RALEIGH — The North Carolina House has released its proposed state budget for the 2025-27 biennium totaling more than $65.91 billion, roughly the same overall total as the Senate’s budget.
“It’s a budget that we’re proud of and invests in working families in North Carolina,” House Speaker Destin Hall (R-Granite Falls) said during a press conference on Tuesday.
The House has branded its version of the budget “Committed to Carolina.”
The House budget includes $32.59 billion for fiscal year 2025-26 and $33.32 billion for fiscal year 2026-27. The Senate version would spend $32.6 billion in year one and $33.3 billion in year two. Gov. Josh Stein’s budget proposal calls for $68 billion over the biennium.
Per House appropriations leaders, the budget keeps the growth of net general fund expenditures to 5% over the biennium.
Rep. Donny Lambeth (R-Forsyth), House Appropriations senior chairman, told reporters House leaders made “a conscious effort” of “listening to what folks told us.”
“We’ve taken and made an overt effort at listening to people and incorporating in this budget things that we think and know that the people want in North Carolina,” Lambeth said.
In education spending, the budget aims to raise the state-funded portion of starting teacher pay to $50,000 by the end of the biennium, which House leaders say would make North Carolina first in the Southeast for entry-level teacher compensation.
Teacher compensation would increase by 8.7% over the two-year period, and the plan restores master’s pay for teachers with advanced degrees.
Salary increases in the proposal for state agency employees, community college staff and UNC System personnel include a 2.5% across-the-board raise. State retirees would get a 1% cost-of-living bonus in the first year and a 2% bonus in the second year.
“We evaluated every area of the state budget, cutting wasteful spending wherever we found it to fund significant pay raises for our teachers and other state employees with no tax increase,” said Rep. Dean Arp (R-Union), Appropriations senior chair, in a press release. “What we have proposed is a sensible, credible plan that invests in our people and reflects the priorities of the people of North Carolina.”
Council of State member salaries see bigger increases under the House proposal than in the Senate version. The governor’s pay goes from $203,073 to $208,150 under the House, while the Senate version raised it to $205,611.
Council of State annual salaries under the House are increased to $172,594; the Senate raised it to $170,489. Similarly, executive branch employees, judicial officials, clerks of court and magistrates all get a bigger raise with the House than the Senate. State Highway Patrol salary increases are lower in the House than in the Senate version.
The budget also has a provision capping state funds for nonprofit organization employee salaries at $140,000.
The budget includes several tax relief measures such as reinstatement of the back-to-school sales tax holiday starting in 2026 and the exemption of the first $5,000 in tips from state income tax.
An increase in the standard tax deduction of $500 for individuals and $1,000 for married couples filing jointly is included. The House proposal alters the tax reduction trigger schedule.
The Senate maintains lower trigger amounts for FY 2025-26 through FY 2032-33, while the House proposal significantly increases trigger amounts for all fiscal years. For example, for FY 2025-26, the Senate’s trigger is $33.042 billion, whereas the House set it at $36.306 billion.
Unlike the personal tax rate reductions offered by the Senate proposal which takes the rate from 3.99% down to 2.99% over time, the Committee Report shows the House’s schedule keeps the projected tax rate at 3.99% through the tax year 2027.
The House budget proposes cutting nearly 3,000 vacant government positions out of more than 10,000 identified statewide. House budget leaders also say that they’ve cut an estimated $10 million from state diversity, equity and inclusion (DEI) programs. The funding behind the vacancy and DEI cuts will be redirected for other purposes.
No specific mention of DEI is in the bill language, but it does mention merit-based hiring.
The budget would restore the Rainy Day Fund to $4.75 billion. That reserve has dipped below $3.65 billion since Hurricane Helene hit the state last year.
The Department of Transportation would receive funding to create 40 additional driver license examiner positions in fiscal year 2025-26 and 21 more in 2026-27. The budget authorizes up to 30 additional administrative specialist positions to support DMV operations.
Several DMV pilot programs are included, such as a privatization pilot program for license renewal, an in-home license renewal pilot in Forsyth County and a pilot allowing commercial driver training schools to administer exams.
Other notable House budget items include:
- $50 million in school safety grants
- New teen social media protections
- Assaulting a classroom teacher or volunteer goes from a Class A1 misdemeanor to a Class I felony
- Prohibiting instruction on gender identity, sexual activity or sexuality in kindergarten through fourth grade curricula while allowing responses to student-initiated questions
- UNC School of Civic Life and Leadership is codified through a new statute amendment
- Increasing maximum unemployment insurance benefit to $450 versus the Senate’s $350
- Moving the State Board of Elections to the Albemarle Building, where the State Auditor’s Office resides
- Redirecting $500 million NCInnovation endowment funding to Hurricane Helene disaster recovery; the Senate version would grant part of that funding back to NCInnovation
- Directing NCDOT to include disaster reimbursements/expenditures related to Hurricane Helene in its Weekly Cash Watch Report
- Changing the America’s Semiquincentennial Committee structure, with requirements to report on costs for the 2026 celebrations
- Modifications to sports wagering revenue distribution
- Election-related provisions allowing the retention of private legal counsel
Amendments are expected to be added during House debate. Once the House passes its version of the budget, the Senate will likely reject the bill, triggering a conference committee to reconcile issues.
All 2025 budget documents and related information are linked near the top left side of the North Carolina General Assembly website.
