North Carolina teachers could receive the highest starting salaries in the Southeast if the legislature follows Gov. Josh Stein’s recommended budget, which he revealed on Tuesday.
Lawmakers returned to Raleigh for their 2026 legislative session after failing to pass a comprehensive budget in 2025. It’s the only state to end the year without one.
Although Stein highlighted North Carolina’s top ranking in several categories — like business, economic and workforce development and job growth — he said there’s still work to be done.
“We’re experiencing this success because of our people and because as a state, we have invested in them over decades, but we’re putting that winning formula at risk,” Stein told reporters at a press conference Tuesday morning. “Our state has fallen behind in key metrics for public education, public safety and healthcare.”
State lawmakers rarely follow the governor’s budget recommendations, especially when legislative leaders and the governor are from different parties, as is the case this year. However, the governor can sometimes bargain for a few key priorities during final negotiations.
Salary increases for state workers
Stein wants to raise pay for teachers, state employees and public safety workers.
He’s asking to provide an 11% average raise for all educators, restore additional pay for teachers with master’s degrees, and eliminate the 10-year salary plateau for teachers. He also wants to increase pay for school-based administrators and give a $1,000 bonus to teachers and local education employees, with an additional $500 bonus for those making less than $75,000.
“If we’re going to continue to build on our long term economic success, we must start by investing in our public schools,” Stein said. “Our children are our future. Investing in them must be our greatest priority.”
For state employees, Stein requests a 5% pay increase across the board — 2.5% each for fiscal year 2025-26 and fiscal year 2026-27. He’s also asking for a $1,000 bonus for all state employees, plus $500 more for those making less than $75,000, and a 2.5% supplement for retirees each year.
The governor is pitching his highest pay increase – 15% – for law enforcement, correctional officers, nurses and healthcare technicians.
“Several recent high-profile incidents have ended in tragedy, and as we mourn the loss of all of those lives taken by violence, many people feel unsafe in their homes or in their communities,” Stein said. “To remedy this, it starts with law enforcement, the people who protect us and we must recruit and retain the best.”
Tax cuts for families
While Gov. Stein is once again asking lawmakers to pause scheduled tax cuts that are projected to reduce recurring revenue by billions, his budget would offer four more modest tax cuts.
Stein is proposing lawmakers increase the state’s standard deduction, adopt a working families tax credit as well as a refundable child and dependent care tax credit.
“It helps families deal with the high cost of childcare, but it also puts more money in the child care system so that it makes it a better business proposition for childcare operators,” said Stein.
North Carolina has lost 262 childcare operators in the last two and a half years, according to the governor.
The governor’s budget proposal would also restore the back-to-school sales tax holiday. North Carolina eliminated that popular holiday in 2013 as part of a tax overhaul signed by then-Gov. Pat McCrory.
“Every August, [parents] have to go buy all their kids school supplies, and that’s a real crunch,” said Stein. “We recognize that and we want to make that experience a little less painful.”
Fully funding Medicaid
The governor’s proposed budget would fully fund the Medicaid rebase for FY 2026-27. Medicaid’s $319 million shortfall has become a political football between the Republican-led General Assembly and the Stein administration.
Tuesday morning, Stein voiced optimism that progress was being made with key budget writers. Hours later, Republican legislative leaders announced that they have reached a deal to cover the shortfall. They’re expected to vote on the proposal Wednesday.
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More than three million North Carolinians, about a quarter of the entire state, rely on Medicaid. N.C. Health and Human Services Secretary Dev Sangvai has repeatedly warned that without a fix, the program will run out of money by the end of May.
Stein said more must also be done to control health care inflation.
“We’re a high-cost health care state separate from Medicaid, just in terms of what each of us pay,” said Stein. “We’ve got a lot of work to do on health care, and I’m eager to partner with the General Assembly to tackle that issue.”
Modernizing government
Stein proposed lengthening services and hours for the Division of Motor Vehicles, bolstering cybersecurity and assisting veterans in transitioning to civilian life.
In some cases, boosting efficiency would mean incorporating artificial intelligence. Stein said his AI Leadership Council engages with each state agency to identify how AI could streamline their processes.
“We want to use technology to help us increase our efficiency and lower costs for taxpayers,” he said.
Notably, the governor is also seeking a recurring $110 million to enhance unemployment insurance benefits.
More than half of North Carolina workers laid off through no fault of their own exhaust their UI benefits before finding a new job, according to Stein.
North Carolina offers 12 weeks of unemployment benefits, among the shortest duration in the country.
Student food aid, SNAP help for counties
The governor’s budget recommends free school breakfast for all public K-12 students, an idea that’s enjoyed bipartisan support among state lawmakers in recent years.
State Superintendent of Public Instruction Mo Green has also advocated for a universal breakfast program.
Stein’s budget would also commit $5 million in state funding to help unlock federal funds for the U.S. Dept. of Agriculture’s SUN Bucks program. SUN Bucks provides grocery-buying benefits on a debit card that can be used to buy food during the summer months when schools are not in session.
“It’s a 25-to-1 federal to state match. That is an incredible return on state investment,” said Stein, noting that one in five children go hungry every day in North Carolina.
The governor is also proposing the state help counties with the Supplemental Nutrition Access Program (SNAP). Under the federal One Big Beautiful Bill Act, SNAP benefits are set to be reduced, with expanded work requirements that counties will need to monitor for compliance, requiring more work hours for county staff.
Stein’s budget recommends $15 million, in addition to federal funding, to strengthen SNAP and align the program with new federal requirements.
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