NC lawmakers taking steps toward new constitutional amendment on property taxes

State lawmakers plan to meet Wednesday for what could be the first vote on a proposed new constitutional amendment. The proposal would limit how much cities and counties can raise property taxes, and possibly even force some cuts.

Wednesday’s planned vote is at a committee that House Speaker Destin Hall set up last year to study different potential changes to property taxes in North Carolina.

If the amendment clears the committee, it would be just the first of possibly many votes. 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 2026 ballot this fall, if it moves through the legislature in the next few months.

Debate over how to tackle property tax reform started small, with lawmakers eyeing specific situations they might want to tackle. Creating new tax loopholes for senior citizens or others on a fixed income, or eliminating existing tax loopholes for hospitals, were some of the items up for debate in prior meetings.

But the proposed constitutional amendment would be far more sweeping in scope, affecting every city and county in the state, and harder to repeal in the future than a normal law.

Property taxes have historically been the responsibility of local government leaders to set, since all of the money stays in those communities to fund police, schools, parks and other priorities. Hall and other Republicans would like the state to get involved now, however, saying they believe some local governments have gotten too aggressive in raising property taxes on their residents.

While Republican voters tend to favor lower taxes than Democratic voters, the state’s lowest property tax rates are mostly found in the large, urban centers dominated by Democratic politics. In part that’s because the big metros also attract businesses more than rural areas, causing rural politicians to have to implement higher property taxes rates since there are fewer businesses and, in general, homes aren’t worth as much.

“Property taxes are out of control,” Hall said when the amendment was first proposed last month. "Families are getting ripped off as some, but by no means all, local governments rake in billions more than inflation and population growth warrant. It’s time for real reform."

But city and county leaders from areas both rural and urban have been raising concerns about the proposed amendment. According to the North Carolina League of Municipalities, which lobbies on behalf of city and town governments, more than half of local spending in North Carolina goes toward public safety — police departments, fire departments, sheriffs’ offices and the like.

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.”

Aside from public safety, much of the rest of any given local government’s budget is spent on roads and schools.

And even without property tax limitations, many school districts around North Carolina have been feeling a budget crunch 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.