Stein budget proposal freezes scheduled tax cuts and boosts spending

Just one week after his first State of the State address, Democratic Gov. Josh Stein unveiled his 2025-2027 budget recommendations. 

The key priorities in the proposal include public education, workforce development, child care, and public safety. 

“Gov. Josh Stein’s budget proposal recommends spending $33.6 billion in fiscal year (FY) 2025-26, or an increase of 6.3% from last year’s total of $31.6 billion, ” said Fiscal Policy Analyst Joseph Harris. “Within the $2 billion increase, $700.3 million would go to Medicaid, another $700.3 million would fund increases to state employees and retirees pay, and $153.5 million would be allocated to the State Health Plan.”

Education 

Stein prioritizes investments in public education, aiming to make North Carolina’s starting teacher pay the highest in the southeast, with an average salary of $53,000 by FY 2026-27. His plan includes a 10.6% average pay raise for teachers and reinstating master’s degree teacher pay statewide. 

The education proposal also includes expanding free school breakfast for every student, adding mental health professionals in schools, and proposes a $4 billion bond to address school infrastructure needs. 

Funding for the Opportunity Scholarship Program would be placed under a moratorium that offers no new awards and gradually decreases future funding for the program, putting Stein at odds with state law, and with Republican lawmakers who have expressed interest in fully funding for the program. Last year more than 55,000 families ended up on the OSP waiting list until lawmakers voted to allocate more funds to it.

“Stein’s budget aims to increase pay for teachers and funding for public education at the expense of reducing funding for Opportunity Scholarships,” explained Harris. 

Workforce Development 

Building on remarks from his State of the State address, Stein advocates for expanded access to free community college in high-demand fields. He also proposes a $20 million investment in apprenticeships and work-based learning programs. 

“I’m also proposing that we expand apprenticeships in state government to recruit and retain talent to serve the public and establish a rural apprenticeship program to connect small businesses and farmers to apprentices so that they can have a pipeline of talent that they need,” said Stein Wednesday morning. 

Child Care and Early Education 

The plan allocates over $630 million per year to increase child care subsidies, expands NC Pre-K by adding 1,000 seats, and establishes summer learning programs to help Pre-K graduates transition to kindergarten. 

“My budget proposes increasing child care subsidy rates across the state so providers can increase the salaries of their child care workers and expands pre-K across North Carolina by 1,000 new slots so that more kids show up to kindergarten ready to learn,” Stein stated. 

Public Safety 

Stein stressed the importance of law enforcement in his comments announcing his proposal. 

“Investing in safety requires investing in the professionals who protect us. Law enforcement officers put themselves in harm’s way to keep our communities safe, but widespread vacancies in law enforcement make it harder for them to do their jobs,” said Stein. 

His plan increases law enforcement salaries with hiring bonuses to attract new officers, invests in fentanyl crisis response by adding new drug agents and financial investigators, provides body cameras for all field-based state law enforcement officers, and funds 330 new School Resource Officers. 

Other budget area highlights include 

• Over $530 million annually in tax relief, including refundable tax credits (Working Families Tax Credit, Child & Dependent Care Tax Credit, and Child Tax Credit).   

• Freezing corporate and personal income tax rates 

• Expanded Medicaid growth 

• A $500 million reserve for disaster relief 

• Increases unemployment benefits, raising the maximum weekly payment to $470 

• $15 million annually for affordable housing loans and $35 million via the Housing Finance Agency program

“Since Hurricane Helene, the state’s Savings Reserve balance has decreased from $4.75 billion to $3.73 billion. While Stein’s budget proposal recommends allocating $500 million to the State Emergency Response and Disaster Relief Fund, it fails to replenish the $1 billion that has been withdrawn from the Savings Reserve,” reported Harris. 

The North Carolina General Assembly is not obligated to act on any recommendations made by the governor. Although the governor can propose legislation, the state Constitution grants the General Assembly the ultimate authority over policy changes and budget recommendations.

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