On Monday, North Carolina Gov. Josh Stein stressed in a post on X that North Carolina is projected to face a $2.8 billion revenue shortfall over the next two years.
North Carolina has so much going for it. Our economy is thriving. Our population is growing. Our reputation is first-rate. We cannot risk losing our momentum by putting irresponsible fiscal decisions on autopilot. The time is now to invest in our people. pic.twitter.com/ZPtfqtGyNB
— Governor Josh Stein (@NC_Governor) March 30, 2026
“North Carolina has so much going for it,” he said. “Our population is growing. Our reputation is first-rate. We cannot risk losing our momentum by putting irresponsible fiscal decisions on autopilot. The time is now to invest in our people.”
The recently released revenue forecast, which came from the Fiscal Research Division and the Office of State Budget and Management (OSBM), shows stronger-than-expected collections and projects $35.079 billion in General Fund revenue for fiscal year 2025-26 and $34.72 billion for 2026-27, both increases over prior estimates.
The revised forecast reflects an improving economic outlook and stronger tax collections. Economists at the state legislature’s Fiscal Research Division now expect 6.7% growth in personal income in 2025-26, up from 5.2% in May 2025.
Lawmakers do caution, however, that rising costs and future tax cuts could strain North Carolina’s finances.
As evidence for his claims, a spokesperson for Stein cites the governor’s recent column, in which he highlights what he calls North Carolina’s impending fiscal cliff and breaks down how the state got to where it is and why a change in course is needed.
The spokesperson said that OSBM’s “Income Tax Cuts Would Lead to Large Structural Shortfall” section reflects the projected gap between future revenues and the cost of maintaining current service levels, accounting for inflation and population growth.
“That gap is driven by the projection in the most recent Consensus Revenue Forecast that our state’s revenue will hit two triggers for additional personal income tax cuts over the next few years,” Stein’s office said. “In other words, the $2.8 billion is the size of the shortfall the state would need to close if no changes are made.”
Brian Balfour, senior vice president of research at the John Locke Foundation, told Carolina Journal that the most recent consensus revenue forecast released last week only showed revenue projections through this coming fiscal year that begins July 1, not for the next two years.
“This means there’s no revenue projection to use as a basis to predict a revenue shortfall in the second of the next two years,” Balfour told CJ. “Additionally, revenue projections have been notoriously low over the past dozen years, producing massive surpluses every year except for the COVID-lockdown year. Unless more compelling evidence comes forward, we can take Stein’s warning with a grain of salt.”
The governor has also continued to advocate for passing his $1.4 billion “critical needs budget” before the General Assembly’s short session begins on April 6, and mentions those needs in the post on X.
Adding the $1.4 billion figure from his critical needs budget over the next two years would also equal the $2.8 billion figure, but Stein’s spokesperson said that is a separate issue.
North Carolina was the only state in the country in 2025 that did not pass a budget and relied on the previous biennium budget from 2.5 years earlier to keep funding for needs and services across the state.
Stein, a Democrat, was quick to remind everyone of that in a March 9 press conference.
“The state has added more than 300,000 people, the cost of living has increased by more than 6%, and the federal government is abandoning long-held commitments,” the governor said. “Yet we have not had a full budget, so the state keeps operating at a baseline, limping along. So much so that some things are already breaking the state. The state faces certain critical needs that require immediate attention.”
This isn’t the first time that he has criticized the legislature for not passing a full budget or funding the Medicaid rebase, which he did again in his new budget request.
The governor pointed out that both the House and the Senate agreed it was underfunded but couldn’t come to a mutual agreement.
About $319 million is needed to fully fund the Medicaid rebase, even though both the House and the Senate agreed last fall that only $190 million would be needed in their separate bills, based on analysis by the General Assembly’s Fiscal Research Division, and that Medicaid would be fully funded through April.
Stein also called for a 10% raise for corrections officers, state troopers, and other state law enforcement, citing the shortage of police officers and correctional officers and that both rank 49th in the nation for starting pay. A few weeks later, he held a separate press conference focusing on the subject of public safety funding.
“That is a damned embarrassment,” stated Stein at the March 9 press conference. “It should surprise no one that the State Highway Patrol now has more than 270 vacant positions… Again, it should surprise no one that the Department of Adult Correction has only half of the correctional officers needed to safely operate its prisons. We’re asking people to put themselves in very demanding, albeit rewarding, jobs, asking their families to sacrifice on our behalf so that they can earn less money than they could if they worked at a Costco.”
He also noted that there are approximately 1,000 more inmates in the Department of Corrections than three years ago, and that health care costs have increased by 10% over the past three years. As a result, the department needs $80 million to get back into the black and has been forced to ask vendors “to float them on their bills.”
Other requests from the governor include:
- A 10% raise for state nurses and health care workers who treat people with severe mental illness.
- Starting teachers get a 13% pay increase.
- Give all teachers a 6% raise on average.
- Restore masters teacher pay and provide more pay increases to veteran teachers.
Stein also mentioned other urgent needs including the State Bureau of investigations (SBI), whose operational budget is in the red because its caseload has dramatically increased in recent years, and 262 childcare programs have closed since the state last passed a budget in part to what he said is due to inadequate childcare subsidies. Also, more than 1,400 children of veterans who were injured or killed either had their scholarships reduced or were denied applying due to a lack of funding.
