Why It Matters
North Carolina lawmakers have cleared a $34 billion state budget, ending a year-long deadlock that left public employees without raises and forced the state to operate under temporary spending measures. The measure now heads to Governor Josh Stein, who has until July 12 to take action.
What Happened
The state House approved the budget Thursday on an 88-21 vote, followed by Senate passage on a 35-10 margin. The spending plan includes new tax provisions on sports betting and prediction market trading sites, policies that emerged late in negotiations and drew mixed reactions from lawmakers.
Sports betting operators will face a 23 percent tax on gross revenue plus a $1 million licensing fee. Prediction market trading sites face a 6 percent tax on net revenue with no licensing fee. The prediction market provision was added by House negotiators after the budget had cleared committee, catching some lawmakers by surprise.
The budget includes salary increases for state workers and teachers, though those raises are not retroactive to cover the year workers went without compensation increases.
By the Numbers
$34 billion — total state budget
88-21 — House vote count
35-10 — Senate vote count
July 12 — deadline for governor action
23% — tax rate on sports betting gross revenue
$1 million — licensing fee for sports betting operators
6% — tax rate on prediction market net revenue
Context: A Year of Deadlock
The budget approval marks the end of a contentious fiscal year. Republicans in the House and Senate clashed over spending priorities throughout 2025, forcing the legislature to pass mini-budgets to keep state government operating. Unlike the outcome, state workers and teachers received no pay raises during that period.
North Carolina faced a similar impasse in 2019, when disagreement over Medicaid expansion between the legislature and then-Governor Roy Cooper created a prolonged standoff. That dispute resulted in mini-budgets and selective salary increases for Highway Patrol, correctional, SBI, and ALE officers, while broader state employee compensation remained frozen.
Senator Phil Berger, a Rockingham Republican and key negotiator, defended the new betting taxes as a reasonable revenue source. “I felt it would be important for us to begin the process of having some tax on that business model,” Berger said.
Zoom Out
State budget standoffs have become recurring features in legislatures across the country where one chamber or party holds narrow control. The prediction market tax provision—added quietly by the House—highlights the use of emerging industries as fiscal targets. Prediction markets have grown as a financial product in recent years, and states are beginning to test regulatory and tax frameworks as the sector expands.
The budget dispute also reflects deeper partisan divisions within the Republican-controlled North Carolina legislature, where House and Senate members differed on fiscal priorities sufficiently to block agreement for a full fiscal year.
What’s Next
Governor Stein has until July 12 to sign the budget, veto it, or allow it to become law without his signature. The budget’s passage clears the way for state agencies to plan expenditures for the remainder of the fiscal year and for employees to receive compensation adjustments, though those will not cover the period without raises. Democratic leaders have signaled interest in using the resolution to refocus on other legislative priorities heading into the election year, including rural outreach efforts and education funding battles.