At a time when property tax bills are rising across North Carolina, policymakers have proposed a constitutional amendment to limit how quickly those taxes can grow. However, critics warn that such limits could reduce allocations to public schools.
The concern is understandable — but it misses a key point.
A levy limit isn’t a budget cut. It doesn’t force local governments to reduce spending, nor does it require school funding to decrease.
Instead, a levy limit caps the growth rate of annual property tax collections going forward. Local governments can still increase revenue each year; they simply can’t allow it to grow faster than a defined formula. And, depending on how the final legislation is crafted, local governments may exceed the cap with local voter approval.
The debate isn’t about whether revenues will go up or down. It’s about how fast they will be allowed to grow.
What the data shows
In a recent analysis of North Carolina’s 10 largest counties, property tax collections collectively exceeded a benchmark tied to inflation and population growth by more than $2.6 billion over the past decade.
On average, county property tax revenues grew 62 percent, while the benchmark would have allowed 51 percent growth; however, the results varied. Some counties, like Wake and Cabarrus, saw property tax revenues grow dramatically faster than the benchmark. Others, like Mecklenburg and New Hanover, kept growth much closer to the benchmark.
That tells us something critical: Rapid growth in property tax revenue during the recent housing boom wasn’t inevitable. It was a policy choice.
What a well-designed levy limit does
A well-designed levy limit ties the growth of property tax revenue to economic realities — specifically inflation and population growth.
This allows local governments to:
- Keep pace with rising costs
- Account for new residents and development
- Continue funding core services, including education and public safety
At the same time, however, it prevents aggressive property tax increases during housing booms.
A well-designed levy limit also applies broadly to all property tax collections. If certain spending categories or fund types are excluded, local governments can shift revenue collection into those areas, weakening the policy’s effectiveness.
Properly structured, a levy limit doesn’t restrict government — it disciplines it.
Where things stand now
The House Select Committee on Property Tax Reduction and Reform has approved a constitutional amendment to establish a property tax levy limit.
For the amendment to advance, it must receive a supermajority, or three-fifths support, in both the House and the Senate. If that happens, it will go before voters statewide on the ballot this November.
If voters approve the amendment, policymakers will need to pass accompanying legislation to define how the levy limit operates in practice. Key decisions — such as the growth formula and allowable exceptions — will determine how effective the policy ultimately is.
The design details will matter just as much as the amendment itself.
A question of growth, not cuts
The central question in this debate is simple: should property tax revenues grow without limit, or should they be tied to the broader economy?
A levy limit answers that question by setting reasonable guardrails. It allows revenue to grow while ensuring that growth remains predictable, sustainable, and aligned with taxpayers’ ability to pay. That is not a threat to school funding. It’s common sense.
