North Carolina lawmakers failed to pass a budget before the July 1 fiscal year deadline, joining Pennsylvania and Oregon as the only states without new spending plans for 2026, according to the Center for State Budget Officers . Michigan also remains without a budget, though its fiscal year begins Oct. 1 .
North Carolina operates on a two-year budget cycle, requiring adoption in odd‑numbered years. Despite legislative delays, state government continues under a stop-gap spending plan enacted in 2016 that maintains previous funding levels. But tensions remain high, as the House and Senate clash over employee pay raises and income tax reductions. The legislature’s proposed $65.9 billion budget falls short of Gov. Josh Stein’s preferred $67.9 billion .
As budget discussions continue, North Carolina faces rising costs in Medicaid, education, healthcare benefits for state employees, affordable housing programs, and disaster recovery efforts . Falling short on these fronts would increase pressure next year. With the state facing sluggish revenue and uncertainty in federal funding, delays could prove damaging .
So far, the lack of a new budget has not disrupted government services in North Carolina. However, consequences have emerged in Oregon, where the budget impasse forced the Department of Transportation to lay off 483 workers. Gov. Tina Kotek described the move as an “emergency in Oregon’s transportation system” .
North Carolina lawmakers adjourned in late June without resolving the deadlock. But with services continuing under the old budget and billions at stake, pressure is growing. Conservatives urge fiscal discipline, cautioning against unnecessary spending hikes, while liberal lawmakers argue that bold investments in education, health, and infrastructure are essential for long-term growth.
North Carolina faces a critical budget deadline in the coming days. Conservatives argue that the stop-gap budget maintains stability, but the final deal must balance responsible spending with key priorities like tax relief and teacher pay.
