July 23, 2026 — North Carolina’s 2026 state budget includes more than funding for state agencies and programs. It also makes policy changes affecting local government finance, transportation planning, infrastructure, land-use administration, and regional collaboration.
For Centralina’s member governments, the effects will vary based on community size, growth, infrastructure capacity, and local priorities. However, several provisions have implications that extend beyond any single jurisdiction.
That regional perspective will be important as local governments evaluate the budget and begin implementing its requirements.
Strengthening regional capacity
The final budget committee report provides a $3.9 million directed grant to the North Carolina Association of Regional Councils of Government to support the state’s 16 regional councils.
The report does not specify how the funding will be distributed or used. Even so, the appropriation represents a meaningful investment in the regional council network and its work helping local governments manage grants, coordinate services, navigate state and federal requirements, and address issues that cross jurisdictional boundaries.
The budget also provides new opportunities for regional collaboration through trail and greenway funding. Regional councils are expressly eligible to apply for Great Trails Program grants supporting planning, land acquisition, construction, rehabilitation, and other eligible activities.
Transportation and regional coordination
One of the budget’s most significant transportation provisions could affect how metropolitan and rural planning organizations make decisions about major projects.
If an MPO or RPO removes or blocks certain statewide transportation projects after NCDOT has begun predevelopment work, local governments voting for that action may be required to reimburse the department for engineering, environmental studies, consultant fees, and other preliminary costs.
Although the provision was prompted by the Interstate 77 South dispute, it applies statewide. It could influence how local governments approach controversial projects and makes early coordination among jurisdictions, planning organizations, and NCDOT even more important.
The budget also preserves $185.875 million in Powell Bill funding for municipal street maintenance.
Infrastructure and local administration
The budget directs a long-range study of water supply, demand, treatment capacity, regional interconnections, conservation, reuse, and infrastructure needs within North Carolina’s high-growth river basins. These issues are closely connected to population growth and economic development and often require coordination across utility service areas and jurisdictional boundaries.
Additional provisions address PFAS and other emerging contaminants. A new mitigation fund may assist local governments with testing, planning, treatment technology, remediation, and contaminant-reduction projects.
For water and sewer construction, the budget temporarily reduces the number of competitive bids generally required before awarding a contract from three to two. This may help smaller communities that have struggled to attract enough qualified bidders.
Local governments will also need to review changes affecting public contracting, economic development reporting, and challenges to zoning and development decisions. The budget restructures the Local Government Commission and creates a separate governing board for the Local Governmental Employees’ Retirement System, representing significant changes to two institutions that directly affect local finance and administration.
A regional perspective
The budget’s effects will become clearer as state agencies implement its provisions and develop processes for distributing new funding.
Centralina will continue evaluating these changes, identifying opportunities for collaboration, and helping member governments understand how statewide decisions affect communities across the region.
For a more in depth look at state budget policy updates, check out our website blog here.
