Last week, lawmakers in the North Carolina General Assembly (NCGA) passed a state budget for the first time in over 1,000 days and on July 7, Governor Josh Stein signed the budget into law. While the completion of a budget finally releases much-needed housing funds throughout the state, several policy changes within the bill will exacerbate income inequality and stifle local housing initiatives.
Legislation + Policy Reform
The budget bill contains legislative changes and policy provisions in addition to budget figures. Several of these new provisions are cause for concern:
Civil legal aid policy changes disproportionately hurt low-income rural North Carolinians seeking legal services. The budget includes language (p. 436) that directs almost all Interest on Lawyers’ Trust Accounts (IOLTA) funds away from civil legal aid organizations like Legal Aid of NC. These organizations represent homeowners and tenants in evictions, fair housing, foreclosures, housing discrimination, maintenance disputes, etc.
Regressive tax reforms place an unfair financial burden on working families. The budget includes tax cuts that benefit corporations and the ultra-wealthy at the expense of everyday North Carolinians.
Mandates that strip local governments of the ability to incorporate local content into local zoning decisions. The budget maintains the statewide downzoning ban that strictly limits local governments’ abilities to amend local zoning laws.
Earmarks
In any given budget there are also special project allocations and other policies or programs that can be added that may not be reflected within any of the categories listed in the table below. This year’s budget includes over 700 earmarks, totaling over $350M.
Draft FY 26-27 Budget – Housing Highlights
This table provides an overview of the key housing-related budget line items, which can be found in the conference report.
| Housing Programs | FY 2026-2027 Appropriation | Details |
| North Carolina Housing Finance Agency | ||
| Workforce Housing Loan Program (WHLP) | $25.0M | Awards select LIHTC projects with a 30-year deferred payment loan at 0% interest. Encourages the development of more deeply affordable housing in NC’s rural and high-need counties. |
| Housing Trust Fund (HTF) | $10.0M | The HTF is one of the state’s most flexible housing resources. It finances the state’s Supportive Housing Development Program by leveraging private dollars to finance the new construction and rehabilitation of emergency shelters, licensed group homes, and other housing for special needs groups. It also funds emergency repairs and accessibility modifications. |
| NC Dept. of Health and Human Services | ||
| Transition to Community Living Initiative (TCLI) | $18.0M | Provides additional funding for housing vouchers and wraparound services for eligible adults with severe and persistent mental illness transitioning from institutions to community care, in compliance with the 2021 U.S Department of Justice Settlement. Brings total TCLI funding to $97.5M across DHHS divisions. |
| Key Rental Assistance Program | $8.4M | This program is a partnership between NCHFA and DHHS to increase access to affordable housing units for low-income individuals with disabilities. Funds provide rental subsidies to make units truly affordable. |
| Healthy Opportunities Pilot (HOP) | $25.1 M | Funding for a Section 1115 waiver program that connects Medicaid managed care plan beneficiaries to community resources that address non-medical needs, including access to food, housing, and transportation. Research demonstrates that this program can reduce health care costs by an average of $164 per month.
The appropriation falls short of the originally requested $80M that is needed to fund the program at its previous service levels. |
| Helene Recovery | ||
| Temporary Relocation Assistance (TRA) | $40.0M | Allocates funds to the Department of Commerce, Division of Community Revitalization to cover temporary relocation for eligible homeowners with demonstrated hardship while their homes are being repaired and rebuilt by ReNew NC. |
| Volunteer Organizations Assisting with Disasters (VOAD) – Housing Projects | $35.0M | Grants to VOADs actively involved in actual and ongoing housing repair and reconstruction projects. |
| Long Term Recovery Groups (LTRGs) | $2.6M | $200K grants to each of the 13 LTRGs in the HUD-designated most impacted and distressed counties from Hurricane Helene. For direct assistance only, no staffing or admin costs. |
| Veterans’ Restoration Quarters (VRQ) | $5.0M | A directed grant to Asheville-Buncombe Community Christian Ministry to cover the remaining costs for VRQ repairs not covered by FEMA Public Assistance. VRQ provides emergency shelter, transitional housing and permanent supportive housing for male veterans. |
| Helene Housing Startup Reallocation | $120M | Transfers money from the Department of Commerce to the Helene Fund. These were funds used to kickstart federally reimbursable Helene home repairs and rebuilds. Previously allocated under SL 2025-2, Section 2A.2(1). |
| FEMA Public Assistance- Nonfederal Share | $450M | Transfer from the Helene Fund to provide the nonfederal match for multiple federal disaster recovery programs. Funds that carry a match requirement assume a 90/10 federal match rate and are anticipated to generate approximately $2.2 billion in receipts.
Up to $20 million may be transferred to Commerce’s Division of Community Revitalization on a revolving basis to assist with cashflow issues related to the CDBG – Disaster Recovery program. |
Check out these budget resources for more information on how the budget impacts education, health, and everyday NC residents:
- North Carolina’s Budget Offers Some Short-Term Fixes for Today, Raises More Questions About Sustainability | Public School Forum of NC
- NC’s first full budget since 2023 reflects transformed health policy landscape | NC Health News
- Final Budget Preserves Tax Cuts While Shifting Costs To Counties And Families | NC Budget & Tax Center
- What’s In the 2026-2027 State Budget | Carolina Forward
