NOTE: With Friday the designated Independence Day Holiday, we’re bringing you the Raleigh Report on Thursday this week. Have a safe and fun-filled July 4^th weekend!

Whelp, as sure as legislative leaders said last week that a state budget was not likely to emerge this week, negotiations over the weekend between House Speaker Destin Hall and Senate President Pro Tem Phil Berger resolved all the remaining disagreements and this final budget proposal appeared on Tuesday as SB 257, passed overwhelmingly in the initial vote on Wednesday, and received final approval in the House and Senate today and then sent today to Governor Josh Stein desk for his signature.

The governor has 10 days to either sign or veto the bill – if he takes no action the budget legislation becomes law.

A veto seems unlikely given the bipartisan support the budget received, with 9 Democrats joining Republicans (two coastal area GOP Senators, Bobby Hanig and Norm Sanderson, voted NO in protest of language in the bill to implement tolls for use of the state’s ferry system) to pass the budget 39-13 in the Senate, with 23 Democrats – and the two now Unaffiliated former Democrats – joining Republicans to pass the budget 92-23 in the House.

Here are some state budget highlights (we’ll provide an overview of the provision of interest to IIANC members in next week’s Raleigh Report):

• Appropriated $209M in funding for the Children’s Hospital, but not for a stadium should North Carolina get a professional baseball team.
• The personal income tax rate remains 3.99% for 2026, dropping to 3.49% starting in 2027 (there is a proposed state constitutional amendment on the November 3 ballot to cap the state personal income rate at 3.5%); the corporate income tax rate remains 2.0%, to be phased out entirely by 2030.
• The tax rate on sporting betting operators is raised from 18% to 23%, with a new 6% tax on net trading fee revenue for prediction market operators.
• Public school teachers get an 8% average raise, and state employees get a 3% raise; state retirees get a one-time 2.5% bump.
• A net reduction of 755 long-vacant positions in state agencies, for a savings of over $40M.
• $1B allocated for Medicaid for the state portion for expenses anticipated in the coming year for healthcare provided to eligible beneficiaries, and $333M set aside for the Medicaid Contingency Reserve.
• An additional $700M appropriated for ongoing Hurricane Helene recovery efforts, including spending that triggers matching support from the federal government.
• $450M was set aside for the state's Rainy Day Fund, bringing the total being held in reserves to $4.2B.
  
•  Other items: proposed elimination of paper DMV-issued vehicle registration cards over time, moving to a digital format; eliminating the certificate of need (CON) requirement for inpatient rehabilitation facilities and several other health care related items; request that the NC Department of Insurance study the issue of affordability and availability of coverage needed by private childcare facilities, to determine if a state-run program to provide insurance for these businesses is needed.

The adjournment resolution taken up after the final budget vote today indicated the General Assembly will shut down for now, looking to re-convene on July 27 to take up the remaining legislative items needing attention this year.

Also of Interest this Week

• HB 1083 would authorize an individual or business hiring an independent contractor to create and voluntarily contribute funds into a portable benefit account the contractor could use to secure on their own benefits such as health insurance and retirement benefits; the bill passed the House is awaiting action in the Senate.
• The House has appointed conferees to work out the difference with the Senate on HB 356 that includes items IIANC is pursing for our members in the 2026 Legislative Session, and we’re working with IIANC members Sen. Todd Johnson and Rep. Chris Humphrey (both are conferees) to get the final version worked out and passed as soon as possible once the legislature returns later this month.
• Governor Stein announced on Jule 30^th the formation of a Health Care Affordability Commission to look at finding ‘solutions to rein in surging health care costs’ in our state. IIANC Chief Advocacy Officer Joe Stewart immediately sent a letter to Governor Stein encouraging him to add a health insurance agent representative to the Commissioner’s membership, saying agents represent the consumer-facing side of the insurance marketplace and would bring valuable insights that would benefit the groups works.
• The governor’s AI Leadership Council released this week a strategic roadmap for North Carolina that calls for a ‘bold strategy that protects residents and empowers them to benefit and thrive from this fundamental technology.’ AI Leadership Council member Rep. Zack Hawkins (D – Durham) will participate on a July 9^th webinar with IIANC Chief Advocacy Officer Joe Stewart to discuss issues of AI regulation and governance important to independent insurance agents looking to use this emerging technology tool.