North Carolina lawmakers unveil finalized $34B state budget with teacher raises, tax cuts and Hurricane Helene funding

RALEIGH, NC (WWAY) — North Carolina legislative leaders announced Tuesday that they have finalized a $34 billion state budget that includes teacher and state employee pay raises, continued income tax reductions, more than $700 million for Hurricane Helene recovery, and significant investments in education, transportation and public safety.

The agreement, negotiated by House Speaker Destin Hall and Senate Leader Phil Berger, is expected to receive votes in both chambers of the General Assembly on Wednesday and Thursday.

If approved, the budget would head to Gov. Josh Stein for consideration.

Teacher, state employee and law enforcement pay increases

One of the largest components of the spending plan is compensation for educators, state employees and law enforcement officers.

The proposal provides an average 8% salary increase for teachers, along with bonuses based on years of service. Beginning teacher pay would increase to $48,000 before local salary supplements.

State employees would receive a 3% across-the-board raise and a salary-based bonus, while school principals and non-certified school employees would also receive a 3% pay increase.

Law enforcement agencies would receive some of the largest raises in the budget, including:

• Average 20.3% raises for State Bureau of Investigation and Alcohol Law Enforcement officers.
• Average 17.7% raises for State Highway Patrol officers.
• Average 15.4% raises for correctional officers.
• Average 10.1% raises for probation and parole officers.
• A 13% increase for other state law enforcement officers.
• A one-time $1,750 bonus for local law enforcement officers statewide.

Tax reductions continue

The budget continues North Carolina’s long-term income tax reduction plan by guaranteeing the personal income tax rate will fall to 2.99% by 2032. Additional reductions could occur if future revenue targets are met.

Lawmakers also included provisions to eliminate a sales tax reimbursement loophole affecting large hospitals and repeal the sales tax exemption on electricity used by data centers.

More than $700 million for Hurricane Helene recovery

The proposal dedicates more than $700 million toward continued Hurricane Helene recovery efforts across western North Carolina.

Funding would support FEMA matching requirements, local government infrastructure, privately owned roads and bridges, housing recovery, wildfire preparedness, dam repairs and tourism initiatives designed to help mountain communities continue rebuilding.

Education funding expands

Education remains one of the largest areas of investment in the budget.

The proposal includes funding for literacy and mathematics initiatives, Advanced Teaching Roles, workforce development programs at community colleges and enrollment growth across the UNC System.

Lawmakers also included funding to eliminate the waitlist for Personal Education Student Accounts for Children with Disabilities and expanded scholarship opportunities at several historically Black colleges and universities.

Healthcare investments

The spending plan provides more than $1 billion for Medicaid and includes funding to ensure North Carolina can continue participating in the Supplemental Nutrition Assistance Program (SNAP).

Other healthcare provisions include investments in opioid prevention and treatment programs, childcare subsidies, food banks, Medicaid fraud prevention and increased reimbursement rates for direct care workers.

The proposal would also repeal certificate-of-need requirements for inpatient rehabilitation facilities.

Infrastructure and transportation

The budget includes approximately $1.6 billion for capital projects across state agencies and the UNC System.

Transportation investments include additional road maintenance funding, wildlife highway crossings, ferry improvements, driver’s license office staffing, and new driver’s license examiner positions to expand office hours at high-volume locations.

Economic development funding includes support for the JetZero manufacturing project at Piedmont Triad International Airport and additional funding for industrial site development.

Public safety funding

The proposal invests in additional prosecutors, court personnel, prison security upgrades and school safety initiatives.

Funding is also included for new State Bureau of Investigation positions, body cameras for the State Highway Patrol, prison security technology and grants for local schools to improve campus safety.

Rainy Day Fund grows

Lawmakers also proposed depositing more than $450 million into North Carolina’s Rainy Day Fund, increasing the reserve to more than $4.2 billion.

The budget also releases $208.5 million from the ARPA Temporary Savings Reserve for the North Carolina Children’s Hospital.

What’s next?

The House and Senate are expected to vote on the budget Wednesday, July 1, and Thursday, July 2.

If approved by both chambers, the legislation will be sent to Gov. Josh Stein, who can sign the measure into law, allow it to become law without his signature, or veto it. If vetoed, lawmakers could attempt to override the governor’s decision with sufficient support in both chambers.