North Carolina voters this fall will be asked whether they want to change the state’s constitution to cap the state income tax at 3.5%.
That’s one of three constitutional amendments approved by the North Carolina House Wednesday. The other two, limiting property taxes and changing how Council of State vacancies can be filled, still need Senate approval.
Each amendment passed narrowly, with unaffiliated Mecklenburg Reps. Carla Cunningham and Nasif Majeed voting with the Republican majority each time, giving them the three-fifths margin required by the constitution to approve proposed amendments. Amendments are not subject to Gov. Josh Stein’s veto.
Political observers say the amendments are aimed at getting GOP voters to come out to the polls in November. As a midterm election year, Democrats are expected to outperform the incumbent Republican Party, which faces long odds due to President Donald Trump’s flagging approval ratings.
Personal income tax rate
The House passed Senate Bill 1080 73-46, securing its spot on the ballot in November.
NC Senate approves constitutional amendment capping income tax
The amendment gives voters the opportunity to cap the state income tax rate at 3.5%, starting in 2027. The Senate approved the measure Tuesday on party lines.
If voters approve the measure, the state can’t raise personal income tax rates in the future without another constitutional amendment.
Supporters of the bill say it allows citizens to have a say on their income tax rate.
“At its core, it’s people deciding what they want to do with their own money,” Rep. Dean Arp (R-Union) said.
Democrats said the amendment would hurt the state’s long-term economic future. The state would lose billions of dollars in revenue.
Rep. Phil Rubin (D-Wake) said reducing taxes will mean cuts to services that people rely on, like education, childcare, roads and public safety. He said people will end up paying more than the tax break will save them.
“I rise to oppose an amendment that seeks to make permanent the reckless fiscal policies that have picked the pockets of working-class people for the past 15 years,” Rubin said. “This amendment will put less money in working people’s pockets.”
Republicans like Rep. Keith Kidwell (R-Beaufort) said capping the income tax is a question of personal freedom.
“We tax people into oblivion,” Kidwell said. “We should concentrate every time we have the opportunity on what way we can cut taxes, what way we can cut how much government is involved in people’s lives, and how we can let them keep more of the fruits of their labor.”
Guilford Democratic Rep. Pricey Harrison said more than half of the state’s budget stems from personal and corporate income tax.Lowering those taxes will benefit the wealthy while harming low- and moderate-income families, she said.
“We’re really handcuffing ourselves in our ability to respond to urgent emergency situations,” Harrison said. “This is absolutely unnecessary and seems to be politically driven, and that’s a really unfortunate motivator for what is best for our constituents.”
Council of State vacancies
Lawmakers also voted 73-46 for House Bill 443, which would outline a process by which the governor can replace an elected member of the Council of State during vacancies. The departing official’s party would nominate three potential replacement candidates, and the governor would pick one.
It’s the same way North Carolina handles its U.S. Senate vacancies, according to Rep. Kyle Hall (R-Forsyth), a primary sponsor of the bill.
“The political party should have a say in who the governor picks to replace whoever it may be,” Hall said.
Currently, the governor has the power to fill any vacancies on the Council, without restrictions on who to appoint. The bill would weaken the governor’s authority, a position which is already limited compared to other states.
Rep. Charles Smith (D-Cumberland) proposed an amendment that would allow the governor to select any replacement from the same party as the vacating officer, rather than choosing from three nominees chosen by the state party.
Smith said his amendment would make voters more likely to approve the amendment on the ballot in November, noting that political parties are increasingly unpopular with voters. He said no amendment has ever added political parties to the state constitution.
“Look at the numbers of folks who are leaving the parties and the growth of unaffiliated voters,” Smith said.
The amendment failed with a 48-71 vote.
House Democratic Leader Robert Reives (D-Chatham) said he supported the amendment but not the bill as it stands. He hinted at Republicans pushing the constitutional amendments to encourage their voters to get to the polls during an anticipated blue wave.
“When we were back in the old days, you ran for office and you ran on who you were. You couldn’t stick a letter behind your name and sneak into office because it was a wave one way or another,” Reives said. “You had to look people in the face and you had to earn their vote.”
The bill moves to the Senate. If it’s approved, it would be on the ballot in November.
Property tax levy limit
The House also passed a bill that would place a constitutional amendment imposing a limit on local property tax increases on the ballot in November.
Lawmakers voted 73-46 to approve House Bill 1089, which now heads to the Senate, puts forward an amendment allowing the General Assembly to limit the amount by which property taxes can increase, but does not specify how to do it or what the limit should be.
Constitutional property tax amendment passes key NC House panel despite concerns
Rep. Brian Echevarria (R-Cabarrus), one of the primary sponsors of the bill, said reforming the state’s property tax system is crucial to protect residents from being priced out of their homes.
“We have heard from residents across the state. They reached out because their taxes had doubled or even tripled in a short time. They reached out to tell us they had to make difficult changes, sell their homes, or to say they didn’t know how much more they could handle,” Echevarria said.
Democrats who opposed the bill said it could deprive counties of critical funding for basic services, including police and fire departments.
Rep. Brandon Lofton (D-Mecklenburg) said his county government in Mecklenburg is spending nearly half a billion dollars a year in local tax revenue to pay for teachers, district attorneys and court personnel that are needed but that the state is not paying for, despite its responsibility to do so.
“If we know that our counties are stretched, and they’re stretched because they’re doing our job, before we impose any revenue limits, we need to ask ourselves, ‘How many teachers are we willing to risk losing?’” Lofton said.
Rep. Maria Cervania (D-Wake) echoed Lofton’s concerns, calling on lawmakers to “step up” and provide adequate funding.
“We need to be honest with our people, and we need to be honest with ourselves in this chamber about what is driving these costs,” she said. “They need schools, they need roads, they need parks, they need libraries. They need emergency [services], law enforcement, fire, EMS. They expect their response times to still be fast when they call 911.”
Echevarria said concerns over cuts to basic services are overblown, noting that 22 states have local property tax levy limits. “The sky did not fall. Services were not cut. And their residents have protection from unaffordable and unsustainable property tax hikes.”
Cunningham, one of the deciding voters in favor of the property tax levy limit amendment, said she was motivated by concern over gentrification. And she said county services need greater oversight if they want to receive more funding.
“The counties have needs, but the people also have needs. We have gentrified our senior citizens out of our communities because of the tax reevaluations,” she said. “We can’t just keep giving people money, and they’re not performing their duties or meeting their expectations.”
Reives said lawmakers already have the authority to limit property taxes without the need for an amendment. If supporters of the bill are genuinely concerned about property taxes, he said, they should pass a bill providing relief now instead of an amendment to be voted on months down the line.
“We’re asking people to vote for an amendment to tell us to do the job we already have. Does that sound weird to anybody else?” Reives said. “This amendment doesn’t change anything about your property tax. We can save your property taxes today. We are choosing not to, and that is disingenuous.”
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