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GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
SESSION LAW 2026-3
HOUSE BILL 433
*H433-v-7*
AN ACT DIRECTING THE OFFICE OF STATE BUD GET AND MANAGEMENT T O
RECLASSIFY UNEXPENDED STATE FISCAL RECOV ERY FUND BALANCES AND
OTHER FUNDING , AUTHORIZING THE NO RTH CAROLINA PANDEMI C
RECOVERY OFFICE TO R EALLOCATE STATE FISC AL RECOVERY FUNDS,
DIRECTING THE OFFICE OF STATE BUDG ET AND MANAGEMENT TO USE
INTEREST EARNED ON V ARIOUS FUNDS FOR OPE RATIONS PERTAINING T O
PANDEMIC RELIEF, AND EXTENDING THE DATE ON WHICH THE NORTH
CAROLINA PANDEMIC RECOVERY OFFICE WILL CEASE TO OPERATE.
The General Assembly of North Carolina enacts:
STATE FISCAL RECOVERY FUND AND OTHER ADJUSTMENTS
SECTION 1.(a) Section 6.9 of S.L. 2025-97 reads as rewritten:
"…
"SECTION 6.9.(b) The Office of State Budget and Management (OSBM), in consultation
with NCPRO, shall identify all State Fisc al Recovery Fund (SFRF) -funded projects with
remaining unexpended balances that were categorized as revenue loss and used for government
services. The Director of the Budget may reclassify such unexpended SFRF balances to support
other eligible government services (i) only to the extent permitted under federal law and federal
guidance; (ii) only from funds that were properly obligated on or before December 31, 2024; and
(iii) with expenditures made consistent with 31 C.F.R. Part 35 and related United States
Department of the Treasury guidance. A reclassification under this subsection may occur during
the 2025 -2026 fiscal year and, to the extent necessary to comply with federal requirements,
within the applicable federal period of performance, if all of the f ollowing conditions are
satisfied:
(1) The governmental service to receive SFRF support was previously supported
by SFRF appropriations.
(2) The governmental service receives a net General Fund appropriation in the
2025-2026 fiscal year.
(3) The governmental service is an eligible use of SFRF under 31 C.F.R. Part 35
and related United States Department of the Treasury guidance during the
period of performance.
"SECTION 6.9.(c) To implement subsection (b) of this section, the Director of the Budget
shall make nonrecurring, budget-neutral adjustments as follows:
(1) Reduce, on a nonrecurring basis, the 2025-2026 or 2026-2027 fiscal year net
General Fund appropriation for each agency receiving SFRF pursuant to this
section by an amount equal to the SFRF reclassified to that agency.
(2) Increase, on a nonrecurring basis, the net General Fund appropriation for each
agency from which SFRF were reclassified under this section by an amount
equal to the SFRF removed from that agency.
(3) Notwithstanding G.S. 143C-1-2(b), the net General Fund appropriations made
under subdivision (2) of this subsection shall be used only for the projects for
Page 2 Session Law 2026-3 House Bill 433
which SFRF were reduced under this section and shall not revert but shall
remain available until the earlier of project completion or June 30, 2027.
(4) In no event shall a project from which SFRF are reclassified receive net
General Fund appropriations in excess of the project's unexpended SFRF
balance as of the date of reclassification.
…
"SECTION 6.9.(e) No later than April 15, 2026, OSBM and NCPRO shall jointly report to
the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division
on all actions taken under this section, including:
(1) For each agency and project meeting the revenue-loss criteria in subsection
(a) of this section, the project name and the amount of remaining unexpended
SFRF as of December 31, 2025. The report shall also identify which projects
are complete and have excess SFRF funds and which SFRF projects need
additional funds for completion.
(2) For each agency and project from which unexpended SFRF were reclassified,
the project name and the amount of the corresponding nonrecurring net
General Fund appropriation provided in lieu of SFRF.
(3) For each agency and project receiving SFRF pursuant to the reclassification,
the project name and the amount of SFRF provided.
The report shall also certify that all SFRF were obligated on or before December 31, 2024, and
that expenditures are being made consistent wi th 31 C.F.R. Part 35 and related United States
Department of the Treasury guidance.
"SECTION 6.9.(f) The Director of the Budget shall ensure that implementation of this
section results in no change to the net General Fund appropriations in either the 2025-2026 or
2026-2027 fiscal year.years."
SECTION 1.(b) No later than January 15, 2027, OSBM and NCPRO shall jointly
update the report required by Section 6.9(e) of S.L. 2025 -97, as amended by subsection (a) of
this section, to reflect agency and project status through December 31, 2026.
SECTION 1.1. Subdivision (5) of Section 6.2 of S.L. 2026-1 reads as rewritten:
"(5) Funds allocated to the Office of State Budget and Management by Section
12.2(f)(2) of S.L. 2023 -134 to provide a grant to the Burke Partnership for
Economic Development, Inc., a nonprofit corporation, (Partnership) to install
water and wastewater at the Western NC Megasite shall, and remaining
unspent and unencumbered as of the effective date of this section, shall,
notwithstanding that subdivision or any provision of law to the contrary, be
reallocated to Burke County to be used for water and wastewater projects in
Burke County.identified in an application as, and used as, matching funds for
a grant applied for and awarded by the United States Department of
Commerce, Economic Development Administration. The Partnership shall
not expend or encumber funds identified in the applicatio n until a
determination regarding the grant is made. In the event the grant is not
awarded on or before October 1, 2026, the Partnership shall distribute the
funds, including any interest earned thereon, as follows: eighty percent (80%)
to Burke County and twenty percent (2 0%) to McDowell County. The
recipient counties shall use the funds distributed pursuant to this subdivision
to construct or improve water infrastructure, sewer infrastructure, or both."
ADDITIONAL STATE FISCAL RECOVERY FUND FLEXIBILITY
SECTION 2.(a) Notwithstanding any provision of law to the contrary, and subject
to the conditions set out in subsection (b) of this section, the North Carolina Pandemic Recovery
Office (NCPRO), in consultation with the Director of the Budget, may reallocat e State Fiscal
House Bill 433 Session Law 2026-3 Page 3
Recovery Funds (SFRF) appropriated by this act or any act of the General Assembly, including,
but not limited to:
(1) S.L. 2021-180.
(2) S.L. 2021-189.
(3) S.L. 2022-6.
(4) S.L. 2022-74.
(5) S.L. 2023-134.
(6) S.L. 2024-1.
(7) S.L. 2024-40.
(8) S.L. 2024-53.
(9) S.L. 2024-55.
SECTION 2.(b) The funds set out in subsection (a) of this section may be reallocated
only when all of the following conditions are met:
(1) There is a reasonable expectation that the funds will not be expended before
the deadline established by applicable federal law or guidance.
(2) The reallocation is made to support activities that previously received an
appropriation from the SFRF, are authorized under this act or one of the acts
listed in subsection (a) of this sect ion, and adhere to Federal SFRF
Expenditure Category 5 (Water, Sewer, or Broadband Infrastructure)
guidance. Reallocated funds shall not be used for any new activity, purpose,
or program.
SECTION 2.(c) The Director of the Budget shall reallocate funds und er subsection
(b) of this section by making nonrecurring transfers of General Fund appropriations from each
agency receiving SFRF fund transfers to the agency from which the SFRF funds were transferred.
The authorization to reallocate under this section is not an authorization to modify the purposes
of the original appropriations to either the receiving or transferring agency.
SECTION 2.(d) The Director of the Budget may allocate any funds remaining after
the reallocation process authorized in subsection ( b) of this section to the State Treasurer up to
an amount equal to the remaining unreimbursed COVID -19-related expenses incurred by the
North Carolina State Health Plan for Teachers and State Employees between March 3, 2021, and
December 31, 2024, provided the reallocation is consistent with federal law and guidelines.
SECTION 2.(e) To the extent that funds reallocated pursuant to this section are
unappropriated, those funds are hereby appropriated and available for use pursuant to this section.
SECTION 2.(f) Reporting. – No later than January 15, 2027, the Office of State
Budget and Management (OSBM) shall report to the Fiscal Research Division on the
reallocations made pursuant to this section in the same manner as required in Section 6.9(e) of
S.L. 2025-97.
INTEREST TO SUPPORT NC PANDEMIC RECOVERY EFFORTS
SECTION 3. Any interest earned on the following is appropriated to the Office of
State Budget and Management (OSBM) for operations pertaining to pandemic recovery and may
be utilized in accordance with the requirements set out in Section 6.9 of S.L. 2025-97:
(1) Local Fiscal Recovery Fund, Budget Code 63009, Budget Fund 610000.
(2) Homeowner Assistance Fund, Budget Code 23023, Budget Fund 214150, that
is allowed to be retained by the State.
(3) Economic Development Assistance Strategy and Tourism grant funds, Budget
Code 23025, Budget Funds 214250 and 214251, that is allowed to be retained
by the State.
(4) Project Fund, Budget Code 23022, Budget Fund 214102, that is allowed to be
retained by the State.
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NCPRO/EXTENSION OF OPERATIONS
SECTION 4. Section 4.3 of S.L. 2020-4, as amended by Section 3.5 of S.L. 2021-1,
Section 23.2 of S.L. 2021-180, Section 6.1 of S.L. 2021-189, and Section 23.1 of S.L. 2023-134,
reads as rewritten:
"SECTION 4.3.(a) OSBM shall establish a temporary North Carolina Pandemic Recovery
Office (Office) to oversee and coordinate funds made available under COVID -19 Recovery
Legislation, as defined in Section 1.2 of S.L. 2020 -4, and the American Rescue Plan Act, as
defined in Section 1.1 of S.L. 2021 -25 and Section 4.9(b) of S.L. 2021 -180. This Office shall
also provide technical assistance and ensure coordination of federal funds received by State
agencies and local governments and ensure proper reporting and accounting of al l funds. The
authorization set forth in this section expires on June 30, 2026, May 1, 2027, and the Office shall
cease to operate upon expiration of the authorization.
"SECTION 4.3.(b) Beginning March 1, 2021, and ending on No later than one week prior
to the date the Office ceases to operate under subsection (a) of this section, the Office shall submit
a monthly final report to the Joint Legislative Commission on Governmental Operations and the
Fiscal Research Division that includes each of the following:
(1) For each month since March 1, 2020, the number of staff hired to support the
Office's duties and responsibilities, including the position numbers, whether
the position is permanent or temporary, the start date and end date for each
temporary position, the funding source for each position, and the total amount
of funds spent on salary and benefits for personnel.
(2) For each month since March 1, 2020, an accounting of nonpersonnel
expenditures.
(3) A description of the Office's activities during the 2020 2026 calendar year.
(4) A description of the Office's activities related to the Fund that remain to be
completed in the 2021 calendar year.Fund, including any funding returned to
the United States Treasury.
…."
House Bill 433 Session Law 2026-3 Page 5
EFFECTIVE DATE
SECTION 5. This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 11th day of May, 2026.
s/ Rachel Hunt
President of the Senate
s/ Donna McDowell White
Presiding Officer of the House of Representatives
s/ Josh Stein
Governor
Approved 3:58 p.m. this 12th day of May, 2026