North Carolina Nears Second Fiscal Year of 2025-27 Biennium Without an Enacted Two-Year Budget
Days before the July 1 start of a new fiscal year, House and Senate Republicans have a framework but not a final budget, leaving raises and tax changes unresolved while the state runs on 2023 spending levels.
Summary
North Carolina is the only U.S. state that has gone through the first year of its 2025-27 two-year budget cycle without enacting a new spending plan, and as of late June 2026 it is heading into the second fiscal year (which begins July 1) still without one[2][3][9]. The deadlock is not between the parties in the usual way: Republicans control both legislative chambers, and the core fight has been between House and Senate Republicans over how fast and how deeply to cut the state income tax[1][3]. The state government has not shut down — under North Carolina law it keeps operating at the most recently enacted spending levels, set in the 2023 budget — but teachers, law-enforcement officers and other state employees have gone without the pay raises a new budget would authorize[9][11].
The Event
As of late June 2026, North Carolina had not enacted a budget for its 2025-27 biennium, leaving it the only state without one as the July 1 start of the second fiscal year approached[2][9]. House Speaker Destin Hall and Senate Leader Phil Berger, both Republicans, continued negotiating after announcing a framework agreement in May and missing a self-imposed mid-June deadline to produce a bill[1][3][13]. State government continued operating at spending levels set in the 2023 budget, and pay raises tied to a new budget remained unauthorized[9].
Undisputed Facts
- North Carolina operates on a two-year (biennial) budget; the 2025-27 budget was due by July 1, 2025, and had not been enacted as of late June 2026, making NC the only state without a budget for the biennium[2][9].
- Republicans hold a majority in the House and a supermajority in the Senate, and the principal deadlock has been between the two Republican-led chambers, primarily over income-tax policy[1][3].
- Unlike the federal government, North Carolina does not shut down without a budget; agencies continue operating at the most recently enacted spending levels, set in the fall 2023 budget[9].
- In May 2026, Berger and Hall announced a framework that includes average teacher raises of about 8% and base starting teacher pay of $48,000 before local supplements[1][5].
- The framework provides most state employees raises of about 3% plus one-time bonuses, and minimum raises of roughly 13% for law-enforcement and correctional officers; the raises would not be retroactive and would begin with the year starting July 1[5][9].
- North Carolina's current personal income-tax rate is 3.99%; the framework schedules further reductions over multiple years, potentially toward 2.49%, and Republicans advanced a constitutional amendment to cap the income-tax rate[5][16].
- Gov. Josh Stein, a Democrat, proposed halting further tax cuts and increasing spending on raises and Medicaid, and has the power to sign, veto, or allow a budget to become law without signature[8][12].
- Leaders missed a self-imposed mid-June 2026 target to release a budget bill, citing unresolved items including tax details and capital projects such as a children's hospital and other local projects[13].
The Pressure
Strip away the moralizing and blame. What structural realities persist regardless of which narrative wins?
- Lock-in vs. flexibility
- Senate Republicans want tax cuts made durable and hard to reverse (including a constitutional cap) before any governorship or majority changes; House Republicans want to preserve the ability to slow cuts if federal funding falls, so the fight is structurally about constraining future budgets, not this year's spending alone[3][16].
- No-shutdown leverage
- Because NC keeps operating on prior spending levels with no shutdown, neither side faces a hard cliff forcing a deal, which removes the deadline pressure that ends most budget fights and lets the standoff persist for a year[9].
- Blame allocation
- With one party controlling the legislature, the 'only state without a budget' label is a pure political liability for Republicans and an asset for Stein, shaping how each side times concessions and public statements[8][9].
Material realityRegardless of messaging, North Carolina's government has continued to function at 2023 spending levels; public employees' pay scales have been frozen and any raises will start July 1 without back pay, so delay imposes real, non-recoverable lost wages on teachers, troopers and state workers while the income-tax rate (3.99%) and contested out-year cuts toward 2.49% remain the central lever determining how much money is available to spend[5][9][14].
Narrative as a weaponTwo narratives compete. Republican-aligned voices (Carolina Journal, ATR, Senate leadership) want you to see a principled, growth-oriented tax debate where rising revenue justifies cuts and the delay is the price of getting reform right. Democratic-aligned voices (Stein, NC Newsline, student press) want you to see a governing party that cannot govern, leaving public servants unpaid to chase tax cuts that favor higher earners. Both rest on real facts; the dispute is over which fact set should headline the story.
How Each Side Sees It
Each major actor’s view — how it frames things, its underlying incentive, and how it’s materially affected. Tap a side to read it.
Frames it asTax relief is the whole point of governing responsibly: with revenue collections running ahead of forecasts, North Carolina can afford to keep cutting and should lock in a predictable path so the rate cannot 'bounce back up,' which is why they backed a constitutional cap[3][6][16]. Faster, durable cuts keep the state competitive with neighbors like South Carolina moving toward low flat taxes[14].
WhyCement a low-tax legacy and constrain future legislatures and a Democratic governor from reversing cuts; satisfy a fiscally conservative base[6][16].
Impact on themOwns the chamber most associated with the delay; benefits politically if the economy holds and cuts are credited, but exposed if delayed raises become the dominant story[3][13].
Frames it asTax cuts must be sustainable, not automatic: with federal Medicaid and other funding uncertain, locking in deep out-year cuts risks forcing future spending reductions, so the responsible course is to pace cuts against actual revenue and protect raises and core services[1][3]. The House also pushed higher starting teacher pay than the final framework set[5].
WhyProtect the House's flexibility and its members' priorities (raises, local capital projects) while still delivering tax relief, avoiding blame for either fiscal recklessness or stalled paychecks[3][13].
Impact on themShares responsibility for the impasse; controls whether and when a bill reaches the floor, and negotiates capital projects valued by individual members[13].
Frames it asThe delay is a failure of Republican governance that punishes teachers, troopers and patients: the state can fund bigger raises and Medicaid instead of further tax cuts that the governor's budget office says mostly benefit high-income households[7][8][12]. Stein also argues voucher expansion diverts billions from public schools[12].
WhyPin the lone-state-without-a-budget label on the GOP, win larger public-sector raises and Medicaid funding, and preserve veto leverage if Republican unity cracks[8][9].
Impact on themHolds the veto pen and the bully pulpit but no budget-writing power given GOP majorities; politically advantaged the longer raises are delayed under Republican control[8][9].
Frames it asPublic servants have worked for nearly a year without the cost-of-living and step raises a new budget would authorize, and the framework's increases would not be retroactive, so every month of delay is permanently lost pay[9][11]. Educators rallied to press for action[1].
WhySecure the largest possible raises as soon as possible and an end to budget-by-stalemate that leaves compensation frozen at 2023 levels[9][11].
Impact on themBears the most direct material cost: frozen pay scales, no retroactive make-up, and recruitment and retention strain in schools, prisons and agencies[9][11].
The Bias Ledger average rating 5
The same story, as framed by outlets across the spectrum, ordered least to most biased. The bias score (1 = straight, 10 = heavily spun) is an AI assessment of that framing — click an outlet to see its track record. The tell is the word choice or omission that reveals the angle.
| Outlet | Vantage | Bias | How they frame it | The tell |
|---|---|---|---|---|
| WRAL (Capitol Bureau) | U.S. center / NC local | 2 | 'NC still doesn't have a budget. Why a top GOP leader says we're on track' | Process-focused and even-handed, but leads with the GOP leader's optimistic 'on track' quote, mildly privileging the in-power narrative of progress over the delay's costs. |
| WUNC (NPR member station) | U.S. center-left / public radio | 3 | 'NC House, Senate announce budget deal that's 10 months overdue' | Neutral, detail-rich reporting, but the 'overdue' framing and emphasis on Stein's call for bigger raises and a voucher freeze tilt the spotlight toward delay and public spending. |
| NC Newsline | U.S. left / progressive (States Newsroom) | 5 | 'NC Republican leaders announce end to state budget impasse' | Foregrounds Republican 'impasse' and infighting, emphasizes harm to public workers and vouchers/veto fights; word choice frames the GOP as the obstacle. |
| Carolina Journal | U.S. right (John Locke Foundation) | 6 | 'NC revenue boost strengthens GOP tax-cut case' | Frames surplus revenue as vindication for accelerating tax cuts and elsewhere casts Stein's plan as kicking '60,000 students off' vouchers; centers taxpayers and school choice, not delayed raises. |
| Technician (NC State student paper) | U.S. left-leaning / student press | 6 | '"An abdication": North Carolina is the only state without a budget amid Republican stalemate' | Leads with a charged quote ('abdication') and 'Republican stalemate,' framing the story as a moral failure by the majority party. |
| Americans for Tax Reform | U.S. right (anti-tax advocacy) | 8 | 'After SC Enacts Path to 1.99% Flat Tax, NC Lawmakers Deliberate Over Income Tax Phase Down to 2.49%' | Advocacy framing that treats deeper cuts as the obvious goal and uses interstate competition as pressure; ignores delayed raises and revenue-loss concerns entirely. |
References
- NC House, Senate announce budget deal that's 10 months overdue — WUNC · Public radio (NPR member), center-left
- NC Republican leaders announce end to state budget impasse — NC Newsline · Progressive nonprofit (States Newsroom-affiliated)
- NC still doesn't have a budget. Why a top GOP leader says 'we're on track' — WRAL · Local TV news, center
- As end of session looms, NC Republican leaders push back expected budget date — NC Newsline · Progressive nonprofit
- North Carolina budget framework reshapes future income tax cuts — CBS17 · Local TV news, center
- NC revenue boost strengthens GOP tax-cut case — Carolina Journal · Right-leaning (John Locke Foundation)
- Scheduled Income Tax Cuts to Mostly Benefit High-Income Households — NC Office of State Budget and Management · Executive-branch budget office under Democratic Gov. Stein
- Governor Stein's Statement on Latest Budget Negotiations — Office of the Governor of North Carolina · Official Democratic governor's office
- Despite ongoing talks, NC budget might not be ready until after start of new fiscal year — WRAL · Local TV news, center
- Stein's budget would kick roughly 60,000 students off Opportunity Scholarships — Carolina Journal · Right-leaning (John Locke Foundation)
- 'An abdication': North Carolina is the only state without a budget amid Republican stalemate — Technician (NC State University) · Student newspaper, left-leaning
- NC Gov. Stein calls for halt to tax reductions, phase out of school vouchers in $35B budget proposal — WUNC · Public radio, center-left
- Budget negotiations stall as North Carolina nears 1,000 days without a spending plan — Daily Tar Heel (UNC-Chapel Hill) · Student newspaper, left-leaning
- After SC Enacts Path to 1.99% Flat Tax, NC Lawmakers Deliberate Over Income Tax Phase Down to 2.49% — Americans for Tax Reform · Conservative anti-tax advocacy group
- What we know about proposed NC teacher raises — WUNC · Public radio, center-left
- NC Senate approves constitutional amendment capping income tax — NC Newsline · Progressive nonprofit