The North Carolina General Assembly is considering a constitutional amendment that would limit the amount local governments can increase their property tax revenue annually.
The House Select Committee on Property Tax Reduction and Reform hopes to add the amendment to the ballot this fall.
The subcommittee has met four times since December, focusing on ways that the legislature could constitutionally limit tax levy rates.
Tax levy rates are the overall countywide or citywide tax bill and have two components: the tax base and the tax rate. The tax base is what is being taxed, such as the value of a property, whereas the tax rate is the percentage or amount charged on that base. Property reappraisals, which Alamance County started in September, update the property tax base to the current, fair market value.
Christopher McLaughlin, professor of Public Law and Government at University of North Carolina’s School of Government, spoke to the House subcommittee during its meeting Jan. 14.
McLaughlin told Elon News Network the proposed amendment allows the General Assembly to limit property taxes but does not include a time frame or manner.
“It simply says they have the Constitution that says the General Assembly shall — meaning must — shall pass limits on property tax levies,” McLaughlin said. “So it doesn’t say how they’re going to go about doing that or what type of limits or when. And frankly, I think it’s completely unenforceable.”
He also said the state government does not need a constitutional amendment to create a tax levy limit.
North Carolina state law already has a maximum tax rate cap of $1.50 per $100 of assessed value. 35 states and Washington D.C. have similar caps. In North Carolina, no counties have reached this cap.
As state officials discuss property tax rates, town of Elon Town Manager Rich Roedner said he believes these decisions should be made by local governments.
“When you start tinkering with a fair system, you may not like the system, but when you start tinkering with it, you’re picking winners and losers,” Roedner said. “You’re telling residents of local government, of local towns and counties, ‘We in Raleigh know better than you do.’”
The town of Elon reported $3,607,119 in property tax revenue for the 2024-25 fiscal year, which was about 19% of total revenue for the town, according to financial statements. The town of Elon receives less in property taxes than in other tax revenue, which makes up for almost 23% of town revenue.
Roedner said property taxes fund community resources, including the town of Elon’s police department, fire department and public works.
“The reality is, like in Elon, between police, fire and public works, it’s over 65% of our budget,” Roender said. “So if suddenly our budget is limited by some artificial number that somebody in Raleigh thought was a good idea, we have to cut budgets. Where do you make those cuts?”
According to Alamance County’s Annual Comprehensive Financial Report for the 2024-25 fiscal year, property tax revenue makes up for just over 54% of total revenue for the county.
McLaughlin said that oftentimes people see a change in their property tax rate because of the reappraisal process, which happens every four to eight years, per North Carolina state law.
“When you wait longer to reappraise and as the economy fluctuates, the tax base goes up and you may see a bigger jump because the changes have not happened in so long,” McLaughlin said.
When McLaughlin spoke to the committee, he focused on The Constitutional Uniformity Requirement, which requires any tax breaks created by the legislature to apply equally statewide. He said committee members were concerned with tax exemptions for elderly residents and exemptions for low income housing.
The exemptions for elderly residents would mean that anyone 65 and older who makes under a certain income level would pay less in property taxes. However, McLaughlin said that some counties would be affected more than others because of their demographic and economic makeup.
In Elon, U.S. Census data from 2024 shows that 13.2% of the population is over the age of 65. Alamance County Census data shows that 17.6% of the population is over the age of 65.
According to Rep. Dennis Riddell, who represents Alamance County and is a member of the subcommittee, the goal of the committee is to reduce the tax burden for North Carolinians. Riddell was unavailable for an interview with Elon News Network, but instead shared a statement.
“All reforms to be considered must provide genuine relief for taxpayers while still balancing the potential impacts on local governments revenue,” Riddell said.
But Roedner said he sees these actions at the state level differently.
“The state is ultimately saying ‘We know better than the local voters know, and we’re going to apply the same rule across the state’ so that the very, very property poor community that needs to repave a road and they need to raise taxes to do it, they may not be able to do it because they won’t be able to raise taxes, depending on what the language looks like.”
The committee is set to meet again April 15.
Even if the House passes the proposal regarding the amendment, the proposal would also have to be approved by the state Senate to get it to voters in November.
“Even though the House and the Senate are controlled by the same party, they are not particularly the best buds, as evidenced by the fact we do not have a state budget.” McLaughlin said. “So I have no idea, even if this committee passes what they talked about, and the full House passes it, what the Senate might do with it.”
Roedner said the town of Elon is preparing a resolution that will serve as the official position of the town council. He said he hopes the proposal will stop the committee from putting the proposed amendment on the ballot.
“Yes, we have residents who complain about taxes, but those are local issues, and they need to deal with it at the local level and scrap this idea of the state trying to take over those decisions,” Roedner said.