting and wondering if they will see a raise this summer finally received some clarity with the release of the conference budget report.

NC legislators report state budget progress

For teachers, the spending plan provides funding to implement a new teacher salary schedule that sets starting base pay for educators at $48,000 and an average salary increase of 8%. The budget provides a $500 one-time bonus for those school employees with 0-15 years of experience. For employees with 16 or more years of experience, the one-time bonus is set at $1,000.

Rep. Tricia Cotham (R-Mecklenburg), chair of the House Education Committee, shared on social media Monday evening that she was in full support of the long-overdue spending plan.

“Looking forward to voting on a budget that raises teacher pay! Teachers deserve to make more money,” Cotham shared on X.

The budget includes a 3% across-the-board salary increase for most employees for the fiscal year. 

Most state employees earning $65,000 or less will receive $1,750 as a one-time bonus. For those employees earning more than $65,000, the one-time bonus is set at $1,000. Some employees will see a much larger increase.

State Highway Patrol law enforcement will receive total salary increases of 15% in FY 2026-27, in addition to any step increases that may be applicable.

Ardis Watkins, executive director of the State Employees Association of North Carolina, noted the raises did little to financially help most state workers who saw no increase in pay last year.

“This year, most will only get 3% — which doesn’t keep pace with inflation for this year much less makes up for last year,” said Watkins.

Retirees will receive a one-time 2.5% payment, not a permanent cost-of-living adjustment, according to SEANC.

“Meanwhile, the state is cutting hundreds of positions from agencies whose mission is public health and safety,” said Watkins in a statement to NC Newsline.

The raises will not be retroactive to 2025. They would begin July 1.

To accomplish these salary increases, the General Assembly is directing state agencies to enact a slew of cuts to vacant positions. Funds from those vacant positions have been used by agencies to overcome funding shortfalls and remain solvent, which these cuts will make more difficult. 

Among those cuts, the Department of Agriculture and Consumer Services must cut nearly $4 million in vacancies from its budget, the Department of Insurance must cut $2.7 million, the Department of Administration must cut $1.8 million, and the Department of Public Instruction $1.1 million.

The Department of Adult Corrections must slash more than $40 million in vacancies from its budget, but those cuts are being supplemented with additional appropriations to offset the loss in program funding. Roughly $13 million each will go toward food and nutrition, pharmacy services, and general health, all of which were experiencing shortfalls.

Lawmakers will also earmark another $80 million in nonrecurring funds to cover the agency’s other financial deficits in hopes of stabilizing a department that is in dire financial straits. That money will come out of the legislature’s stabilization and inflation reserve, a $1 billion emergency fund established in 2022.

Helene relief, tax changes

Following calls from Democratic Gov. Josh Stein, the budget would repeal the sales tax exemption on electricity for data centers and close a loophole in the state’s sales tax exemption for hospitals. It also raises taxes on sports betting operators’ net revenue from 18% to 23%, and creates a new 6% tax on prediction market trading sites like Kalshi and Polymarket.

“We’re going to be reviewing [the budget] incredibly closely in the coming days,” Stein said Tuesday. “What we want is for the state to pass a budget that invests in our people.”

It appropriates more than $700 million for Hurricane Helene relief. Funds will match FEMA reimbursements and support local municipality needs. 

This is a developing story and will be updated.