Gov. Josh Stein signed North Carolina’s roughly $34 billion state budget on Tuesday ahead of his deadline to act, ending a nearly three-year stretch without a new comprehensive spending plan and closing one of the longest-running budget standoffs between the House and Senate.
“You all are here because you value people, educating them, keeping them healthy, keeping them safe, serving,” Stein said. “It’s about time that we, as a state, appropriately value you.
The budget was the first comprehensive state spending plan Stein had the opportunity to sign, veto, or allow to become law without his signature since taking office.
“This budget bill gets a lot of things right. It delivers the largest starting teacher pay raise in nearly 50 years and the largest overall teacher pay raise in the last 15 years,” Stein added. “It protects health care for millions of North Carolinians by fully funding Medicaid. It gives double-digit pay raises to state law enforcement officers and bonuses to local law enforcement.
“It appropriates another $700 million to help people of western North Carolina continue their recovery from Hurricane Helene. The budget also makes meaningful investments in our community colleges, the DMV, child care, and summer food programs for our kids. These are real wins worthy of celebration and worthy of my signature.”
The signing comes after the Republican-led General Assembly sent Stein the budget last week, following months of negotiations over spending levels, tax policy, education, Medicaid oversight, Hurricane Helene recovery, and public safety.
Senate Bill 257 passed in the House by a vote of 88-21 and the Senate by a vote of 35-10, with bipartisan support. Those final votes marked a major breakthrough for legislative leaders after the state continued operating largely under spending levels approved in 2023.
The budget funds raises for teachers, state employees, and law enforcement officers, continues scheduled income-tax cuts, adds new Hurricane Helene recovery funding, maintains Opportunity Scholarship funding, includes Medicaid-related guardrails, and makes several tax and policy changes.
Stein, a Democrat, had until later this week to sign the budget, veto it, or allow it to become law without his signature. By signing the measure he avoided a potential override fight with Republican legislative leaders.
Republican legislative leaders praised the budget as a responsible spending plan that funds state priorities while continuing the GOP’s tax-cutting agenda.
“This budget invests in the people of North Carolina,” House Speaker Destin Hall, R-Caldwell, said. “It delivers historic raises, keeps taxes low, strengthens public safety, and protects taxpayer dollars by making targeted investments to crack down on waste, fraud, and abuse. Every dollar reflects our commitment to build a North Carolina that is a better and more affordable place to live, work, and raise a family.”
Senate Leader Phil Berger, R-Rockingham, said the budget reflects the state’s strong fiscal position.
“For over 15 years, Republicans in the General Assembly have meticulously crafted budgets to rein in the runaway spending Democrats were dependent on. After decades of fiscal recklessness, Republicans right-sized state government and sent billions of dollars back to residents in the form of regular personal income tax cuts and reforms.
“Our fiscal policies resulted in an incredible decade of success and economic growth. Senate Republicans fought to secure a budget that would continue those efforts, and the budget Gov. Stein signed does just that. It continues to slash tax rates for all North Carolinians and prioritize the needs of our citizens, not bureaucrats.
“I’m glad Gov. Stein recognizes how vital this budget is for the people of North Carolina.”
The signing also highlights both agreement and division between Stein and Republican legislative leaders.
Stein’s proposed budget and the final legislative plan both prioritized teacher and state employee raises, Hurricane Helene recovery, public safety funding, and Medicaid stability.
“The legislature has accepted many of my big-ticket budget recommendations, and having just celebrated America 250 this weekend, we remember that our democracy has always run on compromise for the common good,” Stein said.
One notable area where Stein and lawmakers found some agreement was on data center tax incentives. Stein advocated for phasing out North Carolina’s tax exemptions for data centers, saying the rapidly growing industry should pay more of its own costs. While the final budget stops short of Stein’s full proposal, it takes a partial step in that direction by ending the sales-tax exemption on electricity purchased by data centers.
“They also agreed to remove the data center’s sales tax exemption for electricity, so you and I will no longer be subsidizing their energy consumption,” Stein added.
But the final budget differs sharply from Stein’s proposal in several key areas.
Education remained one of the biggest points of contrast. Stein’s recommended budget proposed changes to the Opportunity Scholarship Program that would have halted new awards and imposed an income cap.
The final legislative budget keeps Opportunity Scholarship funding steady, preserving the school-choice program rather than adopting Stein’s proposed rollback.
“The legislature is continuing to pay wealthy people to send their children to unaccountable private schools at the same time our public schools have been chronically underfunded,” Stein said.
The budget also preserves Republican-backed income-tax reductions. Stein’s proposal would have slowed or paused future rate cuts, while the final spending plan keeps North Carolina’s scheduled personal income-tax reductions in place if revenue triggers are met.
“While the budget pushes out further tax cuts beyond this year, which is a good thing, it nonetheless maintains future reckless, preprogrammed tax cuts for corporate shareholders and the wealthy,” Stein said. “Meanwhile, it failed to enact my Working Families Tax Cut, which would have put more money into people’s pockets, people who need it. We should be prioritizing the people of North Carolina, not big corporations.”
Another significant difference centers on executive power. The budget includes policy language that further limits executive appointment authority, extending the ongoing struggle between Stein and Republican lawmakers over control of state boards and commissions.
“It’s full of unconstitutional and petty provisions that strip power from the executive branch, politicize the state government, and undermine its efficiency,” Stein said.
The General Assembly adjourned its regular short session last week but scheduled both chambers to return on July 27. Lawmakers preserved their ability to respond to vetoes, address budget-related matters, take up eligible carryover bills, and address other unfinished business when they return to Raleigh.