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Republican leaders released their much-anticipated state budget on Tuesday morning. We’ll have more to report as it inches toward the finish line this week, but here are eight new developments that depart from the framework lawmakers released last month.
This is a developing story and will be updated.
Hurricane Helene Relief
The spending plan includes $700 million for Hurricane Helene relief. The most sizable allocations include $450 million to cover the state and local share of costs for federal disaster recovery programs, $65 million for local disaster recovery projects that FEMA doesn’t cover, and $43 million to nonprofit organizations for housing and to repair private roads and bridges.
Sports Provisions
The budget creates an itemized deduction for gambling losses, which would apply retroactively to January 1, 2025.
Starting in 2027, prediction markets like Polymarket and Kalshi will face a 6% tax on net trading fee revenues. Meanwhile, sports betting operators like DraftKings and FanDuel would be subject to a 23% tax, up from the current rate of 18%. UNC-Chapel Hill and N.C. State University are also added to the list of tax-proceed recipients.
Election Management
Republican State Board of Elections Executive Director Sam Hayes asked state lawmakers to fund 21 new positions. The budget grants him two-thirds of that ask, with more than $2.1 million set aside for 14 positions.
State Auditor Dave Boliek asked for up to $60 million to modernize the state’s election management system. The budget allocates $15 million toward the endeavor. Separately, Boliek’s office gets funding for 25 positions and new regional office leases in Charlotte and Asheville.
Republican Sen. Brent Jackson, a top budget writer, said the spending plan doesn’t include any changes to election law. House Republicans are advancing a standalone bill, but it remains unclear whether the Senate would take it up.
State Worker Cuts
The budget cuts the equivalent of 755 full-time jobs, though the vast majority of them come from leaving vacancies unfilled. A breakdown by agency is available here.
Most are within the Department of Health and Human Services, Department of Adult Correction, and Department of Public Safety.
The State Employees Association of North Carolina is not pleased with the reductions. “If N.C. is being run like a business, it is a business in terrible financial shape,” said SEANC Executive Director Ardis Watkins. “Cutting the workforce, shutting workers out from any raise only to follow it with peanuts is what a business does when it’s in trouble.”
NCInnovation
House Republicans and Democratic Gov. Josh Stein wanted to fully claw back $500 million that lawmakers previously allocated for NCInnovation, a nonprofit intended to help university researchers commercialize their work.
Senate Republicans were willing to strip $400 million from the program and leave it with $25 million annually over the next four years. In the end, the budget didn’t address NCInnovation at all, meaning the $500 million allocation remains in place.
MLB Expansion
Senate leader Phil Berger pushed for funding in the budget for a possible Major League Baseball team coming to Raleigh. But House Speaker Destin Hall and others in his caucus were concerned about putting taxpayer dollars toward a stadium they felt private investors ought to bear the cost for. The issue will be kicked down the road, as no resolution was reached through the budget.
Medicaid Funding
The budget includes more than $1 billion for Medicaid, including $847 million in recurring funding and $200 million from the Medicaid Contingency Reserve
Data Centers
The budget repeals a sales tax exemption on electricity for data centers.
Other Notable Inclusions
Here are six other toplines worth knowing about:
- NC Children’s Hospital: The budget includes $208.5 million for a planned children’s hospital in the Triangle, which is a joint project between UNC Health and Duke Health. The budget redirects $105 million from a rural health partnership between the University North Carolina and East Carolina University to the N.C. Children’s Hospital.
- State Employee Raises: Most state workers will receive a 3% raise. Those making $65,000 or less a year are to receive a one-time $1,750 bonus, while those earning more than $65,000 will get $1,000.
- Pay for Teachers: Teachers will receive an average 8% salary increase. The most sizable raises will go to less experienced educators, with starting pay rising to $48,000 before bonuses and local supplements (see here for a detailed salary schedule). None of the raises will be retroactive, meaning they’ll take effect in the 2026-27 fiscal year.
- Other Raises: State Bureau of Investigation civilian personnel will get an average 27.5% raise, while SBI and Alcohol Law Enforcement officers secured a 20.3% increase. Highway Patrol officers will get 17.7% more, with civilian personnel taking in an extra 11.5%. Correctional officers will receive an average 15.4% salary increase, and probation and parole officers will receive an average increase of 10.1%. Other law enforcement officers in state government, including Capitol Police, will see a 13% raise.
- Tax Cuts: The personal income tax rate will drop from 3.99% this year to 3.49% in the 2027, 2028, and 2029 tax years. The rates would drop to 3.24% from 2030 to 2032, followed by another cut to 2.99% in 2033 and 2034. Corporate income tax rates would still be phased out by the end of the decade.
- Campus Survivors: A bill that Republican Sen. Michael Lee of New Hanover County spearheaded made its way into the budget, as Lee anticipated last month. The measure is intended to protect survivors of sexual assault on college campuses by ensuring information that could inadvertently identify them isn’t a public record. But the plan had also raised concerns that it could protect perpetrators of crimes. The budget states that “any record of a disciplinary proceeding that reveals personally identifiable information about a student is not a public record.”
