After years of back-and-forth negotiations, the General Assembly finally unveiled, then voted on, its long-anticipated state budget. The $34 billion budget spans over 1,300 pages and covers a variety of monetary and policy decisions, some newly inserted, some legacies of lengthy debate through the 2026 General Assembly session. The bill emerged as a conference report, negotiated between House and Senate leadership behind closed doors, then presented to the senators and representatives for a simple yes-or-no vote. No amendments were made. While technical changes may be introduced in the future, they will not substantively change the intent of the budget. Review the Legislative Brief below to read NCACC’s preliminary analysis of the budget.
While the budget was the main focal point of legislative action this week, numerous bills impacting county operations also moved forward as the session winds down.
Legislators are expected to adjourn until late July, when they will return to pick up a limited number of bills. It is unclear how long they will remain in session and whether they plan future legislative votes before the November elections.
Legislative Analysis of 2026 State Budget
The complete budget package contains two documents:
- The formal budget bill contains both policy and fiscal provisions.
- The Conference Report contains line-item appropriation details, but no policy.
NCACC has created this analysis to highlight aspects of the budget that may be of interest to county leadership. Due to the varied interests of the counties, this analysis should not be considered exhaustive. Be sure to review both tables below for the budget bill and the conference report.
Positive Developments for Counties
- The budget includes $713 million in new Western North Carolina recovery funding, plus other initiatives supporting communities impacted by Hurricane Helene, including legal immunity for counties that receive land because of hazard mitigation buyouts for landslide condemnation.
- Funding is included to support implementation of opioid abatement technical assistance efforts and county-led remediation activities across the state.
- Several county-specific projects and appropriations were included throughout the budget, reflecting ongoing legislative recognition of local needs and priorities.
- The budget contains various targeted investments intended to support local service delivery, infrastructure, and community development efforts.
- The budget includes increased funding for teacher salaries.
- The budget makes changes to grant prioritization in the Needs-Based Public School Capital Fund:
- Priority to projects for a local school administrative unit that has not received grant funds from a county in the previous three years, rather than counties themselves
- Tier 1 (economically distressed) counties
- Counties with limited revenue capacity
- Counties with high debt burdens
- Projects addressing critical facility needs
- Projects that will merge two or more schools into one
- Priority toward projects for school districts that have not received funding from the program within the previous three years
- The budget provides funding for farmland preservation.
Areas of Concern for Counties
- The most significant concern identified thus far involves provisions related to the Supplemental Nutrition Assistance Program (SNAP). The budget places the vast majority of new SNAP costs resulting from the One Big Beautiful Bill Act (H.R. 1) on counties. Counties will be responsible for paying a cumulative $52 million in increased program administration fees this upcoming fiscal year. The budget also requires all counties to pay the full state match for SNAP benefit costs, should the state not achieve the target determination error rate.
- Several provisions continue broader trends of shifting responsibilities and costs to local governments without corresponding revenue sources.
- Numerous land use provisions reducing local control that had previously been debated in separate regulatory reform legislation were included.
- The budget failed to include provisions from House Bill 1042, a county-led effort to close loopholes created by the Blue Ridge Apartments lawsuit, which deprives counties of tax revenue by allowing property managers to use nonprofits to shield for-profit activities.
2026 Joint Conference Committee Report
The table below highlights sections of the conference report, which only contains line-item budget decisions and no policy.
| Budget Page | Topic | County Budget Impact |
|---|---|---|
| C-118 Item 332 | DSS Administration | Increases federal funding supporting Department of Social Services (DSS) administration, including Adult Protective Services administration by $1.3 million. |
| D-8 Item 20 | Farmland Preservation Budget | Adds an additional $2 million recurring and $46.9 million nonrecurring to the Farmland Preservation Budget Fund. |
| D-8 Item 21 | Tobacco Trust Fund | Allocates an additional $5 million to the Tobacco Trust Fund to assist rural counties. |
| D-47 Item 116 | Landslide Mapping & Infrastructure | Provides $1 million for mapping roads and infrastructure for possible future landslide risk. |
| D-52, D-57, D-58 Misc. items | PFAS Containment | Allocates varying amounts of funds to various programs to combat per- and polyfluoroalkyl substances (PFAS) contamination, establish emergency drinking water supplies, and monitor water quality. |
| F-100 Item 798 | State Match for Federal Disaster Programs | Appropriates $450 million for required non-federal matching funds. |
| F-100 Item 799 | Private Roads & Bridges | Provides $30 million for the Private Roads and Bridges Program. |
| F-101 Item 801 | Local Government Capital Grant Program | Appropriates $65 million to continue the Local Government Capital Grant Program for Hurricane Helene recovery. Up to $30 million may support volunteer fire departments in affected counties. |
| F-101 Item 802 | Local Government Cashflow Loan Program | Provides $20 million to continue the State Treasurer’s cashflow loan program for local governments recovering from Helene. |
| B-17 Item 37 | Teacher Compensation | Creates a new teacher salary schedule raising starting base pay to $48,000 and an average salary increase of 8%. Also provides bonuses between $500 and $1,000. |
| B-5 Item 8 | Community Colleges Enrollment Adjustment | Increases enrollment funding by $73 million due to a 6% student increase since previous state budget. |
| J-14 Item 1 | State Employee Benefits | Increases state employees’ salaries by 3% and provides bonuses ranging from $1,000 to $1,750 based on their salary level. |
Provisions of Interest
The table below highlights provisions of the budget bill, which combines budget and policy decisions.
| Budget Page | Topic | County Budget Impact |
|---|---|---|
| Page 33 Section 5.9(a) | DEI – Local Government Effective Dates | Delays implementation dates for certain provisions of diversity, equity, and inclusion (DEI) legislation affecting units of local government. |
| Page 65-72 Section 5A.6(a) | Hurricane Helene Recovery | Creates and modifies disaster recovery funding, including Local Government Capital Grants, Cashflow Loan Program, housing repair and reconstruction, dam safety, tourism, and infrastructure funding targeted to affected counties. |
| Page 18 Section 4.3(a) | Low-Wealth County School Funding | Limits annual gains and losses in the low-wealth county school funding formula, creating greater predictability for county education budgets. |
| Page 18-19 Section 4.2(b) | Various Education Funding Formulas | Multiple provisions allocate education funding using county wealth, county property values, or county location. These indirectly affect county appropriations and local school finance. |
| Page 251- 252 Section 9B.7(a) | SNAP Benefit Cost-Sharing | Establishes a county assessment methodology that withholds county sales tax distributions to satisfy the state’s new federal SNAP cost-share obligation, using a combination of flat and performance-based assessments (goes into effect October 1, 2027). |
| Page 305-307 Section 9J.15(a) | Child Welfare Case Escalation Team | Creates new mandatory county DSS notification, record-sharing, response timelines, collaboration with state specialists, and same-day response requirements for identified safety concerns. This language closely follows the Dominique Moody Safety Act. |
| Page 309-310 Section 9L.2(a) | LME/MCO Study | Requires a study of eliminating LME/MCOs, including fiscal and operational impacts on counties. |
| Page 310-314 Section 9M.1(a) | NCDHHS Block Grants | Continues major county-administered funding streams including Work First County Block Grants, Child Protective Services workers, and other local DSS programs. |
| Page 327-330 Section 11.1.(a) | Community Development Block Grants | Continues Community Development Block Grant (CDBG) allocations that counties frequently administer for infrastructure and economic development. |
| Page 347 Section 12.3.(a) | Water & Wastewater Funding | Expands grant limits and modifies eligibility for local government water and wastewater projects. |
| Pages 351-354 Sections 12.5 and 12.6 | Interbasin Transfer (IBT) Moratorium Extension and Study | Extends the moratorium on the Environmental Management Commission’s ability to grant interbasin transfer permits until Aug 1, 2028. Further, it specifically places a new moratorium on new or increased IBTs from the Cape Fear River Basin, with limited emergency exceptions. |
| Page 511 Section 35.4 | County Veterans Offices | Requires additional reporting on grants provided to county veterans service offices. |
| Page 526-527 Section 39.59(a) | Third-Party Standing | Allows member associations and organizations to sue on behalf of membership in local land development regulations. |
| Page 529-530 Section 39.5(f) | Permit Choice / Vested Rights Expansion | Major statewide change to county development review. Allows applicants to choose which version of a land development regulation applies if the regulation changes after a permit or rezoning application is submitted. Expands applicant protections and increases litigation exposure for counties. |
| Page 530 Section 39.5(g) | Rezoning Applications | If a county amends its Unified Development Ordinance (UDO) while a rezoning application is pending, the applicant may elect to have the application reviewed under the regulations that existed when the application was filed. Counties cannot require the applicant to wait until ordinance amendments are complete before acting on the rezoning. |
| Page 530 Section 39.5(g) | Expanded Definition of Development Permit | Expands the statutory definition of “development permit” to expressly include legislative approvals such as rezonings, conditional zoning, subdivision approvals, development agreements, plats, stormwater permits, erosion control permits, driveway permits, certificates of appropriateness, and site plans. This broadens the scope of projects protected by the permit-choice statute. |
| Page 530 Section 39.5(g) | Expanded Definition of Land Development Regulations | Defines virtually every county land use ordinance as a protected land development regulation, including UDOs, zoning ordinances, subdivision regulations, floodplain regulations, stormwater ordinances, historic preservation ordinances, erosion control ordinances, wireless ordinances, and housing codes. |
| Page 531 Section 39.5(h) | Mandatory Attorney Fee Awards | Requires courts to award attorney’s fees when a county violates the permit-choice provisions or acts inconsistently with vested-rights statutes. This substantially increases litigation risk for counties. |
| Page 537 Section 41.3(a) | Local Law Enforcement Bonuses | Provides a $1,750 bonus for all local law enforcement officers employed by June 30, 2026. |
Other Bills on the Move
House Joint Resolution 1244 – Adjournment Resolution
Bill Summary: The bill adjourns the General Assembly on July 2 to reconvene on July 27 to review a limited selection of bills that must meet certain criteria to be considered.
Changes of Note: None this week.
Bill Next Steps: As of this writing, the House and Senate are expected to pass the resolution.
House Bill 56 – 2026 Budget Technical Corrections
Bill Summary: The bill makes varying technical corrections to the 2026 state budget, including clarifying funding levels for various, specific municipal and county projects. NCACC recommends that counties review the full bill for additional details.
Changes of Note: The bill is a proposed committee substitute that bears no relation to the original bill. See the Bill Summary for all relevant language.
Bill Next Steps: As of this writing, it is anticipated that both the House and Senate will pass this legislation to modify the 2026 state budget.
House Bill 162 – Parking Lot Reform / Stormwater Control
Bill Summary: The bill prohibits local governments, except for those in the 20 coastal counties, from requiring a minimum number of off-street parking spaces and amends the current restriction on regulating parking space dimensions to apply only to off-street parking spaces. It also stipulates that private property owners cannot be required to install new or increased stormwater controls for existing built-upon areas or redevelopment. It also stipulates that there can be no retroactive application of stormwater control requirements unless allowed by federal law. Additionally, the bill would hold stormwater rules only to new development. Existing developments would be grandfathered into prior rules and requirements and would not be subject to new rules. Local governments would be required to update their regulations and would be permitted to provide incentives if they deem them necessary.
Changes of Note: None this week.
Bill Next Steps: The House concurred with Senate committee substitute and provided final passage. The bill has been ratified and presented to the governor.
House Bill 437 – Drug-Free Zones/Unauthorized Public Camping
Bill Summary: The bill has two primary sections:
- Section 1 establishes increased penalties for anyone possessing or distributing banned substances in a drug-free homeless service zone and creates penalties for operators of homeless service zones who knowingly permit such activity. It additionally defines drug-free homeless service zones. This section becomes effective December 1, 2026.
- Section 2 bans local governments from authorizing or permitting public camping or sleeping on public property. Local governments would be permitted to establish locations for persons to publicly camp, but those locations would be subject to a list of requirements, including security, restroom facilities with running water, coordination with health departments for behavioral health services, and a prohibition on illegal substances and alcohol. The bill also includes a provision allowing residents, business owners, or the attorney general to file a civil action against a local government found to be in violation of this law. The bill gives local governments 15 days to respond to citizen complaints and defines exactly where those complaints need to be routed. This section becomes effective June 30, 2027.
Changes of Note: None this week.
Bill Next Steps: The bill passed the House Tuesday, June 30 and will now head to the governor’s desk for consideration.
House Bill 1213 – Protect Taxpayers and Local Governments
Bill Summary: The bill removes the property tax exemption for solar energy systems that begin generating electricity after July 1, 2027. All systems brought online prior to that date will still receive the 80% property tax exemption. This bill is a modified version of House Bill 729 – Farmland Protection Act, a bill that addresses one of the top NCACC legislative goals.
Changes of Note: The bill is a proposed committee substitute that completely replaces the original bill language with new language described in the Bill Summary.
Bill Next Steps: The bill passed the House Finance Committee, and its next stop will be the House Energy and Public Utilities Committee.
Senate Bill 474 – Adjust Counties/Reappraisal Moratorium
Bill Summary: Senate Bill 474 revises the property tax reappraisal moratorium established in Senate Bill 889 by narrowing its application to counties with January 1, 2026, reappraisals that do not meet specified exclusion criteria, including certain population thresholds, high property tax rates, or designation as Hurricane Helene-affected areas. As amended, the moratorium would apply to Anson, Bladen, Chowan, Davidson, Guilford, Onslow, Pamlico, and Pender counties. Buncombe, Clay, Harnett, and Scotland counties would be excluded from the freeze due to the bill’s revised eligibility criteria. Finally, the bill preserves taxpayers’ ability to appeal 2026 reappraisals during 2027.
Changes of Note: A conference report was adopted this week that offered the following changes:
- The hold harmless for public utility equalization was removed.
- Buncombe County was given a conditional requirement for exclusion, requiring the county to adopt a revenue-neutral tax rate.
Bill Next Steps: The conference report was adopted by both chambers, and the bill has been sent to the governor.
Senate Bill 992 – Truth in Taxation
Bill Summary: The bill contains numerous provisions for how local governments handle the tax process in reappraisal years if the governing board chooses to adopt a property tax rate higher than the revenue-neutral rate:
- Prohibits adoption of a tax rate above the revenue-neutral rate unless a resolution or ordinance is approved by the governing body after specific notice and hearing requirements.
- Mandates publication of the local government’s interest in exceeding the revenue-neutral rate in both the local newspaper and website prior to holding a public hearing.
- Mandates each local governing board to send notice of intent to exceed the revenue-neutral rate to each taxpayer via first-class mail. The notice must include detailed information on the revenue needed, tax rate, estimated amount of tax, and information on the public hearing.
- Requires a public hearing dedicated to the issue of exceeding the revenue-neutral rate, with a majority vote of the governing body needed to approve the higher rate before adopting the budget ordinance.
Changes of Note: None this week.
Bill Next Steps: NCACC worked with members on an amendment to remove fiscal concerns, and as a result, the bill was removed from the House calendar and referred to the Rules Committee for further review.
State & Federal Updates
OMB Releases Proposed Rewrite of Federal Rules Under 2 CFR Part 200
Deadline: July 13
The Office of Management and Budget (OMB) has published a proposed rule rewriting 2 CFR Part 200 — the Uniform Guidance — the largest overhaul of federal grant rules since 2013. This rule governs every federal grant your county receives, covering public safety, transportation, housing, public health, emergency management, and more. The public comment period closes July 13, 2026. To assist counties, the National Association of Counties (NACo) has developed an online resource hub and comprehensive analysis.
What Your County Should Do Now
- County attorneys: Review the proposed rule, particularly the new discretionary grant termination authority, expanded pass-through entity obligations, new event services requirements, and the reclassification of 2 CFR Subtitle A from policy guidance to binding federal regulation.
- County officials: Use NACo’s template comment letter to submit formal comments, personalized with your county’s specific grant programs and local examples of how the proposed changes could affect service delivery and budgets.
- Submit comments by July 13. Every county comment on the record strengthens NACo’s advocacy and ensures local government realities shape the final rule.
NACo Wants to Hear From You: OMB Uniform Grants Guidance Office Hours
NACO wants to hear from counties about what is at stake. Join NACo for a live office hours session where NACo staff will listen to how the proposed rule could affect your county’s federal grant programs, operations, and capacity. Your input will directly shape NACo’s formal comment letter ahead of the July 13 deadline. Click here or the button below to join the next session, which runs from 4:00-5:00 p.m. on Tuesday, July 7.