A proposed constitutional amendment that would require the General Assembly to limit local governments' ability to increase revenue through property taxes cleared a hurdle on Wednesday.
The N.C. House of Representatives' Select Committee on Property Tax Reduction and Reform formally voted to recommend passage of a bill putting the constitutional amendment on the ballot this November. It would still need to pass the full House and Senate before actually appearing on the ballot.
The constitutional amendment was one of two bills the House committee advanced. The other moves to close a loophole that allowed apartment owners to claim property tax exemptions as long as they meet affordable housing limits and part of the property is owned by a nonprofit.
On the other hand, the committee did not take up a pair of recommendations that would have halved the full property tax exemption nonprofit hospitals receive or that would have cut by about two-thirds the local and state sales tax refunds hospitals can request.
Rep. Julia Howard, R-Davie, did not directly reference the hospital recommendations but urged her fellow committee members to consider what tax exemptions they'd be willing to claw back. Howard said more than $2 billion in properties are excluded from taxes.
"It's just one small thing today and next year it's another small thing and pretty soon it adds up to be rather large. When we eliminate or exclude an exemption, that is a definite cutout for local government. You're absolutely just reaching in and taking part of their tax base. And then they are still responsible to do the things that they are required to do," Howard said.
Property tax amendment
If passed by voters, the proposed constitutional amendment would mandate that the General Assembly enact a levy limit.
That would put a limit on increases in local governments' revenue from property taxes. The specifics of any such proposal, including what the limit actually is and what exceptions might exist, would be hashed out by lawmakers after passage of the amendment.
Speaker of the House Destin Hall said in a release Wednesday that the limits would likely be tied to inflation and population growth and likely allow for local voters to approve exceptions.
Rep. Brian Echevarria, R-Cabarrus, introduced the proposal Wednesday, saying property taxes have typically increased between 50-and-60% since 2020 while inflation has gone up by about 30%.
Enacting a levy limit would, Echevarria said, help address increases that come from property tax rates but also increases that come from soaring home valuations across the state.
"Under the current property tax system, when tax assessed values rise sharply, property tax bills can increase substantially even without any change or with the 'we didn't raise your taxes' reduction in the local rate. However, nothing changes for the people. They continue with the same income, same provided services and daily cost of living," Echevarria said.
Echevarria expressed particular concern for older and disabled people who are living on fixed incomes.
"You don't get priced out of the home you already own, you get taxed out," he said.
Critics of the proposal have said it could constrain local governments' ability to provide basic services, particularly in a highly inflationary environment like the current moment.
In a statement Wednesday, House Minority Leader Robert Reives, D-Chatham, called the property tax proposal "a political stunt" enacted by Republicans to cover up for legislative inaction this biennium.
"For years, they have pushed state responsibilities like public safety and school funding onto counties and now fault them for providing basic services to their residents," Reives wrote.
Blue Ridge Housing exemptions
In its other action, the committee proposed tightening a loophole apartment complexes have been using to obtain property tax exemptions because they are offering what is technically affordable housing.
Under the Blue Ridge Housing loophole, named for a 2013 N.C. Court of Appeals case that opened it, any owner of an affordable housing complex can claim a property tax exemption as long as it is controlled by a nonprofit. In the eponymous court case, the for-profit entity owned 99.9% of a Bakersville affordable housing complex and the nonprofit owned 0.1%.
Use of the exemption has increased by 93% between 2021 and 2025, in part because apartment prices spiked during and shortly after the COVID-19 pandemic, widening the scope of what is considered "affordable housing."
"This is a troubling trajectory of foregone tax revenue for affected local governments due to the ambiguity in current statute that led this committee to take a look at the categories of entities eligible for the charitable purpose exemption, the lack of definition of low to moderate income and ongoing compliance requirements to enforce long term affordability," said Rep. Erin Paré, R-Wake, who introduced the proposal to roll the exemption back.
In Wake County, 69 properties used the exemption in 2021, increasing to 137 in 2025. Those 2025 exemptions covered more than $2.2 billion in assessed properties and exempted $11.4 million in taxes, a N.C. Association of County Commissioners representative told lawmakers in January.
Under the changes, the affordable housing property tax exemption would only be available to properties that are 100% owned by a nonprofit with a track record of affordable housing or joint ventures that received government financing to support affordable housing.
Properties would be eligible for a 100% property tax exemption if they meet U.S. Housing and Urban Development affordable housing benchmarks or otherwise for a percentage equal to the percentage of affordable housing units.
