Short Session Recap

The North Carolina General Assembly has largely wrapped up its work for the 2026 short session. Still, at the time of this writing, legislators will return to Raleigh on July 27. It is still unclear how long legislators will remain in session once they return. They will be able to consider most of the same issues and bills they considered during the short session, including bills that met the 2025 crossover deadline and those vetoed by Gov. Josh Stein. Municipal officials should continue to monitor the League’s Legislative Bulletins for any important updates that could affect local governments.

This session produced several major policy changes affecting North Carolina's cities and towns, from the first state budget enacted in three years to legislation impacting local property tax authority, land-use
planning and homelessness.

State Budget Approved
For the first time since 2023, state legislators have approved a revised state budget, a spending package that includes significant pay raises for teachers and state law enforcement, as well as a one-time $1,750 bonus to all full-time sworn law enforcement officers in the state. The $31.3 billion annual spending plan went to Gov. Stein, who sign the bill into law.

For municipalities, the budget represents a mixed bag of priorities. It includes a handful of land-use and building permit provisions that could create more barriers for local planning. There are also dozens of directed grants to communities for various infrastructure projects. A detailed breakdown of the impacts on local governments can be found in the League’s Bulletin distributed on July 3, 2026, which can also be found on the League’s website.

As municipalities implement their own adopted budgets, local officials should review the final state budget carefully to identify any changes affecting grants, infrastructure funding, transportation investments, public safety programs and other state-supported initiatives. 

Property Tax Authority Remains a Central Issue 
The General Assembly approved a constitutional amendment that will appear on the November 2026 statewide ballot asking voters whether the North Carolina Constitution should require the legislature to establish limits on increases in local government property tax levies. If approved by voters, the amendment would direct the General Assembly to determine those limits through future legislation. 

For municipal officials, the proposal represents a potentially significant shift in local fiscal authority. Property taxes remain the primary revenue source that cities and towns rely on to fund core services
such as police and fire protection, street maintenance, parks and other essential public services.

Lawmakers also enacted legislation delaying implementation of scheduled property reappraisals in several counties. Counties that conducted revaluations last year, for use in 2026, will not be permitted to use those updated values for taxation in the 2026-27 fiscal year, delaying the effects of higher assessments on property owners.

It is important to note that any actual changes to authority over property tax assessments would come through future legislation. Meawhile, with an extremely volatile election ahead that could cause changes to legislative majorities, the constitutional amendment was likely seen as a means to push some voting constituencies to the polls.

State Limits Local Parking Regulations
The General Assembly also approved legislation limiting local governments' authority over off- street parking requirements. 

House members agreed to the Senate's changes to HB 162 Parking Lot Reform/Stormwater Control, sending the bill to Gov. Stein, who signed the legislation into law. As the= legislation was being considered, the League advocated for changes, making clear that the bill could affect residents’ public safety and service-vehicle access. Through committee amendments, 20 coastal counties were exempted, allowing municipalities in those counties to continue enforcing parking minimum requirements.

Homeless Encampment Legislation Awaits Final Outcome
One of the session's most closely watched bills affecting municipalities remains unresolved.

House Bill 437 would prohibit local governments from allowing people to regularly sleep or camp on public property, but incorporates amendments requested by the League that provide additional time for local governments to comply and clarify notice requirements before litigation may be initiated. The legislation also permits local governments to designate a specific public place for camping if detailed statutory requirements are met. The legislation would also allow residents, business owners and others to bring civil actions against municipalities that fail to enforce the law's requirements.

Gov. Josh Stein vetoed the bill, stating it would create significant burdens for local governments while making it more difficult to connect individuals experiencing homelessness with needed services. Legislative leaders are expected to attempt a veto override when lawmakers return later this month, although the final outcome remains uncertain.

If the veto is overridden, municipalities may need to review enforcement procedures, evaluate staffing and legal considerations, and coordinate with community partners to ensure compliance with the new requirements.