(Photo: Clayton Henkel/NC Newsline)
A Senate committee on Tuesday advanced a bill that would prohibit local governments from adopting a property tax rate exceeding the revenue-neutral tax rate after a tax revaluation unless they publicize their intent to do so.
To avoid raising property owners’ tax bills after a tax reappraisal, local governments can lower their overall property tax rate to offset the increase in values, so they’re collecting the same amount of revenue. That’s what’s known as a revenue-neutral rate.
However, supporters of the bill say local governments aren’t fully offsetting the revaluation. They say local governments claim they’re lowering the property tax rate, but the real tax bill that a property owner pays still goes up.
Under Senate Bill 992, dubbed “Truth in Taxation,” local governments would be required to pass a resolution or ordinance to allow the tax rate to exceed the revenue-neutral rate. The bill also requires them to publish public notices of intent to exceed the revenue-neutral rate and to hold a public hearing about it.
Counties and municipalities that do not comply with S992 would have to refund any property taxes collected that exceed the revenue-neutral tax rate.
Sen. Carl Ford (Photo: NC General Assembly)Sen. Carl Ford (R-Rowan), a bill sponsor, said S992 would increase transparency by making it mandatory for local government officials to tell taxpayers when they plan to increase their tax bills.
“What’s wrong with that?” Ford asked during a senate committee meeting Tuesday.
Ford said some homeowners don’t know how much they’re paying in taxes because the payments are rolled into the mortgage.
“No one cares because no one knows,” Ford said.
Sen. Lisa Grafstein (D-Wake) thanked Ford for S992 and quipped that she “wished we could have a bill” that brought transparency to the state budget.
NC property tax moratorium bill nears the finish line
S992 is one of several bills lawmakers have filed to reduce the property tax burden on homeowners. Throughout the short session, the Republican leadership has blamed local government officials for high property taxes.
“Families are getting ripped off as some, but by no means all, local governments rake in billions more than inflation and population growth warrant,” House Speaker Destin Hall (R-Caldwell) said.
Meanwhile, Democrats say high property taxes are the result of years of underfunding and neglect by the General Assembly. They claim lawmakers have consistently handed down unfunded mandates and pushed state responsibilities onto local governments.
“The truth is, property taxes are not rising because cities and counties suddenly went on a wild, drunken binge and started spending like sailors,” said Rep. Deb Butler (D-New Hanover) in May.“It’s because of the cost shifting that we have done from this body.”
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