Put property tax cap on NC ballot and close housing loophole, lawmakers say in report
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- Report proposes a November ballot question on limits for local property tax increases.
- Report recommends closing affordable housing loophole to restore tax revenue.
- Fiscal Research Division found $130M lost to hospital exemptions and $60M to housing
In the November election, voters in North Carolina may have this proposal on their ballots:
“Constitutional amendment requiring limits on property tax increases by local governments.”
Local governments that worry about the impact on their budgets of that constitutional change could also end up getting more property tax revenue if a loophole for affordable housing developments is closed.
Both things are in the final report of a Republican-led General Assembly committee that spent the past five months studying property tax policy and possibilities to reform it.
Two major aspects of the report would impact property taxes.
One is closing the so-called “Blue Ridge” affordable housing loophole for developers.
The other takes the decision of capping property tax increases to the voters.
Property taxes are how local governments pay for major needs like law enforcement, trash pickup, salaries and more.
Capping property taxes could also cap local government spending.
The amendment, if it passes and is added to November ballots, would ask voters if the General Assembly should create limits on the amount that local governments can increase property taxes. There’s not a set amount in the question.
Affordable housing loophole in proposal, hospital exemptions are not
One solution for local governments seeking more revenue, pitched by the House lawmakers, is to get rid of loopholes that mean less property tax income for municipalities.
The legislature’s Fiscal Research Division found localities lose $130 million a year in nonprofit hospital property exemptions and $60 million in exemptions for charitable nonprofit low and moderate income housing.
The hospital exemptions are a conversation for 2027, lawmakers say. Rep. Erin Paré, a Wake County Republican and committee chair, said it was important to go through the process of looking at the hospital exemptions, and they’ll use what they found when property tax changes will be a topic in the legislative long session in 2027.
The affordable housing exemption proposal would:
- Keep the property tax exemption for nonprofit or joint ventures with local government support for low- and moderate-income housing,
- Drop the tax deferral time for future affordable housing sites to five years, from the current 10 years, and
- “Prohibit joint ventures that do not finance affordable housing with government support from obtaining the property tax exemption.”
Local governments have been losing out on millions in tax revenue because of the loophole based on a 2012 “Blue Ridge Housing” court case and even older state law, The N&O previously reported, that lets corporate investors partner with nonprofit housing agencies.
Democrats question impact on local governments
The committee was formed by Republican House Speaker Destin Hall, and the committee chairs are all Republicans. The ideas for looking at property tax reform got some support from Democrats on the committee, but also concerns.
Wake County Democratic Rep. Maria Cervania has consistently asked about what limiting taxes would mean for local governments that need the money for services. And some Democrats say those local governments need the money because of the legislature.
Rep. Becky Carney, a Mecklenburg County Democrat, said in March that she agrees the state should do something about property taxes. Carney said that she doesn’t normally support constitutional amendments, but does support advancing this one so the public can weigh in.
“We’re going to let the public have an input on whether we should do this or not,” Carney said.
Paré said it is too early to say if a property tax cap would impact local budgets in certain ways, because the amendment hasn’t passed yet, and the limits haven’t been defined.
“I think we all need to step back a little bit and just take a look at what this constitutional amendment does, and it really is an exercise in direct democracy. People can tell us if they want the General Assembly to put those limits on property tax increases,” Paré told The N&O on Wednesday.
As lawmakers passed their final report before the legislative session begins, House Democratic Leader Robert Reives, who is not on the committee, called the proposals a “political stunt.”
“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. 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,” Reives said in a statement.
“The General Assembly could take action to raise the minimum wage, to fund Medicaid fully, or to pass a state budget. Instead, we get political stunts like this to give their vulnerable incumbents a platform to run on when very little of substance has been accomplished this biennium,” Reives said.
No property tax changes unless Senate agrees
If the House passes a bill with the property tax changes, it still won’t go anywhere unless the Senate is on board, too.
The Senate does not have a property tax reform committee, but Senate leader Phil Berger did designate some Republican senators to study the issue. They have not met formally yet. Lawmakers on the House committee had hoped they could meet as a joint committee.
Republican Sen. Benton Sawrey is on the Berger task force and represents Johnston County on the edge of the Triangle, including rural communities. He’s cautious about a statewide measure.
“Everything is on the table and should be looked at with respect to property taxes, but we need to be deliberate and make sure that we’re thinking through impacts of any changes to the system across all 100 counties,” Sawrey told The N&O. “Johnston County isn’t Wake County or Mecklenburg County.”
This story was originally published April 15, 2026 at 2:27 PM with the headline "Put property tax cap on NC ballot and close housing loophole, lawmakers say in report."
