Raleigh, N.C. — Municipal and county representatives spoke out Wednesday against a bill that would exempt new homes in builder inventories from property taxes for up to three years.
Under House Bill 168, which cleared the House last month and is closing in on a Senate vote, builders would pay property taxes only on the land but not on the single-family homes or duplexes they have built there but haven't yet sold. For commercial buildings, the property tax exemption would run for five years.
During a Senate Finance Committee hearing on the bill, opponents said the exemption would wreak havoc with county tax offices, especially during revaluations.
Garner Assistant Town Manager Rodney Dickerson added that counties and cities provide services to those properties, from police and fire protection to sanitation and street maintenance and should be able to recoup some of those costs.
The legislative Fiscal Research Division estimates that counties and municipalities would lose about $60 million a year statewide in tax revenue if the exemption goes into effect next year, and Dickerson said that financial burden is too much for many locales to absorb.
Sen. Andy Wells, R-Catawba, asked how the exemption differed from a nonprofit hospital buying a physician practice and taking it off the tax rolls.
"This would apply to the vast majority of our growth every year, while that is just a one-off thing," Dickerson replied.
Sen. Jerry Tillman, R-Randolph, rebuked opponents, saying cities and counties would gain plenty of tax revenue from the developed properties once they were sold.
"Your money's not on the line here, the builder's is," Tillman said. "They're the ones we're trying to help."
The bill passed the committee on a voice vote and next goes to the Senate Appropriations Committee before heading to the floor.