Governor Josh Stein on Tuesday, April 21, 2026, presented his recommended budget for the 2026-2027 fiscal year, a comprehensive fiscal plan that prioritizes public education, state employee compensation, and targeted tax relief. Announced on the opening day of the North Carolina General Assembly’s short session, the proposal seeks to address long-standing vacancies in critical public sectors while maintaining the state’s current tax rates to ensure fiscal stability.
A primary focus of the budget is a substantial investment in the state’s education system. Governor Stein proposed raising starting teacher salaries to the highest level in the Southeast, a move intended to address recruitment challenges and improve the state's national ranking in per-pupil spending. The plan also includes the restoration of master’s degree pay for veteran educators and allocates $115 million from the State Capital and Infrastructure Fund for the renovation and repair of public school buildings. Stein emphasized that investing in public schools is foundational to the state’s long-term economic success.
The budget also calls for significant pay increases for public safety and healthcare professionals. The Governor recommended a total 15% raise for law enforcement officers, nurses, correctional officers, and health technicians. This increase is structured as a 10% raise in the current fiscal year followed by an additional 5% in the 2026-2027 fiscal year. Furthermore, the plan includes a $1,000 bonus for all state employees, with an additional $500 bonus for those earning less than $75,000 annually. For retirees, the budget proposes a 2.5% one-time cost-of-living adjustment.
Regarding tax policy, the administration’s proposal includes nearly $380 million in targeted tax relief for working families. This package features a new child care tax break and the restoration of the state’s back-to-school sales tax holiday in August. To fund these initiatives while protecting state revenue, the Governor recommended maintaining the individual income tax rate at 3.99% and the corporate income tax rate at 2.25%. Stein criticized further scheduled reductions as a threat to public service funding and school resources.
Healthcare and workforce development also received significant attention in the proposal. The budget includes $319 million to fully fund Medicaid, which currently serves more than three million North Carolinians. For workforce development, the Governor allocated $448 million, including funding for free community college tuition for students pursuing credentials in high-demand fields. Additionally, $300 million is earmarked for stabilization grants to support childcare providers and reduce costs for parents, which the administration links directly to workforce participation rates.
The budget proposal now moves to the Republican-controlled General Assembly for consideration. Legislative leaders are expected to begin committee hearings on the Governor’s recommendations in the coming weeks. The final budget must be approved by both the House and Senate before being sent back to the Governor for signature.