NC Republicans have a deal on the long-delayed state budget
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- North Carolina will soon have a new state budget almost a year late.
- House and Senate Republican leaders will reveal budget details at 3:45 p.m.
- They had been at a stalemate since the summer of 2025.
Almost a year late, North Carolina will soon have a new state budget.
House Speaker Destin Hall and Senate leader Phil Berger, both Republicans, had been at a stalemate since the summer of 2025, when they failed to reach an agreement on the amounts of tax cuts or raises for teachers and state employees. Hall and Berger are the top lawmakers in each chamber, which are controlled by Republicans.
The deal, on a framework lawmakers will use as a starting point to write a final budget bill, includes dropping the individual income tax rate to 3.49% in 2027, which is also what it would have been under the Senate’s prior plan for tax cuts.
However, the corporate income tax rate will not be reduced next year as part of the deal, Berger told reporters.
Much more work on the budget to come
Republican leaders of the House and Senate outlined the deal to reporters late afternoon on Tuesday — after the House Republicans shared the news on social media with “Habemus budget deal,” which means “we have a budget deal.” It’s a play on the Latin phrase used to announce a new pope, “Habemus papem.”
They still have a lot of work to do working out the details, and top budget committee chairs are meeting this week to iron that out. A budget document is expected in the coming weeks.
Berger and Hall announced an agreement on average teacher raises of 8%. Starting teacher pay would be set at $48,000 without supplements.
An average raise of 3% for state employees is also part of the deal, with some receiving higher raises, along with bonuses. Bonuses would be given out this current fiscal year, which is nearly over.
Some in law enforcement would receive much higher raises than other state employees, with an average 23% raise for State Bureau of Investigation and Alcohol Law Enforcement officers, and 17% for State Highway Patrol officers.
“We have an understanding on a number of things,” Berger said, saying that “this is a starting point,” and calling the agreement a “good framework for moving forward.”
Both leaders had been dug in, with Hall pushing for higher raises than Berger wanted, and Berger wanting faster tax cuts than Hall. Those two major costs have been at the core of the stalemate, which slowly started to break as the legislative short session began three weeks ago.
A majority of House Democrats voted with House Republicans on their 2025 budget proposal.
Aside from three very small spending bills passed in the fall, negotiations stalled out until last month. At that point, lawmakers passed a bill, which Democratic Gov. Josh Stein signed into law, to fund Medicaid needs for the current fiscal year, which ends in June.
But raises have been on hold, and state agencies have been operating at the same levels as the last new budget. North Carolina’s state government does not shut down without a budget like the federal government does — instead, spending levels remain the same until new money is appropriated.
This story was originally published May 12, 2026 at 3:17 PM.
