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North Carolina Gov. Josh Stein speaks to reporters as he unveils his two-year budget proposal in Raleigh on March 19, 2025. (Photo: Galen Bacharier/NC Newsline)
Gov. Josh Stein outlined his request for North Carolina’s two-year budget on Wednesday, asking lawmakers to fund pay raises for teachers and law enforcement, an expansion of child care and new affordable housing.
Stein’s budget proposal, the first of his term, outlines a plan to fund the state’s programs and services through 2027. But many of its specifics are likely to be pushed aside by the GOP-led General Assembly, who will negotiate their priorities on their own over the coming months.
The Democratic governor is asking legislators to increase teacher salaries by an average of 10%, boost state law enforcement pay and give state workers a raise. He wants to expand workforce and apprenticeships, including providing free community college for some students. And he’s outlining a range of potential investments in child care, affordable housing and education.
“To me, each of these commitments is delivering on the promise of North Carolina, that where you come from should never limit how far you can go,” Stein said at a news conference Wednesday.
“I’m grateful to the General Assembly for its consideration of the budget, and I look forward to working with them in the coming weeks so that we can do right by North Carolina’s children and North Carolina’s families.”
Last year, Stein’s predecessor Gov. Roy Cooper proposed a $34.5 billion one-year budget with similar mainstay line-items: a pause on Republican-led school vouchers, investment in child care, and pay raises for state workers and teachers.
Stein, while renewing a push for those priorities, is also couching his own request with a warning: that income tax cuts touted by Republicans could lead to a budget shortfall in the coming years.
“The truth is, we are in for some self-inflicted fiscal pain,” he said.
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The budget’s second fiscal year will see more uncertainty, Stein’s budget director said, with less tax revenue expected. As a result, some proposed spending has only been outlined for the first year.
“We’ve not sat down to prepare a two-year budget where there’s less revenue in the second year than the first,” said Kristin Walker, the state budget director.
Year one of the budget outlines a total of $33.6 billion in spending; year two totals $34.3 billion.
Wednesday’s ask will not be the governor’s last request for spending. In the coming weeks, he will outline a need for additional Hurricane Helene aid, with lawmakers set to send their latest relief package to his desk today.
“I have been encouraged by the conversations I’ve been having with leadership,” Stein said of the dynamic between him and Republican leaders. “I think these priorities make all the sense in the world, and I know they want to do right by the people of North Carolina.”
Budget writer Sen. Ralph Hise (R-Mitchell) told NC Newsline his chamber has started working on the budget. Senate Republicans hope to have their proposed budget voted out of the chamber before Easter, he said.
Taxes, costs of living and health care
Stein is asking legislative leaders to freeze a planned series of income tax cuts. He argues the cuts overwhelmingly benefit the wealthy, and will lead to a potential shortfall.
Republicans argue that the cuts drive growth in the long run and attract new business. Hise said he hadn’t seen Stein’s budget proposal, but expressed opposition to a freeze on the cuts.
“To me, that’s a ‘no,'” Hise said.
Instead, Stein wants a trio of tax cuts that he says will benefit working class people: one for families with young children, one for child care costs and one for working families. Other proposed line-items related to taxes and the costs of living include:
- Increasing subsidy rates for child care centers by an average of 13%, allowing them to increase worker salaries.
- Increasing pre-K provider subsidy rates by 20%.
- Loans to build affordable workforce housing, totaling $15 million annually, and using federal and private money ($35 million) for other affordable housing.
- Making renovations to some state government buildings to allow for child care facilities.
- Creating a tax holiday for back-to-school shopping.
In addition, some of Stein’s priorities on health care include:
- Expanding the state’s Healthy Opportunities program.
- An extra annual $20 million for access to OB/GYN care.
- Investing $14.3 million in primary and dental care at rural and community health clinics.
House Speaker Destin Hall (R-Caldwell) didn’t shut down the possibility of revisiting income tax cuts when asked about Stein’s proposal Wednesday.
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“We’re at the point of refining that,” Hall said. “If we need to make adjustments around our tax cuts, I think we can do that, potentially. We’re not going to raise taxes, obviously.”
A “better method” would be to “dial the knobs” on tax rates as needed, he added.
The head of the NC Budget & Tax Center praised Stein’s proposal to pause the cuts.
“Amid the federal funding chaos and the deep cuts being considered by congressional leaders that would shift costs to our state, pausing the scheduled income tax cuts is the only responsible path forward,” executive director Alexandra Sirota said in a statement.
Education
Headlining Stein’s education requests are proposed raises for teachers: increasing the starting salary to $53,000 from its current $42,800, as well as boosting pay for experienced teachers and principals. Also in the governor’s budget request:
- Ending the GOP-led school voucher program for households making over $115,000 annually. For those making under that amount, their children can keep their vouchers for their time in school. No new vouchers would be distributed.
- Making community college free for students pursuing “high demand” sectors of work.
- Free school breakfasts for all students.
- Creating 1,000 new slots in pre-K, and funding summer learning programs.
- New hires for nurses, counselors, social workers and resource officers, as well as grants for school safety.
- A $4 billion bond to repair public school facilities.
- A $300 tax-deductible stipend for teachers to buy school supplies.
“If the General Assembly has any hesitation, it’s easy,” Stein said, as he outlined his request for the bond. “Let the voters decide. Let’s put it on the ballot.”
Hall told reporters he supported efforts to raise teacher pay — and that lawmakers “ought to continue to do all we can to be as highly ranked in the South as we can be.” And he expressed support for hiring more school resource officers.
But Hall called Stein’s proposal to pause the school voucher program “a non-starter” with House Republicans.
The president of the North Carolina Educators’ Association praised the bulk of Stein’s education budget, saying it “prioritizes the needs of working-class families over the state’s wealthiest residents.” But she said more robust pay raises for experienced teachers were needed.
“We’ve seen legislative proposals that include larger salary increases up and down the salary schedule,” president Tamika Walker Kelly said in a statement.
And the director of UNC’s Carolina Hunger Initiative, Lou Anne Crumpler, said the proposed nutrition initiatives would “have significant, positive impacts on the health of North Carolina families.”
State government services
The first year of Stein’s budget would see a 2% pay raise for state employees, as well as a $1,000 bonus. It would also give a cost of living increase for retirees, and improve benefits.
Among Stein’s other proposals to improve state government services:
- Creating an ‘Impact Center’ to better track state spending like contracts.
- Funding new DMV offices, expanding existing ones and hiring new examiners.
- Upgrade state IT, HR and banking systems.
- Funding storm and flood mitigation projects in eastern North Carolina.
Ardis Watkins, executive director of the State Employees Association of North Carolina, was disappointed with the 2% proposed raises for state workers. She predicted it would further the exodus of workers from state jobs.
“The raises in the overall budget are terrible,” she said.
Between the upcoming fiscal cliff Stein says is coming, as well as hikes in workers’ health coverage, this was the last chance to do something for them, Watkins added.
“They end up ultimately going backward,” she said.
Stein said during his news conference Wednesday that “budget constraints” limited the amount he could propose raising state worker pay.
“I wish that were was more money,” Stein said. “I want to pay state employees more. They deserve more.”
Hall said House Republicans’ budget would likely include a pay raise for state workers higher than what Stein proposed Wednesday.
“I don’t know what the final number will be on state employees, but I imagine that the House budget will be higher than 2%,” Hall said.
Public safety and law enforcement
The former attorney general wants to increase wages by 6.5% for correctional officers and youth counselors; other law enforcement workers would be in line for a 3% raise. And new graduates and transfers could receive bonuses.
Here’s what else he’s proposing for law enforcement:
- Creating a “fentanyl control unit,” tapping police and prosecutors to focus on the drug.
- Creating a “cold case” unit for sexual assault cases.
- Buying more body cameras, gun locks and gun safes.