Gov. Josh Stein on Tuesday signed the $34 billion budget lawmakers sent him, bringing an end to a more than year-long saga after state House and Senate Republicans resolved their stalemate over several policy issues.
The budget, which passed with the support of about half of Democratic legislators, included a number of top priorities for the governor, including pay raises for teachers and law enforcement personnel, more than $1 billion to help Medicaid keep up with enrollment growth and rising health care costs, and $700 million for Hurricane Helene recovery.
“We did today move the state forward in a meaningful way,” Stein said.
The governor decided to sign off despite several provisions he dislikes. While Stein called for the state personal income tax rate to remain at 3.99%, lawmakers voted to reduce it to 3.49% for 2027, 2028, and 2029. The rates will drop to 3.24% from 2030 to 2032, followed by another cut to 2.99% in 2033 and 2034. Separately, lawmakers are sending a constitutional amendment to voters to ensure the personal income tax rate couldn’t exceed 3.5% in the future.
The governor also wanted to freeze corporate income tax rates, which are set to be phased out by the end of the decade. The legislature left that wind-down in place.
The budget also cuts the equivalent of 755 full-time jobs in state government, largely by terminating unfilled vacancies. Most of the cuts are in the Department of Health and Human Services, Department of Adult Correction, and Department of Public Safety.
Stein also objected to provisions shifting the power to appoint various state officials away from the governor. He told reporters after Tuesday’s signing ceremony that a lawsuit was on the table. “It’s wrong-headed. It’s unconstitutional. But it’s also small.”
An analysis from Chris Cooper, a Western Carolina University political scientist, found that the governor is losing 84 of his 115 appointments across 13 boards and commissions—a 73% reduction. With the changes, Stein will lose control of the State Banking Commission, Historical Commission, Board of Agriculture, Real Estate Commission, Industrial Commission, Arts Council, Lottery Commission, and others.
Appointments to those bodies will instead be made by either the GOP-controlled General Assembly or by four members of the Council of State, all currently Republicans: Auditor Dave Boliek, Labor Commissioner Luke Farley, Treasurer Brad Briner, and Agriculture Commissioner Steve Troxler. Insurance Commissioner Mike Causey, the fifth Republican on the Council of State, isn’t gaining any power to make appointments.
House Speaker Destin Hall and Senate leader Phil Berger defended the appointment changes as the budget worked its way through their chambers last week.
“It’s no secret on policy matters we often disagree with the governor and agree more with the treasurer, labor commissioner, ag commissioner, and the auditor,” Hall said. “I just think, right now, they do a better job of picking appointments.”
Since Republicans took control of the state Supreme Court in 2023, GOP lawmakers have redirected a range of powers away from the governor in favor of other statewide officeholders. This includes state Board of Elections appointments transferring from the governor to the auditor.
“The Supreme Court has basically confirmed the view that a lot of us have held for a very long period of time that North Carolina’s history is replete with concerns about executive power and the need to make sure that executive power is spread amongst executive officers,” Berger said.
