Amid stalled budget negotiations, the General Assembly has passed its first mini budget of the biennium. Initially filed in February as a ceremonial bill designating the Moravian star as the official state star, House Bill 125 served as a placeholder to meet early session filing deadlines.
After sitting dormant for months, the Senate gutted and repurposed it in late June as a vehicle for continuing budget operations. The House initially rejected the proposal, but it was sent to a conference committee, where policymakers ultimately reached an agreement.
The following is a brief overview of key provisions in House Bill 125, and a few provisions notably absent. For clarity, the items below are grouped into two categories: education-related provisions and all other relevant expenditures.
Education-related
- Allocates $1.1 billion from the Education Lottery Fund each fiscal year of the biennium to support pre-K programs, noninstructional personnel, capital improvements, transportation, and scholarship programs.
- Provides $104.2 million in recurring appropriations to account for changes in average salaries, special population headcounts, supplemental funding in low-wealth counties, and other technical adjustments for public schools.
- Authorizes $94.9 million in recurring funding to support increased enrollment at community colleges, including $19.9 million from receipts.
- Directs $10 million in nonrecurring appropriations to Wilson Community College to support the operation of its biologics training center.
- Allots $9.5 million in recurring General Fund appropriations to support increased enrollment of undergraduate resident and nonresident students receiving reduced tuition under the NC Promise Tuition Plan.
- Assigns $9.4 million in recurring appropriations to increase funding for the Uniform Education Reporting System for costs associated with transitioning to a new student information system.
- Allows state and public school employees to receive step increases, merit raises, and bonuses during the period of continuing budget authority, and permits state agencies to implement salary adjustments using existing appropriations if funded through vacancies, savings, or internal reallocations and not based on experience-based salary schedules.
Other relevant expenditures
- $823.6 million in nonrecurring funds appropriated from the State Capital and Infrastructure Fund in fiscal year (FY) 2025–26 to the Office of State Budget and Management for capital improvement and repairs, and renovation project cash flow.
- Allocates $600 million in recurring funds and associated receipts for the Medicaid rebase to account for projected changes in enrollment, service costs, and federal match rates. The funds will also support managed care operations, including the Children and Families Specialty Plan rollout in December 2025.
- Transfers $252 million over the biennium in nonrecurring funds from the Stabilization and Inflation Reserve for site acquisition and improvements in Guilford County to support an airplane manufacturer, presumably JetZero, with an additional $198 million over the following four fiscal years.
- Provides $197.6 million in recurring General Fund appropriations to cover costs associated with state employee benefits.
- Transfers $142 million in nonrecurring funds from the Stabilization and Inflation Reserve to the Department of Agriculture and Consumer Services in FY 2025–26 to support the Agricultural Disaster Crop Loss Program.
- Establishes the Division of Accountability, Value, and Efficiency (DAVE) in the Office of the State Auditor, requiring each state agency to report by October 1, 2025, on how it disburses funding and to identify any positions vacant for six months or more; includes $6 million in recurring General Fund appropriations to support 45 new positions in the Auditor’s office.
- Directs $5.7 million in General Fund appropriations, mostly nonrecurring, to support the opening of the McLeansville National Guard Readiness Center in January 2026, along with $400,000 in nonrecurring funds for equipment and setup at the North Wilkesboro Readiness Center.
- Allots $1.2 million in recurring and $1.5 million in nonrecurring General Fund appropriations to the State Board of Elections to support seven new positions and for litigation needs.
Notably absent
- No mention of NCInnovation’s funds and potential clawback of the $500 million allocated to the controversial nonprofit.
- Includes no across-the-board pay raises for teachers or other state employees.
- No plan for continued tax cuts, as included in the Senate budget proposal, or changes to revenue triggers for already-scheduled tax cuts, as in the House budget.
- No repeal of Certificate of Need (CON) laws, as recommended in the Senate budget.
- No additional funding for the Hurricane Helene recovery.
House Bill 125 now heads to Gov. Josh Stein’s desk for his signature. If signed into law, it will authorize targeted spending to address urgent fiscal needs while broader budget negotiations remain at a standstill.
