State budget shifts costs onto hardworking North Carolinians while leaving $1 billion unaccounted for

RALEIGH (July 1, 2026) – Every budget is a policy choice that reflects who and what lawmakers value. With the newly released budget, NC lawmakers have chosen to prioritize corporate interests and the wealthy few over people-first investments that would make life more affordable for everyday North Carolinians. Instead of helping families keep up with the rising cost of living, this budget shifts costs onto local communities, working families, and people already struggling to make ends meet.

At the same time, lawmakers left $1 billion sitting on the sidelines, leaving North Carolinians with no transparency about how those taxpayer dollars will ultimately be spent.

“Lawmakers claim there isn’t enough money to fully fund essential services but have simultaneously set aside $1 billion in funds to pursue their pet projects and a major league baseball stadium,” said Graig Meyer, Executive Director of the NC Justice Center. “Put the people first. Use the people’s money to make wages go up and keep costs down.”

What’s good: A few positive steps, but not enough

While we are glad to see a handful of positive provisions, they largely amount to correcting past mistakes or offering limited relief that falls short of what North Carolinians need. For example:

  • Health care: The budget funds the Medicaid rebase, restores the Healthy Opportunities Pilot programs, and fixes an HB 696 error that would have denied Medicaid coverage to lawfully present pregnant women and children. However, these are corrections to harm the legislature itself created.
  • Education: Teachers and state employees will receive raises, but the increases don’t cover the loss of purchasing power these state workers absorbed due to inflation during the long wait for a budget.
  • Disaster recovery: $880 million in Helene disaster recovery dollars is included, but the details of allocation and accountability mechanisms need close scrutiny to ensure funds reach impacted communities.
  • Taxes: The income tax rate will be cut to 3.49%, but at that rate the richest 1% will save $7,000 per year while the majority of households save $170 or less. The state also continues to shift toward more regressive taxes, such as sports gambling.
  • Criminal justice: Provides approximately $1.6 million in funding for local reentry councils. While this is welcomed funding, it is non-recurring.

What’s harmful: Policies that make life less affordable

People should not be misled by modest personal income tax cuts and raises that mask a broader shift in costs. This budget will deepen, not ease, North Carolina’s affordability crisis.

  • Education: An education budget increase of only 4.6% falls far short of fully funding the Leandro Plan. Adjusted for inflation, per-student state funding would be 1% below pre-Recession levels, and despite a proposed 17% increase in starting teacher pay, inflation-adjusted starting salaries would still be below FY 2015-16 levels.
  • Health care: The budget cuts 364 vacant positions from Health and Human Services, when more support is needed to ensure people retain Medicaid coverage during the roll-out of new federal work requirements.
  • Court costs: Courts are an essential public service that should be funded through tax dollars. Instead, this budget significantly increases court costs, shifting the burden of paying for the justice system onto those who can least afford it. In civil court, higher fees will prevent more people from seeking relief from harm. In criminal court, more people will be unable to pay fines and fees, increasing the risk of poverty penalties such as debt-based driver’s license suspensions.
  • IOLTA: The budget almost completely abdicates civil legal services, a move that will fall hardest on people with low incomes who rely on legal assistance to protect their homes, families, safety, and livelihoods and leave them more vulnerable to exploitation.
  • SNAP: The budget appropriates an insufficient $2.86 million recurring and $2.5 million nonrecurring to improve SNAP administration and creates a new mechanism to pass the cost of any federal SNAP penalty directly down to counties by withholding from their sales tax allocations.

These failures are especially concerning at a time when federal budget cuts have left North Carolina shouldering more of the cost for Medicaid, SNAP, and other essential programs that millions of people rely on.

This budget also raises serious transparency concerns. The 634-page bill, paired with a 716-page money report, touches more than 1,100 sections of the General Statutes and amends or rewrites provisions from dozens of previously enacted laws. It is a vehicle for rewriting state law behind closed doors, tucked into a document with minimal public input and that most North Carolinians will never read.

What’s missing: People-first investments that lower costs

“What’s missing from this budget matters just as much as what’s in it,” said Nicole Dozier, Director of Advocacy and Engagement at the NC Justice Center. “A people-first budget centers the needs of North Carolinians. Yet, this budget fails to make a serious, long-term commitment to lowering people’s health care, housing, and energy costs.”

Missing investments include:

  • Education: Full funding for the Leandro Plan, an end to private school voucher expansion, and investments in school building repairs.
  • Energy affordability: Investments that lower energy costs for families, including energy efficiency programs and protections against rising electricity rates.
  • Health care: Protection and strengthening of Medicaid, investments in disability care to reduce out-of-pocket health care costs, and protection of access to health care and food assistance for people impacted by the criminal justice system.
  • Housing The budget provides almost nothing for affordable housing—a $35 million one-time transfer to the Housing Finance Agency, and only a $10 million net appropriation. There is no rental assistance, no eviction prevention funding, and no recurring appropriation to the Housing Trust Fund.
  • Workers and economic security: Restoration of unemployment benefits, higher wages, paid family leave insurance, guaranteed paid sick leave, and stronger workplace protections.

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FOR MORE INFORMATION, CONTACT: Nicole Dozier, Director of Advocacy and Engagement, nicole@ncjustice.org