A proposal to change to the North Carolina constitution to give the state legislature the authority to limit local property tax increases won approval from a House committee on Wednesday, but not without criticism from some lawmakers who said it will force local governments to cut services.
The proposed constitutional amendment would direct the General Assembly to enact laws “limiting the amount by which the levy on property may increase, which may include exceptions.”
Though the proposal by the House Select Committee on Property Tax Reduction and Reform does not spell out how the legislature would limit increases, the proposed takeover by the General Assembly of a power that has been almost exclusively in the hands of local elected officials would mark a significant change. Property taxes are the main source of county revenue.
Rep. Brian Echevarria (R-Cabarrus) said the legislature would not be intruding into local government.
“It is our duty to put guardrails in place,” he said. The committee will have time after the general election to work out the specifics, Echevarria said.
The amendment would require a three-fifths vote in both chambers. If it passes, voters will be asked to approve it on the Nov. 3 ballot.
Rep. Eric Ager (D-Buncombe) said the reason local governments have to increase taxes is because the legislature has passed more fiscal burdens onto them.
Rep. Maria Cervania (D-Wake) said the proposal to have the legislature set levy limits is an overly simple solution “to a complicated problem” because it does not consider that property appraisals are part of the reason tax bills are rising.
The N.C. Association of County Commissioners had proposed more modest changes, such as allowing more older, disabled, and low-income homeowners to defer their taxes.
Affordable housing tax loophole threatens to drain local government budgets in NC
However, Chairwoman Julia Howard (R-Davie) said homeowners are reluctant to claim these exemptions because they don’t want their heirs to have to deal with the debt.
The committee also endorsed a proposed bill that would close a loophole in a law that allows for-profit apartment complex owners to take advantage of property tax exemptions aimed at nonprofits.
The for-profit companies claim the tax exemptions by partnering with nonprofits that provide housing to low- and moderate-income residents, NC Newsline has reported. The loophole costs local governments tens of millions of dollars each year that would otherwise go to fund schools, libraries, and public safety.
The legislature could take up both proposals in its session beginning next week.
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