July 6, 2026
Old North State Report – July 6, 2026
UPCOMING EVENTS
- October 15, 2026: NC Professional Lobbyists Association Annual Meeting
- October 22, 2026: Association of Executives of North Carolina Fall Conference
- December 2, 2026: NC Chamber - Women Lead NC
- January 12, 2027: NC Chamber - Economic Forecast Forum
LEGISLATIVE NEWS
NORTH CAROLINA’S 2026–27 BUDGET: KEY FUNDING, POLICY, AND RECOVERY INITIATIVES
On July 2, after more than a year of negotiations and internal disagreements, the North Carolina General Assembly approved a $34 billion state budget, the largest in state history, and sent it to Governor Josh Stein for consideration. The budget (Senate Bill 257) passed with bipartisan support in both chambers, passing 88-21 in the House and in the Senate by a 35-10 vote. Governor Stein has 10 days to sign the budget, veto it, or allow it to become law without his signature.
The 2026–27 North Carolina budget emphasizes disaster recovery, healthcare access, government modernization, and long-term infrastructure investment. The most significant initiatives include restoring Medicaid coverage for roughly 27,000 residents, allocating more than $700 million for Hurricane Helene recovery, investing $208 million in a new children's hospital partnership in Apex, modernizing SNAP administration through technology and staffing enhancements, and restructuring public-health operations to improve efficiency. Together, these provisions represent a major statewide effort focused on recovery, healthcare, and future economic growth.
Other matters addressed by the budget are:
Medicaid Coverage Restoration
The budget restores Medicaid coverage for approximately 27,000 immigrant children and pregnant adults with certain legal immigration statuses who lost eligibility under earlier Medicaid funding changes approved in 2026. This provision will reverse prior cuts and expand access to healthcare services for vulnerable populations across the state.
Hurricane Helene Recovery Funding
A major focus of the budget is disaster recovery, with more than $700 million allocated for Hurricane Helene-related efforts and contributes $450 million to the state’s Rainy Day Fund, increasing the balance to $4.2 billion. The funding includes $450 million to secure federal matching funds, approximately $90 million for housing assistance and home repair programs, $30 million for repairs to roads and bridges on private property, and $65 million in grants to local governments for rebuilding projects. Additional appropriations include $27 million for Madison County and $21 million for dam safety improvements, reflecting the state's continued commitment to long-term recovery and infrastructure restoration.
Changes to SNAP Administration
The budget responds to new federal requirements affecting the Supplemental Nutrition Assistance Program (SNAP) by providing more than $5 million for technology upgrades, staffing, and program administration. Funding supports the hiring of more than 30 employees to help reduce payment errors and implement artificial intelligence tools to assist with eligibility and compliance. The budget also includes a mechanism that could shift some federal penalty costs to counties if the state incurs penalties related to SNAP payment errors.
NC IOLTA Changes
North Carolina lawmakers have approved changes to the IOLTA program that will redirect most new funds from civil legal aid to indigent criminal defense services and impose new eligibility restrictions on organizations receiving grants. Critics say the changes could significantly reduce free legal assistance for low-income residents facing issues such as domestic violence, housing disputes, and consumer protection matters, while supporters argue the reforms would improve accountability and prevent funding of organizations engaged in political advocacy. North Carolina becomes the only state to use IOLTA funds primarily for constitutionally mandated criminal defense rather than civil legal aid.
Office of Health Equity Restructuring
The budget eliminates the Office of Health Equity within the North Carolina Department of Health and Human Services. Rather than ending its work entirely, the budget transfers its responsibilities to the Division of Public Health. Lawmakers describe the change as a restructuring of services designed to improve administrative efficiency while maintaining health-related functions.
Major Projects and Investments
The budget includes $208 million for the children’s hospital partnership between Duke Health and UNC Health in Apex. The project is expected to cost about $3 billion, with construction anticipated to begin in 2027 and continue for approximately six years. The budget also authorizes agreements among Duke, UNC, and NC Children’s Health to advance pediatric healthcare, research, and medical innovation throughout the state.
The budget also provides funding for UNC-Chapel Hill expansion projects, NC State’s Poe Hall project, and initiatives related to PFAS contamination research, water testing, and firefighter protection.
Pay Raises and Bonuses
The budget includes pay increases and bonuses for many public employees. Most state workers will receive an average 3% raise, while law enforcement officers and prison staff will see larger increases ranging from about 10% to nearly 18%. Teachers will receive an average 8% raise, with newer teachers receiving the largest increases. State employees earning more than $65,000 annually will receive a $1,000 bonus, while those earning less than $65,000 will receive $1,750. Teachers and school administrators will receive bonuses of $500 to $1,000 based on experience, and local law enforcement officers will receive a $1,750 bonus. Raises will take effect in the next fiscal year, with bonuses scheduled to be paid in October 2026.
Jobs and Government Structure
The budget will reduce the overall state workforce by about 755 positions, primarily through the elimination of vacant jobs. At the same time, additional positions will be created within the State Bureau of Investigation, the State Auditor’s Office, and the Department of Justice. Workforce reductions will mainly affect corrections, agriculture, and certain health agencies.
Tax Policy
The budget also lowers the state personal income tax rate from 3.99% to 3.49%, with the possibility of further reductions to 2.49% by 2034 if revenue targets are met. Lawmakers are also pursuing a constitutional amendment to permanently cap the income tax rate. To help offset revenue losses, some tax loopholes affecting data centers and certain nonprofit organizations, including hospitals, would be closed.
Gambling and Sports Revenue
Sports betting taxes increase from 18% to 23%. Since legalization in 2024, sports betting has generated more than $287 million in state revenue. Under the budget, UNC-Chapel Hill and NC State will begin receiving a share of that revenue, potentially up to $5.8 million annually each beginning in 2027.
Funding Excluded
One notable omission from the budget is a Major League Baseball stadium in Raleigh. Earlier versions of the plan included roughly $500 million toward the estimated $1.7 billion project, but that funding was ultimately removed from the final budget.
The News & Observer (Schrader) June 30, 2026
WRAL News (Doran & Yaffa) June 30, 2026
The Charlotte Observer (Sullivan) July 2, 2026
WRAL News (Specht & Doran) July 2, 2026
LATEST POLLS
270 to Win: North Carolina Senate
RealClear Polling: North Carolina Senate- Whatley v. Cooper
WHAT WE’RE LISTENING TO
Tying It Together with Tim Boyum
