New NC budget guts funding for civil legal aid

A provision in the North Carolina state budget, signed into law by Gov. Josh Stein July 7, guts vital funding for organizations that provide civil legal aid in North Carolina, leaders from two legal aid organizations said.

The budget bill diverts funding away from free legal help for civil cases, which can involve landlord-tenant disagreements, victims of domestic violence who are seeking protective orders, immigrants and child custody cases. Advocates for the funding say the cut will force them to turn people who need help away, sending them to court without a lawyer.

For about 40 years, the North Carolina Interest on Lawyers’ Trust Accounts has used interest earned on pooled client funds held by attorneys to fund legal aid for people who cannot afford to hire their own attorney but have a case in civil court. The N.C. State Bar and state Supreme Court created NC IOLTA in 1983 for that purpose.

Jackie Kiger, executive director of Asheville-based Pisgah Legal Services, told the Citizen Times July 7 that the program is little known outside of the legal world, but it’s had “outstanding results” for four decades.

“Basically, any time an attorney holds money for a client, the interest is put into a shared account that has historically been spent on civil legal defense for the poorest North Carolinians,” said Kiger, who recently wrote an op-ed on the topic for the Citizen Times.

Since 1983, it has provided more than $134 million in funding.

The state budget passed July 7 shifts most of that funding away from organizations that provide civil legal aid and into indigent criminal defense services, which are now state funded. The recently passed budget also places limits on who can receive what little funding is left for civil legal aid. It makes ineligible organizations that:

• Provide help to immigrants under federal immigration law.
• Legally assist transgender people with accessing healthcare.
• Advocate for public policy.

“I’ve never seen anything like this in all my time at Pisgah Legal or my career, people creating a problem that doesn’t need to be a problem,” Kiger said.

Last year, Pisgah Legal served 27,800 people across 18 counties in North Carolina.

“We’re talking veterans, older adults, immigrants who are victims of crime and human trafficking, children, low-income people who are experiencing really difficult, sometimes even life-threatening situations,” Kiger said.

The Republican-led General Assembly first froze IOLTA funds last year. Legislators at the time questioned whether the funds were being used to fund organizations that engaged in political activism.

“We were blindsided by the freeze,” Kiger said. “It really was challenging and stressful to try to figure out what was going on. In good faith, we have been trying to talk to, meet with and understand for the past year lawmaker’s concerns about the program.”

The permanent cut to that funding is “disastrous,” Kiger said. In 2025, Pisgah Legal received $1.9 million in funding from NC IOLTA, almost 15 percent of their $14 million budget. The rest of Pisgah Legal’s funding comes from support from individual donors, faith-based organizations, private and community foundations, area United Ways, and county, state and federal government competitive funding sources, according to Pisgah Legal’s website.

“I think what we’re facing is the possibility of, if we’ve lost nearly 15 percent of our budget, … that’s thousands of people potentially that we would have to turn away, now and in years ahead if we’re not able to replace this funding,” Kiger said.

Legal Aid‘s struggle

Legal Aid of North Carolina is facing similar challenges.

Legal Aid initially closed seven of its offices across the state after the funding freeze, but sometime thereafter found donated space for one of them. Today, Legal Aid has 18 offices in North Carolina, Legal Aid Chief Operating Officer Lesley Albritton told the Citizen Times July 7.

Legal Aid received approximately $6.3 million in funding from NC IOLTA last year, 13.4 percent of Legal Aid‘s $47.1 million budget, Albritton said.

Last year, Legal Aid, which is headquartered in Raleigh, served over 62,000 North Carolinians, Albritton said. The funding cuts are particularly going to impact rural parts of the state where there is no other free legal help for people involved in civil cases, Albritton said.

“It’s going to mean that more people are going to court without the benefit of understanding their rights or understanding how the system works,” Albritton said. “We’re going to do our level best to serve the communities that we care about. The important thing to know is it’s definitely impacting us and our service delivery, but more importantly it’s going to impact people’s neighbors.”

Sen. Julie Mayfield, D-Buncombe, told the Citizen Times July 8 that although she finds the funding cut cruel, she voted to approve the budget.

“It’s a 600-page document. There was $700 million for Helene. There were raises for state employees. It’s a budget, and we haven’t had a comprehensive budget since October of 2023,” she said. “A number of my colleagues did not vote for it, and that IOLTA provision was one of the big reasons.”

She said she feels that the provision is motivated by hatred of immigrants and transgender people, and “an impatience on the part of people in power to be the targets of advocacy.”

“And I say all of that because the legislative leadership that is behind these changes are being completely transparent in the language in the bill about why they’re cutting off this funding.”

Mayfield said that the IOLTA fund should be managed by a foundation, not the legislature, “which has absolutely no business getting their hands on this money and dictating how it should or should not be spent.”

Mayfield said that Speaker for the N.C. House, Rep. Destin Hall, a Republican from Caldwell County, was the driving force behind the IOLTA provision. Hall did not return multiple calls July 8 from the Citizen Times.

Kara Fohner is the Public Safety Reporter for the Asheville Citizen Times. Email her at [email protected].