North Carolina didn’t become America’s top state for business by accident. When voters gave Republicans control of the General Assembly 15 years ago, we took our state on a new path. We ended the old tax-and-spend cycle, cut taxes responsibly across the board and focused on steady, long-term growth.
Today, the results show: a booming economy, a pristine AAA bond rating and billions in reserve accounts, including a $3.6 billion rainy day fund ready for emergencies.
That strength has drawn major employers like Toyota, Amazon, Johnson & Johnson and others to invest billions and create tens of thousands of jobs here. It also meant that when Hurricane Helene devastated western North Carolina, we could respond quickly. Lawmakers passed five recovery bills and invested around $2 billion to rebuild schools, repair infrastructure, restore homes and farms, and help local businesses recover. By restraining spending and growing our economy, we had the resources available for our citizens when disaster struck.
Our formula for success still works, but maintaining that success requires a responsible, conservative budget that attracts job creators while making North Carolina more affordable. That’s why, in the ongoing budget debate, the House is drawing a firm line — we won’t risk our record of success with reckless fiscal policy. State tax cuts must be structured to protect our economy and our citizens.
North Carolina families do need tax relief. This year, we’re fighting to ensure workers don’t pay income tax on their first $5,000 in tips. We’re also working to reinstate the back-to-school sales tax holiday and raise the standard deduction, so your family can keep more of their hard-earned pay.
But tax relief must be grounded in reality. Otherwise, there are very real consequences for education, public safety, health care and infrastructure investments. That’s where the divide with the Senate begins. Their plan locks in new rate cuts based on revenue triggers written in 2023, when Joe Biden (and his disastrous inflationary policies) still had 15 months left in office. Their proposal ignores today’s fiscal realities and strays from the grounded, steady record of reform that has guided North Carolina’s success since 2011. The House wants tax relief as quickly as we can responsibly deliver it, but not at the cost of tomorrow’s financial stability.
The House relies on nonpartisan fiscal experts, the same professionals who have guided North Carolina through stable budgets for years. Their projections are clear: leaving the 2023 triggers unchanged will push North Carolina into structural deficits starting in 2027. Experts agree deficits would occur; the only debate is how large they would be. Ignoring these warnings won’t make the problem go away; it will make the eventual fix more painful and costly.
In the words of the experts at the conservative Tax Foundation, “While revenue-based triggers promote fiscal discipline by tying tax cuts to available resources, North Carolina’s current design is overly rigid. The fixed revenue targets … fail to account for critical economic variables such as inflation, population growth, or macroeconomic shifts.”
The House isn’t abandoning income tax cuts. Our budget keeps the scheduled decrease from 4.25 percent to 3.99 percent in 2026. What we propose is updating the formula for future cuts so they only happen when revenue actually supports them, adjusted for inflation and population growth. It’s a simple, commonsense adjustment with a big payoff — preventing North Carolina from sliding into multibillion-dollar shortfalls.
And that matters. North Carolina can’t grow its workforce or keep living costs manageable if we can’t fund the basics that make our state competitive. We didn’t become the No. 1 state for business by cutting taxes alone. We paired them with world-class universities, a strong community college system, safe communities and steady, predictable budgeting. That balance has made North Carolina a magnet for jobs and innovation. Upset that balance, and we risk our greatest advantages.
Affordability isn’t just a tax-rate conversation. It’s about whether teachers can stay in the classroom, law enforcement officers can stay on the beat and families can afford to live near where they work. That requires a budget that funds essentials, provides fair raises for state employees and protects core services. With outdated triggers, future revenue barely covers essentials, let alone competitive pay.
If deficits hit, the choices are grim, forcing us to drain reserves, cut crucial programs or raise taxes. Some may point to gambling or marijuana legalization as budget saviors, but in addition to being controversial among conservatives, these ideas are not stable enough sources of revenue to balance a state budget or even dent the deficits we’re facing. North Carolina conservatives shouldn’t be forced to select from that menu of options.
The House’s stance is simple: protect taxpayers, our workforce and the pro-growth economy we’ve built. Keep tax cuts in place but only trigger new ones when the numbers make sense. This is a fiscally conservative tax policy worth fighting for.
North Carolina’s long-term financial health is at stake. We’re ready to negotiate. The Senate just needs to come to the table.
Until then, the House is holding the line for all North Carolinians.
Rep. Julia Howard is N.C. House Finance Chair and Rep. Dean Arp is N.C. House Appropriations Chair.
