As a constitutional amendment to limit the amount by which local governments can increase property taxes passed the North Carolina House Finance Committee on Tuesday, several Democratic lawmakers expressed concerns about whether it will solve the underlying problem.
The constitutional amendment, House Bill 1089, was recommended bythe House Select Committee on Property Tax Reduction and Reform. House Speaker Destin Hall (R-Caldwell) created the committee to examine tax reform as a result of constituent complaints about rising property taxes.
Hall and other Republican leaders blame local governments for the increases.
“Families are getting ripped off as some, but by no means all, local governments rake in billions more than inflation and population growth warrant,” Hall said in a recent press release.
Critics, however, warn that limiting property tax levies could have dire consequences for local governments, which could be forced to cut services. Local property taxes help pay for vital needs like public safety, education, and public health.
Rep. Eric Ager (Photo: N.C. General Assembly)State Rep. Eric Ager (D-Buncombe) told colleagues that the costs the state passes down to local governments are the reason for increasing property taxes.
“I think if we were really serious about fixing the property tax problem, we would begin here looking at ourselves and figuring out how we can support these communities in both their education, their law enforcement, all of those things, and stop creating unfunded mandates,” Ager said.
Despite those concerns, Ager said he believes the proposed amendment is a “good faith effort” to solve the vexing property tax problem that has some taxpayers worried about being able to remain in their homes.
“I’ll support it here in the committee as we think about it, but I do think we have a lot of hard work to do on the property tax issue, and I think we need to look at ourselves first,” Ager said.
Rep. Tim Longest (D-Wake) said North Carolina must keep promises it made to attract businesses to the state and pay for services needed to keep pace with growth.
Rep. Tim Longest (Photo: N.C. General Assembly)“If we’re gonna make good on the promises that we made to those people in getting their businesses to come here, locate their employees and themselves, we need to be prepared to provide the essential services that are currently the county’s unfair responsibility to shoulder,” Longest said.
For example, Longest said, in Wake County, $600 million in local funding will go to fill state funding gaps for public schools, community college operations, jail operations and foster care.
Rep. Brandon Lofton (D-Mecklenburg) noted that at a recent town hall meeting with Charlotte-Mecklenburg Schools, he learned the district has 700 teaching positions that are funded completely by the county. Teacher salaries are primarily a state responsibility.
“That means without the county stepping in to fill that gap, there would be 700 fewer teachers within Charlotte-Mecklenburg Schools,” Lofton said.
Mecklenburg County will spend $429 million this year filling school funding gaps created by the state, Lofton said. Over the past seven years, the county has spent about $2.9 billion on items that are the state’s responsibility, he said.
“Fifty-eight percent of our county budget comes from property taxes, so that means the best way to relieve the pressure on property taxes is to stop shifting costs down to the county and down to local governments,” Lofton said.
Tamika Walker Kelly (Photo: NCAE)Tamika Walker Kelly, president of the North Carolina Association of Educators, said the state has favored “tax breaks over classrooms.” The constitutional amendment would rob local governments of one of the few tools they have to adequately fund public schools, she said.
“When local revenue is constrained, schools feel it immediately with overcrowded classrooms, aging school buildings and educators stretched too thin,” Walker Kelly said. “A constitutional cap does not protect struggling families, it protects the largest landowners in the state, while the families who depend on public schools are left with less.”
Taking a cue from the state’s GOP leadership, Rep. Keith Kidwell (R-Beaufort) argued that North Carolina’s high property taxes are due to runaway spending at the local level, which he said lawmakers also need to address.“
Rep. Keith Kidwell (R-Beaufort) (Photo: N.C. General Assembly)“I agree we need to put a cap on the increases that can be assessed by the municipalities, counties and so forth, but this really just brushes the top of the problem, and to the great words of [former president] Ronald Reagan, we don’t have a taxing problem, we have a spending problem,” Kidwell said.
Kidwell cited several examples of what he believes are local government abuses of tax dollars in his district. He said in those cases, local leaders asked for tax or fee increases but didn’t use the money for stated purposes.
“This happens across the state,” he said. “When cities and counties are going to levy a tax for a specific purpose … it should be used for that purpose and not diverted to other uses.”
Rep. Deb Butler (D-New Hanover) said that blaming higher taxes on “fraud, waste and abuse,” as she suspects some lawmakers will do this campaign season, is misleading.
Rep. Deb Butler (D-New Hanover) (Photo: N.C. General Assembly)“The truth is, property taxes are not rising because cities and counties suddenly went on a wild, drunken binge and started spending like sailors,” Butler said. “It’s because of the cost shifting that we have done from this body.”
Butler said reforms to current property tax relief programs could yield savings of up to $6,000 for some households, compared to $300 or so in savings from a tax levy limit.
Voters would be asked to approve the constitutional amendment in the Nov. 3 General Election.
Primary bill sponsors are Rep. Brian Echevarria (R-Cabarrus), Rep. Julia Howard (R-Davie), Rep. Erin Paré (R-Wake) and Rep. Mitchell Setzer (R-Catawba).
“We heard extensively from staff, stakeholders, and subject matter experts,” Echevarria said. “The resulting debate led to the conclusion that asking the people whether they want a constitutional amendment requiring limits on property tax increases by local governments is the next step toward a modern, fairer, and more predictable property tax system.”
Bill to put property taxes on hold in North Carolina gets Senate approval
The request for the constitutional amendment comes as Senate leaders consider legislation to block some local governments from instituting property tax revaluation changes in 2026. Senate Bill 889 also grew out of growing concern about rising local property taxes.
Senate Leader Phil Berger said that a constitutional amendment will take months or years to put into effect. He said a moratorium would offer some breathing room while lawmakers work out the details.
“I know that in the counties that are affected by the moratorium, there are significant discrepancies in terms of who is facing the burden of higher property tax payments,” Berger (R-Rockingham) recently told reporters. “In many instances, the folks that are getting hit the hardest are folks at the lower end of the income scale, folks that are on fixed incomes.”
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