North Carolina governor proposes freezing tax cuts, vouchers

North Carolina's Democratic Governor Josh Stein is pushing for significant changes in the state's budget. He is asking the Republican-led legislature to stop upcoming income tax cuts and to reduce private school vouchers available to families. This is part of his first two-year budget proposal since taking office in January. Stein's budget plans to spend $33.65 billion for the year starting July 1. This amount is $2 billion more than this year's budget. He also intends to increase funding by $700 million for the following year. Key priorities in his budget include bigger salaries for public school teachers, more funding for child care and affordable housing, and tax relief for lower and middle-income families. Stein believes that maintaining current tax rates is crucial to avoid a $825 million drop in operating revenues expected in the 2026-27 fiscal year. He warns that unless the cuts are stopped, the state might face significant financial challenges due to population growth and inflation. Stein argues that the proposed tax cuts primarily benefit the wealthy. The Republican lawmakers are likely to resist Stein's proposals. They credit past tax cuts for boosting the state's economy, and GOP leaders have shown no intention of raising taxes. However, with their majority reduced, they might give Stein's suggestions more consideration than in previous years. Stein has also called for average pay raises of 10.7% for teachers, especially for less experienced educators. He wants to improve North Carolina's standing in teacher pay. To finance this, he is suggesting the phase-out of taxpayer-funded scholarships for private school attendance, which have become available to all families. Republicans have opposition to this, arguing it limits educational freedom. Additionally, Stein's budget did not address recovery funding for damages caused by Hurricane Helene six months ago. He plans to issue a separate request in the coming weeks for this funding, as the state has already allocated over $1.1 billion for recovery efforts. Officials have estimated that the storm caused damages and recovery needs of nearly $60 billion.