NC governor warns of ‘exceedingly painful cuts’ as legislative tax cuts reduce future revenue

Official photo

By Clayton Henkel, NC Newsline
April 8, 2026

Two weeks before the 2026 North Carolina General Assembly’s short session convenes, Gov. Josh Stein issued a dire warning.

Stein told members of the N.C. Council of State Tuesday that the nonpartisan consensus revenue forecast for the biennium reflects a $370 million increase in expected revenue for the current fiscal year. While that’s good news for the current fiscal year, it’s more problematic for the future — it means state revenue will be high enough to trigger a previously enacted cut to the personal income tax rate in 2028.

“In two years, we will have $2.8 billion less to meet our budget needs. And in three years, it balloons to $5 billion less,” projected Stein. “If we don’t have a fiscally responsible budget, we’re all going to have to make exceedingly painful cuts to the work that we do at the state.”

The notion of having fewer resources to work with in the future was not what Secretary of State Elaine Marshall wanted to hear. She said her agency has seen its workload double in the last five years.

Her office has processed more than 47,000 new business registration documents in the first quarter of 2026 alone.

“Our ability to help businesses start quickly has been a competitive advantage for North Carolina, but that advantage is being strained as turnaround times begin to slip,” warned Marshall. “Why? Because we’ve seen little to no additional resources during this period of record growth.”

Stein said the legislature’s automatic tax cuts make it much harder to fund the additional needs that come with growth and inflation. He noted that Marshall was not alone in feeling the pressures to do more with less.

The state has 280 vacancies in the state highway patrol, where starting pay is 49th in the country. Pay for correctional officers is also 49th in the country, according to the governor, leading to thousands of vacancies in that department.

“Teachers, as the state superintendent knows very well, we’re 43rd in the country,” said Stein. “We’re 49th in the country in per-pupil investment in K-12 education.”

Stein reflected on his first year in the NC Senate in 2009, when the Great Recession caused plunging tax revenue and lawmakers faced a $4.6 billion state budget shortfall.

“It was awful. We had to cut $5 billion — 23% of the entire state budget,” said the governor. “We either had to cut it or raise taxes.”

Stein says he’s not suggesting the state raise new taxes. But he wants legislators to understand the urgency to pause the next round of tax cuts and pass a comprehensive budget, especially  as the federal government pushes more expenses onto the states, and North Carolina works to find hundreds of millions more to rebuild Helene-damaged counties.

“It must be a fiscally responsible budget that not only gets us through this year, but sets us up for success in years two, three, four, and five,” said Stein.

Stein and the Council of State met Tuesday 80 miles outside of Raleigh at a new visitor center at Halifax Historic Site. Leaders used the rare offsite meeting to mark the 250th anniversary of the Halifax Resolves, recognized as America’s first formal call for independence from Great Britain. For the first time since 1776, the document will be exhibited at the historic site from April 10 through Oct. 6.

NC Newsline is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. NC Newsline maintains editorial independence. Contact Editor Laura Leslie for questions: [email protected].