July 9, 2026 — The 2026 state budget includes a broad mix of statewide spending decisions, targeted appropriations, and policy provisions affecting local governments across North Carolina. For Centralina and its member governments, the budget touches a wide range of regional priorities, including transportation, water and wastewater infrastructure, land-use authority, environmental quality, economic development, housing, emergency management, and local-government administration.
In addition to broader policy changes, the budget also includes direct support for regional organizations, including a $3.9 million appropriation to the North Carolina Association of Regional Councils of Governments to support the state’s 16 regional councils. This overview focuses on provisions with the greatest potential impact on Centralina, its member communities, and opportunities for regional coordination.
Regional Planning and Local Land-Use Authority
Local Land-Use Decisions and Litigation – Section 39.5
Section 39.5 would make it easier to challenge local zoning and development decisions in court. It would allow parties to bypass the Board of Adjustment in certain cases, extend the general period for filing claims from one year to three years, and expressly cover permit conditions, enforcement actions, conditional rezonings, and rezoning decisions.
The section also addresses written interpretations of development regulations and which local rules apply when regulations change while an application is pending.
For Centralina’s member governments, the provision could increase litigation exposure, legal costs, and uncertainty surrounding development decisions. It may also reduce opportunities to resolve disputes through local administrative processes before they reach court. Because the region includes communities experiencing very different levels and types of growth, the practical effects could vary substantially among jurisdictions. This provision warrants close review by local attorneys, planning directors, and development-services staff.
Outdoor Advertising and Billboard Regulation – Section 43.20
Section 43.20 expands relocation and vegetation-clearing rights for permitted outdoor advertising signs along state-maintained roads. In some cases, a billboard displaced by an NCDOT project could be relocated under the local regulations that existed when the sign was originally erected rather than the jurisdiction’s current sign standards.
The section also creates annual vegetation-maintenance permits allowing billboard owners to clear vegetation within expanded viewing zones.
This could affect local sign ordinances, corridor appearance, tree preservation, and long-range planning along major transportation routes. The regional impact may be especially noticeable along interstates and other state-maintained corridors that cross multiple jurisdictions.
Building-Code Administration – Sections 13.3 and 13.4
The budget creates a Building Codes and Interpretations Bureau within the Department of Labor and transfers state building-code administration from the Office of the State Fire Marshal beginning January 1, 2027.
The Building Code Council, Residential Code Council, code interpretations, appeals, and associated staff functions would move to the new bureau. Existing codes and interpretations would remain in place until changed.
The provision does not appear to substantially alter local inspection responsibilities, but counties and municipalities should prepare for a change in their primary state-level contact for building-code guidance and appeals.
Regional Water Supply and Infrastructure
Interbasin Transfer Moratorium and High-Growth Basin Study – Section 12.6
The budget extends the existing moratorium on significant new or increased interbasin transfers through August 1, 2028. It also directs the UNC Collaboratory to conduct a long-term water-supply study of the Catawba, Cape Fear, and Neuse river basins, designated as the State’s “High Growth Basins.”
The study will assess:
- Water supply and demand through 2055.
- The reliable yield of each basin and major tributary.
- The amount of water that may be withdrawn or transferred without unacceptable impacts.
- Existing intake, storage, treatment, and interconnection capacity.
- Regional interconnections, reuse, conservation, and new storage.
- Infrastructure costs and potential funding mechanisms.
- Existing data gaps and possible new reporting requirements.
Water Safety Act, PFAS, and Emerging Contaminants – Section 8.27
The Water Safety Act establishes research, monitoring, and funding initiatives addressing PFAS and 1,4-dioxane.
DEQ and the UNC Collaboratory would study PFAS discharges from industrial users and publicly owned wastewater treatment systems. The work includes sampling wastewater influent, effluent, sludge, and biosolids and evaluating domestic, passive, and industrial sources of contamination.
The section also establishes an Emerging Contaminant Mitigation Fund that may provide assistance to local governments for testing, planning, treatment technology, remediation, and contaminant-reduction projects.
This is regionally important because water and wastewater systems often serve multiple jurisdictions, and treatment requirements or industrial-discharge restrictions may affect utility rates, economic-development recruitment, biosolids management, and infrastructure planning across jurisdictional boundaries.
DEQ Environmental Permitting Pilot – Section 12.23
DEQ would establish a pilot program using artificial intelligence to identify incomplete or potentially noncompliant environmental permit applications.
The program includes permits involving wastewater, stormwater, erosion and sedimentation control, air quality, water withdrawals, wells, solid waste, underground storage tanks, riparian buffers, and mining.
It does not automatically approve permits or alter local permitting authority. However, it could eventually affect the speed and consistency of state environmental reviews for infrastructure, development, utility, and economic-development projects throughout the region.
Water and Sewer Construction Bids – Section 22.6
For water and sewer construction projects, the budget reduces the number of competitive bids generally required before awarding a contract from three to two.
If fewer than two bids are received, the project must be readvertised. After the second advertisement, the contract could be awarded to the lowest responsible bidder even if only one bid is received. The provision expires January 1, 2031.
This may help local governments advance utility projects in a challenging construction market, particularly smaller communities that have struggled to attract three qualified bidders.
Transportation and Regional Mobility
MPO/RPO Project Removal and Reimbursement Requirements – Section 43.27
Section 43.27 could have significant implications for MPO and RPO decision-making. The provision appears to be a direct response to the recent I-77 South project dispute and CRTPO’s action to remove the project from the regional transportation plan.
If an MPO or RPO takes unilateral action to remove or block a statewide mobility project after NCDOT has begun predevelopment work, each local government voting for the action could be required to reimburse NCDOT for its share of preliminary engineering, environmental studies, consultant fees, labor, and other project costs.
The local share would be based on the jurisdiction’s weighted voting percentage. Until repayment is complete, NCDOT could withhold Powell Bill funding and decline to begin new STIP projects within that jurisdiction.
The provision also applies to certain actions already taken before the budget’s effective date, including the recent I-77-related vote. However, it provides a 90-day grace period during which an affected MPO or RPO may avoid the reimbursement requirement if it adopts a subsequent resolution reinstating the project.
Although prompted by the I-77 and CRTPO dispute, the provision would apply statewide. It could affect how local governments approach controversial regional transportation projects and makes early coordination among jurisdictions, MPOs, RPOs, and NCDOT even more important.
Powell Bill Funding – Section 43.4
The Highway Fund maintains $185.875 million for Powell Bill aid to municipalities, and the budget specifically directs NCDOT not to reduce the appropriation.
Municipalities in the Centralina region, other than the special allocation applicable to cities with populations of at least 400,000, would continue to receive funding through the regular statutory formula. The primary takeaway is that this core municipal transportation funding is preserved.
NCDOT Contingency Funding – Section 43.2
NCDOT contingency funds may be used for small urban and rural highway projects, industrial access roads, railroad improvements, pedestrian-safety projects, and other spot improvements.
This is not a formula-based allocation, but it may offer an additional avenue for smaller transportation or safety projects that do not fit easily within the regular STIP process.
Automatic License Plate Readers in NCDOT Rights-of-Way – Section 43.26
Section 43.26 establishes a process for placing automatic license plate reader systems within NCDOT rights-of-way.
The SBI may enter into agreements on behalf of local law-enforcement agencies. Participating agencies must provide information about their policies, number of cameras, and data requests. Cameras may not unreasonably interfere with roadway maintenance or utilities and may have to be relocated when access is needed.
This may be relevant to jurisdictions using regional law-enforcement technology along state-maintained roads.
Regional Trails, Recreation, and Quality of Life
Complete the Trails Program – Section 14.9
The budget provides $9.653 million for Complete the Trails grants supporting land acquisition and construction for designated State Trails. Additional funding is provided for partner capacity building.
Eligible projects include trail planning, design, acquisition, construction, structures, amenities, maintenance, and matching funds, depending on the program and project category.
Great Trails Program – Section 14.10
The budget provides $4.137 million for Great Trails Program grants. Importantly, regional councils of government are expressly eligible applicants, along with municipalities, counties, public authorities, and qualifying nonprofits.
Eligible uses include:
- Planning and design.
- Environmental review and permitting.
- Land and easement acquisition.
- Trail and greenway construction.
- Bridges, boardwalks, and other structures.
- Trail amenities.
- Maintenance and rehabilitation.
- Matching funds for federal and other non-state grants.
Economic Development, Housing, and Regional Competitiveness
Regional Economic Development Reserve
The budget reserves $200 million for regional economic development and an additional $170.9 million for the Economic Development Project Reserve. It also establishes a $35 million Housing Reserve.
Not all of these funds are immediately assigned to specific projects, and some allocations may require later agency or legislative action. However, the reserves indicate continued state interest in major employment, infrastructure, housing, and site-development projects.
Selectsites Program – Section 11.9
The budget modifies the Selectsites program, which supports the identification and preparation of industrial sites.
The changes primarily concern the use of remaining funds and the engagement of site-selection firms. The program may remain relevant to counties, municipalities, and regional economic-development partners seeking to improve site readiness, utility access, transportation connectivity, and competitiveness for major projects.
Data Center Electricity Tax Exemption – Section 44.4
Section 44.4 removes the electricity sales-tax exemption for the older statutory category of an “eligible internet datacenter.” A separate exemption remains for facilities meeting the requirements of a “qualifying datacenter.”
The change does not directly alter local zoning or incentive authority. However, it could affect the operating costs and state tax treatment of certain existing or proposed facilities. Given the level of regional interest in data-center development, member governments may wish to understand which statutory category applies to projects in their jurisdictions.
Local Economic Development Reporting – Section 39.3
Local governments would be required to notify the State Auditor when an approved economic-development disbursement exceeds $25,000. The Auditor would compile the information for the Local Government Commission and the Joint Legislative Commission on Governmental Operations.
The provision also reiterates that local economic-development funds may be used only for legally authorized purposes.
Counties and municipalities may need to establish internal procedures for identifying and reporting qualifying incentive payments, grants, infrastructure commitments, or other disbursements.
Local Government Finance and Administration
Public Contracting Requirements – Section 22.5
Section 22.5 makes broad changes to public construction and contracting laws. It repeals existing statutory minority- and women-owned business participation goals and related good-faith requirements, replacing many of those provisions with a more general expectation that public entities recruit and select small businesses.
The changes apply to traditional construction contracts, construction-manager-at-risk projects, design-build contracts, and public-private partnership construction projects. Local participation requirements would generally be repealed unless required for a federally funded project.
Member governments may need to review procurement policies, bid documents, reporting procedures, and contract templates. Federal requirements would continue to apply to projects receiving federal assistance.
Local Government Commission Membership – Section 5.10(b)
The budget restructures the Local Government Commission by shifting appointment authority away from the Governor and toward legislative leaders and the State Treasurer.
The Treasurer, Auditor, Secretary of State, and Secretary of Revenue would remain ex officio members. Existing appointed members would complete their terms, so the transition would occur gradually.
Because the LGC oversees local borrowing, debt issuance, and financially distressed units, the change could influence the commission’s future direction and approach to local-government finance.
Separate LGERS Governing Board – Section 5.10(c)
The budget establishes a dedicated Board of Trustees for the Local Governmental Employees’ Retirement System.
The board would include local elected officials, managers, active and retired employees, law-enforcement personnel, and fire and rescue representatives. Appointment authority would be divided among the General Assembly, Governor, and State Treasurer.
The provision does not itself change local employer contribution rates, but it is a meaningful governance change for the retirement system covering local-government employees.
Investment of Local Idle Funds – Section 39.2
Section 39.2 expands the types of government money-market mutual funds in which local governments may invest idle funds.
Qualifying funds would need to be SEC registered, invest primarily in government securities or cash, seek to maintain a stable $1 share price, and hold one of the two highest recognized ratings.
This provides additional flexibility for local finance officers, subject to state law and local investment policies.
House Bill 171 Compliance Delay – Section 5.9(a)
The budget delays several local-government compliance requirements associated with House Bill 171 until July 1, 2027, with the first annual local compliance reports due in 2028.
This gives counties and municipalities additional time to review policies, training, forms, and administrative procedures. It delays but does not eliminate the underlying requirements.
Emergency Management and Regional Resilience
Hazard Mitigation and Property Acquisition – Section 5A.19
Section 5A.19 expands the concept of hazard-risk management and clarifies local authority to undertake property acquisition and other mitigation activities.
It also extends certain governmental-immunity protections to local governments, nonprofits, businesses, and other partners participating in authorized hazard-mitigation work, except in cases involving gross negligence, willful misconduct, or bad faith.
This could support regional flood mitigation, resilience planning, property acquisition, and disaster-recovery partnerships.
State Emergency Response and Disaster Relief Funding
The budget reserves $350 million for the State Emergency Response and Disaster Relief Fund. Although much of the immediate disaster-recovery focus is outside the Centralina region, the reserve may support future state response capacity, preparedness, and recovery needs.
Aging and Community Services
The budget maintains a revised net appropriation of approximately $53 million for the Division of Aging. The committee report does not appear to make a structural change to the regional Area Agency on Aging model, but Centralina should continue reviewing individual aging line items and federal-receipt assumptions for any operational impacts on regional services.
Priority Issues for Centralina and Member Review
The following provisions appear most appropriate for regional discussion or coordinated member outreach:
- Section 39.5: Expanded challenges to local land-use and development decisions.
- Section 12.6: Regional water-supply planning, IBT policy, and the Catawba basin study.
- Section 8.27: PFAS, emerging contaminants, wastewater systems, and potential mitigation funding.
- Section 43.27: Financial consequences for local governments participating in MPO or RPO decisions to remove statewide projects.
- Sections 14.9 and 14.10: Trail and greenway funding, including direct eligibility for regional councils of government.
- Section 22.5: Changes to local construction and procurement requirements.
- Section 39.3: New reporting for local economic-development disbursements.
- Section 43.20: Impacts on local sign ordinances, billboard relocation, and roadside vegetation.
- Sections 5.10(b) and 5.10(c): Changes to the LGC and LGERS governance structures.
- Sections 13.3 and 13.4: Transfer of state building-code administration.
- Section 5.9(a): Revised timeline for House Bill 171 compliance.
