State budget reroutes future interest earnings to criminal defense, leaving fewer resources for residents facing eviction, domestic‑violence hearings, and benefits disputes.
Raleigh, NC — North Carolina is now the only state in the nation redirecting Interest on Lawyers’ Trust Accounts (IOLTA) funds away from civil legal aid and into the state’s criminal indigent defense system, one of several policy changes tucked into the state budget signed by Gov. Josh Stein.
The budget shifts nearly all future IOLTA earnings to the Office of Indigent Defense Services to help cover rising costs for private assigned counsel in criminal cases. Up to $2 million may support civil legal aid, but only from interest earned before July 1, 2025. Organizations providing immigration services, gender‑affirming care representation, or policy‑focused advocacy are no longer eligible for IOLTA grants.
The change is expected to directly affect residents in Brunswick and Columbus counties, where access to civil legal assistance is already limited. Last year’s freeze on IOLTA distributions forced staff cuts and office closures at Legal Aid of North Carolina offices that serve southeastern communities. Local families facing eviction, domestic‑violence hearings, or benefits disputes may now have even fewer options for free legal representation.
State officials say the shift is intended to stabilize the indigent defense system, which has struggled with attorney shortages and increasing caseloads. The IOLTA provision was part of the full budget package, which the governor signed to maintain statewide funding and agency operations.
Sources: NC General Assembly, NC State Bar, Legal Aid NC
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