NC House committee advances proposal to give state more control over property taxes

State lawmakers voted Wednesday to advance a proposed constitutional amendment that would give the state more control over how much cities and counties can raise property taxes.

“The question this committee is answering is whether North Carolinians should be protected from continual, unsustainable, unpredictable property tax increases or not,” said state Rep. Brian Echevarria, R-Cabarrus.

The House Select Committee on Property Tax Reduction and Reform, formed by House Speaker Destin Hall last year, was tasked with studying different potential changes to property taxes in North Carolina.

Hall and the committee’s Republican leaders have said property taxes have gotten too high in some parts of the state, and that it’s unfairly burdening some people, particularly people who bought homes long ago — and have their property values and tax bills both surge — as well as people on fixed incomes.

““Property tax hikes are overburdening North Carolina families, who are footing the bill while some local governments take in far more than inflation and population growth can justify,” Hall said in a statement Wednesday after the vote.

His Democratic counterpart, House Minority Leader Rep. Robert Reives, D-Chatham, called the push a “political stunt” that would punish cities and counties for having filled gaps in funding that have occurred due to GOP-backed cuts to state government funding.

“I am glad to see Republican leadership recognizing that North Carolinians are living through an affordability crisis that this General Assembly has only exacerbated by failing to do its basic duties,” Reives said in a statement. “For years, they have pushed state responsibilities like public safety and school funding onto counties and now faults them for providing basic services to their residents.”

Counties already facing cuts

Even without property tax limitations, many school districts around North Carolina have been feeling a budget crunch this year and are looking to cut millions of dollars from their budgets. School districts statewide are currently in the process of setting their budgets for the 2026-27 school year, and many are facing the need to cut millions of dollars.

That education budget crunch, driven in part by falling enrollment and rising inflation, has affected rural districts like in Harnett County, urban districts like in Wake County, and suburban districts like in Chapel Hill-Carrboro schools.

The proposed constitutional amendment would establish new rules called a levy limit, already in place in some other states, WRAL previously reported. If approved, that system would limit local governments’ authority over property taxes — including by forcing automatic cuts in certain situations — passed with some opposition in Wednesday’s committee meeting. 

Wake County relies on property taxes to fund parks, public safety, and infrastructure, and local leaders are worried this amendment would force them to make some cuts if approved.

“Property tax is our most stable revenue source that we receive… it's our largest revenue stream, funding about 75% of our annual budget,” Don Mial, Chair of the Wake County Commissioners told WRAL in an interview Wednesday.

The League of Municipalities recently sent a message to local leaders, urging them to call state lawmakers and try to convince them not to move forward.

“Explain the effects of artificial limits on your funding,” the group wrote. “Examples include higher borrowing costs due to the lower bond ratings that would likely result from these limitations; an inability to respond to skyrocketing costs like those experienced this decade; and difficulties in paying for needs after floods and other natural disasters.”

Other opponents said the amendment wouldn’t lower people’s property taxes in a meaningful way, and the committee should keep working to find different solutions.

“It's not really going to help the people that really need it in the near term or even maybe the medium term,” state Rep. Eric Ager, D-Buncombe, said of the proposed amendment.

Some of the issues the committee previously debated, but didn’t ultimately recommend for consideration by the full legislature, include creating new tax loopholes for senior citizens or others on a fixed income, and eliminating existing tax loopholes for hospitals.

Hospital lobby’s political power

Rep. Julia Howard, R-Davie, indicated Wednesday that the hospital lobby pressured GOP leaders to kill the recommendation to whittle down the tax loopholes hospitals enjoy, and that that the effort was successful.

Lobbying groups for hospitals, as well as for doctors and other health care professionals, contribute large sums of money to Republican politicians and conservative-leaning political groups.

“Somebody told me that I probably shouldn’t say this, but it’s okay,” said Howard, one of the committee’s three co-chairs. “We were all bombarded with calls from lobbyists.”

One of her fellow co-chairs, Rep. Mitchell Setzer, R-Catawba, interjected: “Yes, you were told not to bring it up.”

Howard, who also co-chairs the House Finance Committee, went on to say that hospitals are going far beyond the original intent of the legislature when it created some tax exemptions for nonprofits, describing their tax strategies as involving cheating and manipulation.

Various tax exemptions have been costing local governments billions of dollars, she added.

“Hospitals are very intimidating and have a large lobby,” Howard said. “But as we move forward and look at these exemptions, you’re going to have to have a big coat on, and have the will to stop it. … We have to do what’s right.”

The North Carolina Healthcare Association, which lobbies on behalf of hospitals, said that without the savings from those tax breaks, some hospitals could face serious financial issues.

“Many hospitals in North Carolina, particularly those serving rural and underserved communities, operate on very small margins,” NCHA spokesperson Hannah Rogers said. “Proposals that further strain hospital resources raise serious concerns about the potential impact on patients, access to care, and hospitals’ ability to reinvest in critical services both within their facilities and in the communities they serve.”

Low-income housing

As for the constitutional amendment to limit property taxes statewide, Wednesday’s vote was just the first of possibly many. The proposal will have to pass the full state House and Senate — with supermajority support — before it could be put on the ballot for voters to decide.

There’s still enough time that it could be on the ballot this fall, if it moves through the legislature in the next few months. Lawmakers are expected to return to the legislature next week for the start of a short legislative session.

The committee also advanced a draft bill that would change the rules for property tax exemptions for nonprofit organizations. Under that proposal, certain organizations can avoid paying property taxes if they use their property entirely for charitable purposes and are not run for profit. The change is meant to winnow down the list of who qualifies, especially nonprofits that provide affordable housing for low- or moderate-income people. 

WRAL previously reported that those affordable housing tax breaks kept nearly $750 million worth of property out of the county’s tax base in 2025.