North Carolina Passes New Limits on Property Tax Levies

On Tuesday, North Carolina voters narrowly approved House Bill 1089, which proposed a limit on property tax increases. The amendment needed 60% of voters to support it to pass. It received 60.4% support.

The amendment does not specify the terms of those limits. Instead, that will be up to the North Carolina General Assembly to decide.

Proponents, including North Carolina House Speaker Destin Hall, contended that surging property assessments have enabled local governments to impose excessive tax burdens on residents without delivering proportional public services.

Last year, Hall formed the House Select Committee on Property Tax Reduction and Reform, a 23-member committee to examine property taxes in the state.

“Families are getting ripped off as some, but by no means all, local governments rake in billions more than inflation and population growth warrant,” Hall said in a press release earlier this year.

Support for the amendment fell across party lines. Conservatives and commercial organizations supported the measure, arguing that the amendment would help curb local government spending and protect property owners.

Political pundits theorized that the ballot measures were meant to entice Republican voters to the polls during an off-election year. But Western Carolina University professor Chris Cooper told NPR's All Things Considered the theory didn't hold much weight.

"The notion that North Carolinians were not going to show up and vote from the Republican persuasion, but now they are because of a constitutional amendment, is on there, frankly that stretches credibility for me a little bit."

But critics of the proposal said that creating a property tax cap would hobble local governments. Furthermore, the North Carolina Housing Coalition argued that the proposal would most benefit larger corporate property owners while providing little benefit to owners of single-family homes.

Tamika Walker Kelly, president of the North Carolina Association of Educators, criticized the bill for favoring “tax breaks over classrooms.” 

“When local revenue is constrained, schools feel it immediately with overcrowded classrooms, aging school buildings, and educators stretched too thin,” Walker Kelly told NC Newsline. “A constitutional cap does not protect struggling families. It protects the largest landowners in the state, while the families who depend on public schools are left with less.” 

In the U.S., property tax rates are determined at the local level and vary widely. The average effective property tax rate on owner-occupied housing in North Carolina is 0.66%, which is relatively low compared with states such as New Jersey and Illinois, where the effective tax rate is 1.88%, according to Tax Foundation, a nonpartisan tax policy nonprofit.