A N.C. House committee formed to look at property taxes across the state voiced support Wednesday for a constitutional amendment on the ballot that would require the legislature to limit how much local governments can increase their property tax revenues each year.
The proposal is called a levy limit and has already been enacted in 28 states, including Texas and Washington. The House Select Committee on Property Tax Reduction and Reform took a voice vote, giving its support to putting the amendment before voters as soon as this fall.
With assessed property values soaring in many corners of North Carolina and inflation hitting any number of expenses, lawmakers have grown concerned about the impact property taxes are having on homeowners.
'We really owe people a sense of predictability of what they're going to be looking at as far as their personal budgets, their household budgets. And that just hasn't been happening with these recent tax hikes that we've been seeing," Rep. Erin Paré, R-Wake, told the committee, which she co-chairs.
Paré and other committee members have expressed concern that rising property tax rates threaten home ownership, particularly among senior citizens who are living on fixed incomes.
Wednesday's voice vote is only a first step ahead of the legislative short session that is expected to begin next month.
A proposed constitutional amendment would also need to be approved by at least three-fifths of the House and three-fifths of the Senate before appearing on a statewide ballot. Those votes would need to happen by early September for the proposal to be on November's ballot.
Passage of the amendment would not provide specifics limiting property tax increases. Those would need to be passed into law by the General Assembly.
Rep. Julia Howard, R-Davie, a chairwoman of the committee, said the proposed constitutional amendment is the right place to start reforming the state's property taxes.
"Will the constitutional amendment pass? Absolutely, it will. So people are very concerned about their property tax, but they're going to speak loud and clear and when they do, then it's going to be your responsibility to address the issue, and it's not an easy fix," Howard told the committee.
Some have expressed concern that limiting the ability of local governments to collect property taxes could make it difficult to provide key services such as police and fire, as well as take on the increased burden last year's H.R. 1 is expected to place on local governments.
"We need to be efficient about spending, but our demand is not flat. Our state is growing, and if you think that our spending needs to be flat, you need to reevaluate what your thoughts are right now," Rep. Maria Cervania, D-Wake, told the committee.
Property taxes in NC
North Carolina state law already limits property taxes to a maximum rate of $1.50 per $100 of assessed value. That comes out to $4,500 on a $300,000 home or $7,500 on a $500,000 home.
County property taxes in North Carolina range from 99 cents per $100 in assessed value in Scotland County ($2,970 for a $300,000 home) to 27 cents per $100 in assessed value in Macon County ($810 for a $300,000 home).
It is important to bear in mind that many properties are located in incorporated areas and therefore must pay taxes assessed by two local governments.
Speaker of the House Destin Hall, R-Caldwell, signaled his support for the constitutional amendment in a press release shortly after Wednesday's vote.
"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, which is why the House is pursing solutions like levy limits to stop runaway property tax hikes and protect North Carolina taxpayers," Hall wrote.
Hall pointed to a recent analysis from the conservative John Locke Foundation that found tax rates in seven of the state's 10 largest county increased more quickly from 2014 to 2024 than they would have under levy limits accounting for inflation rate and population growth.
Rep. Brian Biggs, R-Randolph, shared a story about a real estate client of his who owns an investment property in the Triad that had previously been assessed in the $190,000s. They were trying to sell it for $275,000 after making some improvements to it.
That county recently conducted a revaluation finding that it is worth $435,000 due to improvements. After receiving the letter, Biggs said, the client called him panicked to say they could no longer afford to own it. They asked him to drop the price to whatever is necessary to sell it.
"There's real-life pain going on when people get that sticker shock," Biggs said.
Chances in the Senate?
Senate leader Phil Berger has also turned attention to the property tax issue in recent weeks, directing 10 Republican Senators, including the chamber's Appropriations Committee and Finance Committee chairs to consider reforms.
Additionally, Berger said in late February that he plans to file a bill in April imposing a 12-month legislative moratorium on local property tax increases.
Asked whether Berger supports the proposed constitutional amendment, spokeswoman Lauren Horsch wrote, "Senate Republicans continue their work to bring forward a proposal to rein in the local governments that saddle residents with skyrocketing property tax increases."
Howard said she contacted senators on the Finance Committee three months ago and asked them to work with the House property tax reform committee. Howard said she hasn't yet heard back.
"With or without them, we will move forward because it's the right thing to do," Howard said.
The property tax committee heard details about but did not vote on a number of other proposals Wednesday, including bills that would limit sales tax refunds that nonprofit hospitals can claim, that would increase property taxes paid by nonprofit hospitals and that would modify property tax exemptions that can be claimed by affordable housing projects.
The House property tax committee is next scheduled to meet April 15 and plans to take votes at that time.
