Six trends that state and local governments will face in 2026

Six trends that state and local governments will face in 2026

What big-picture issues and topics should we be monitoring this year? UNC School of Government faculty are looking ahead to the key issues local governments need to tackle this year—and the solutions they are working to create to solve them. Read about six trends that state and local governments will face in 2026.

Kirk Boone, on North Carolina’s rising property assessments and possible tax reform

“Although rising property values do not automatically translate into higher tax bills, property values have increased sharply in recent years, and in North Carolina, home values have increased rapidly - in some measures outpacing national averages. Even in revenue-neutral systems—where total collections remain the same but individual tax bills shift based on how the property’s value changed relative to others— substantial value increases has also increased attention to assessments and property tax policy, particularly questions of affordability and equity.

Property tax relief and reform have also become more common topics nationwide. During recent legislative cycles, dozens of states have introduced or debated proposals that include expanded exemptions or credits, as well as caps on assessed value increases, tax rates, or total levy. These efforts reflect ongoing tension between taxpayer concerns and the property tax’s role as a primary source of local government revenue.”

Rebecca Fisher-Gabbard and Colt Jensen, on the increasing strain on councils and boards 

“A trend likely to shape local government in 2026 is the increasing strain on governing relationships within councils and boards. As policy demands grow more complex and public trust remains fragile, local governments have increasingly been focusing on intentionally clarifying roles, strengthening working relationships, and reinforcing norms that support effective governance.

In response, School faculty are developing several relationship-building tools for both elected officials and managers, including an upcoming short Board Builders book that will be available for purchase in February 2026. It will give practical guidance on navigating board–manager dynamics, and engaging data-driven efforts to better understand how these challenges are evolving across the state.

Jim Joyce, on how local governments respond to change through development regulation

“Rapid growth in many North Carolina communities is putting pressure on housing prices and infrastructure systems. Local governments looking to manage these pressures will need to continue to do so in the context of 2024’s updates to down-zoning statutory provisions, as it is anyone’s guess what action—if any—the General Assembly will take to further modify that law. 

Resilience planning is likely to remain a key topic as well. Many communities have work left to do to fully bounce back from Hurricane Helene. Most of these communities, as well as those in the traditional path of hurricanes in the eastern portion of the state, will be looking to protect themselves from similar calamities in the future.”

Tyler Mulligan, on increased development in low-income areas

“The ‘One Big Beautiful Bill Act’ made two permanent federal tax incentives that subsidize development projects in low-income census tracts. Those two tax incentives—New Markets Tax Credits and Opportunity Zones—will spur local governments to reexamine the development potential of their low-income areas. Public leaders will debate what investments in public infrastructure and amenities are needed to attract private investment to distressed areas.”

Bill Rivenbark, on local governments facing financial burden 

“Over 100 local governments across North Carolina are currently on the Local Government Commission’s Unit Assistant List (UAL) for financial condition and internal control challenges that impact the sustainability of their organizations and respective communities.  The School of Government is working with these local governments through training opportunities to provide them with concrete strategies for improving their financial management systems, from adopting annual budget ordinances to producing annual financial statements, for list removal and more importantly—for long-term success.” For local governments needing assistance, contact faculty members Bill Rivenbark or Rebecca Badgett at rivenbark@sog.unc.edu and rbadgett@sog.unc.edu respectively to learn more about making financial improvements.

Dylan Russell, on the workforce capacity strain facing state and local governments

“One trend that will continue to shape local government in 2026 is the growing strain on human resource capacity and workforce pipelines at both the state and local level. While recruitment pressures have eased slightly, many governments—especially smaller and rural jurisdictions—still face difficulty building sustainable talent pipelines, onboarding early-career staff effectively, and modernizing HR practices with limited internal capacity. In response, we’re likely to see increased experimentation with internships, applied learning partnerships, skill-based hiring, and shared tools that lower the transaction costs of recruiting and developing the next generation of public servants.”

Consider applying to host a Lead for North Carolina Fellow here.

Published January 26, 2026