Brooks Pierce Capital Dispatch: Senate Approves Budget Bill and Confirms Two More Secretaries

Senate Budget bill

The North Carolina Senate on Thursday approved its version of the 2025 Appropriations Act by a vote of 30 to 15. Four Democrats joined twenty-six Republicans in supporting the bill. Fourteen Democrats and one Republican voted against it.

The bill now goes to the House where it could be ready for a vote by Memorial Day. After House approval, the bill goes to a conference committee of members from both chambers who will negotiate a report for presentation to the Governor.

The bill appropriates $32.6 billion in FY 2026 and $33.3 billion in 2027 for the state’s General Fund for the two-year biennium. The current 2025 fiscal year enacted General Fund budget is about $31.7 billion. 

Highlights of the bill include:

Hurricane Helene

• Appropriates an additional $700 million for Helene recovery (in addition to the $1.4 billion already appropriated) and repurposes $633 million for transportation needs

Education

• Increases K-12 teacher salaries by an average of 3.3% plus a $3,000 bonus over the biennium
• Appropriates $36.5 million to the North Carolina Community Colleges to increase pathways to fields such as healthcare and information technology through the system’s Propel NC initiative
• Funds enrollment growth at both the UNC system schools ($46.4 million both years) and Community Colleges ($75.8 million both years)
• Appropriates $35 million in both years for school safety grants

Health and Human Services

• Appropriates funding for the Medicaid rebase (costs resulting from changes in enrollment and other factors)
• Appropriates an additional $80 million to increase childcare subsidy rates
• Directs NC DHHS to seek a work requirement for Medicaid recipients
• Repeals state certificate of needs laws, which require approval of certain health care capital expenditures and equipment purchases
• Appropriates $639 million for a new NC Children’s hospital, which is a partnership between Duke Health and UNC Health to be located in the Research Triangle area

Justice and Public Safety

• Increases funding to provide equipment for the State Highway Patrol and the Division of Alcohol Law Enforcement
• Increases funding to the Administrative Office of the Courts for local positions such as assistant district attorneys, magistrates, deputy clerks of court, and victim-witness legal assistants
• Increases salaries for correctional officers, probation and parole officers and state law enforcement

Tax Changes

• Continues reductions in the state income tax, which is 4.25% for 2025. The rate is scheduled to drop to 3.99% in 2026. Under the bill, it would fall to 3.49% in 2027 and 2.99% in 2028. If certain revenue collection “triggers” are met in future years, the rate could fall to 1.99% by 2036.
• Caps the state franchise tax at $200 on the first $5 million of the tax base for S corporations and $500 on the first $5 million of the tax base for C corporations. Under current law, these same tax caps apply only to the first $1 million of the tax base.

Other appropriations and matters

• Appropriates $250 million for verifiable 2024 agricultural disaster crop losses
• Provides $110 million over the biennium for grants to local government and water/sewer authorities for PFAS sampling and monitoring and installing or upgrading water treatment technologies
• Provides $6 million over the biennium to the State Auditor to establish the Division of Accountability, Value, and Efficiency to assess whether state agencies and vacant positions are still needed
• Appropriates an estimated $1.5 billion in federal funds for rural broadband
• Creates a new North Carolina Investment Authority to take over investment responsibilities previously held solely by the State Treasurer

Cabinet Confirmations

The Senate on Thursday confirmed the nominations of two additional Cabinet secretaries—Lee Lilley of Commerce and McKinley Wooten of Revenue.

Five other Cabinet Secretaries were approved earlier—Joey Hopkins at DOT, Pam Cashwell at Natural and Cultural Resources, Gabe Esparza at Administration, Eddie Buffaloe at Public Safety, and Dr. Devdutta Sangvai at Health and Human Resources.

The confirmation of four other Secretaries is pending. They are Teena Piccione at Information Technology, Leslie Dismukes at Adult Correction, Jocelyn Mitnaul at Military and Veterans Affairs, and Reid Wilson at Environmental Quality.

For more information, contact a member of the Brooks Pierce Government Affairs Team.

Ed Turlington, Partner
Drew Moretz, Government Relations Advisor
Katelyn Kingsbury, Government Relations Advisor