CONSTITUTIONAL AMENDMENT #3
Property Tax Levy Limits
BOTTOM LINE
Here is exactly what you will see on your ballot: “Constitutional amendment requiring limits on property tax increases by local governments.”
This amendment does not establish a percentage limit on property-tax increases. It does not establish an inflation formula. It does not say how population growth will be treated. It does not specify what happens with new construction. It does not require exceptions for emergencies, natural disasters like Hurricane Helene, schools, public safety, state mandates or other extraordinary or unexpected expenses.
This amendment does not ask voters to approve a property-tax levy limit. It asks voters to require the General Assembly to create one later.
If voters approve this Amendment, the constitutional mandate would be settled: there must be a limit. The General Assembly would then have to come back later and enact general laws establishing how that property-tax levy limit actually works. Those future laws may contain exceptions. We don’t know if there will be exceptions. And, if there are, we don’t know what they will be.
So the central question is:
Should North Carolina voters amend our Constitution to require limits on local-government property-tax levies before the limits themselves have been enacted — or even specified — in the amendment we’re being asked to approve?
WHAT THE BALLOT DOESN’T TELL YOU
The ballot language for this Amendment says only: “Constitutional amendment requiring limits on property tax increases by local governments.”
What the ballot doesn’t tell you is that there is no actual limit established in the amendment. Nor can its eventual local fiscal impact yet be calculated.
In fact, the General Assembly’s own Fiscal Research Division said it could not estimate the eventual local fiscal impact because “the specifics of a potential levy limit” are not specified in HB1089 and would have to be addressed later if voters approve the amendment.
The official voter explanation does not supply the missing formula either. It says: “This amendment to the North Carolina Constitution would require the General Assembly to set limits on property tax increases by local governments.”
The actual constitutional language tells us a little more: “The General Assembly shall enact general laws limiting the amount by which the levy of taxes on property may increase, which may include exceptions.”
May. Not shall.
SOURCES: Session Law 2026-5 (HB1089); General Assembly Fiscal Research Division fiscal note, May 5, 2026; 2026 Legislative Services Officer constitutional-amendment explanation.
WHAT DOES “LEVY” EVEN MEAN?
Turns out that word “levy” really matters. And it’s complicated. The amendment is not necessarily limiting how much your individual property assessment can increase. And it is not necessarily limiting how much your individual property-tax bill can increase. Instead, it requires the legislature to limit how much the property-tax levy imposed by a local government may increase.
Got it? Those are different things, and they are easy to confuse. So bear with me while I try to break it down:
Property taxes involve at least three different moving pieces:
ASSESSED VALUE: What the county says your property is worth.
TAX RATE: The amount charged for each $100 of the assessed value of your property.
TAX LEVY: The total amount of property tax imposed across the entire County tax base.
So suppose property values rise dramatically during a countywide revaluation, as ours here in Watauga generally do. That does not automatically mean the county collects the same percentage increase in taxes. Commissioners can lower the tax rate.
Likewise, restricting growth in the county’s total levy does not necessarily restrict every homeowner’s tax bill by the same percentage. Some properties may appreciate much faster than others. That distinction is especially important in Watauga County because another countywide property revaluation is approaching.
LET’S PLAY OUT HOW THIS AMENDMENT MIGHT AFFECT WATAUGA COUNTY
Watauga County’s FY 2026–27 adopted budget uses a property-tax rate of 31.8 cents per $100 of assessed value on a taxable base of roughly $15 billion. The budget anticipates approximately $47.2 million in ad valorem property-tax revenue.
Suppose that after revaluation Watauga’s tax base increased 50%. That would not mean commissioners had to collect 50% more property taxes.
If the tax base rose from roughly $15 billion to roughly $22.5 billion, commissioners could lower the tax rate substantially, something they have done before. A rate around 21.2 cents rather than 31.8 cents would produce approximately the same levy as before.
For illustration purposes only, suppose a future General Assembly chose a 3% levy limit. (The proposed constitutional amendment itself contains no 3% limit—or any other percentage.) Under that hypothetical, Watauga County could collect roughly $48.6 million rather than $47.2 million. With our hypothetical $22.5 billion tax base, the tax rate would be roughly 21.6 cents.
All three of these things could then happen at the same time:
Property assessments: UP roughly 50%
Tax rate: DOWN roughly 32%
Total property-tax levy: UP roughly 3%
And your own tax bill could still rise substantially.
Further suppose three Watauga County houses are currently assessed at $300,000. At the current 31.8-cent county rate, each would owe approximately $954 in county property tax. After revaluation, suppose House A rises 25% to $375,000; House B rises 50% to $450,000; and House C rises 100% to $600,000.
At our hypothetical levy-limited rate of roughly 21.6 cents, their owners’ bills would be approximately:
House A: $810 — DOWN about 15%
House B: $972 — UP about 2%
House C: $1,296 — UP about 36%
Meanwhile, the county’s overall levy could have risen only about 3%. Clear as mud? And that, my friends, is why a levy limit is not the same thing as a limit on your individual property-tax bill.
SOURCES: Watauga County FY 2026–27 adopted budget and tax-rate information. NOTE: Calculations above are illustrations, not predictions and not the formula contained in the proposed amendment.
WHAT SUPPORTERS SAY
Supporters of the Amendment argue that rapidly increasing property values can produce rapidly increasing property-tax revenues and bills unless local governments reduce their tax rates. A levy limit attacks the problem from the revenue side: instead of limiting assessed values, it restricts how quickly the total property-tax levy can grow.
Supporters say this can give taxpayers greater predictability and require local governments to justify revenue growth rather than simply benefit from rapidly appreciating property values. They also argue that this approach is preferable to suppressing property assessments because assessments can continue to reflect market value.
Detailed levy-limit models can also make separate provisions for inflation, new construction, emergencies and voter-approved increases. But none of those particular formulas or protections is contained in the constitutional amendment now before voters.
WHAT OPPONENTS SAY
Opponents argue that local-government expenses do not necessarily grow according to whatever statewide formula the General Assembly eventually adopts. A rapidly growing urban county, a tourism-dependent mountain county and a small rural county with a declining population may face very different financial circumstances.
Counties pay for schools, sheriff’s departments, emergency services, social services, public health, infrastructure and employees, among other things. They can also face expenses over which they have limited control.
During the state legislature’s consideration of this proposal, lawmakers and local-government representatives raised concerns about unfunded mandates and costs shifted to counties by state and federal government. The North Carolina Association of County Commissioners opposed HB1089, arguing in part that the state should not restrict county revenue growth while continuing to impose or shift costs onto counties.
SOURCES: House Select Committee on Property Tax Reduction and Reform final report; North Carolina Association of County Commissioners legislative update; Tax Foundation property-tax levy-limit materials.
A LOOK INSIDE THE SAUSAGE MAKING OF THIS AMENDMENT
This proposed amendment grew out of the House Select Committee on Property Tax Reduction and Reform. The committee deliberated considerably more detail about property-tax policy than voters are given on the ballot.
December 2025: Legislative staff presented multiple approaches used by states to control or respond to property taxes, including assessment limits, revenue or expenditure limits, targeted relief programs, truth-in-taxation requirements and levy limits.
January 2026: The committee heard about North Carolina property-tax law and local-government financing from the UNC School of Government and representatives of counties and municipalities.
February 18: UNC School of Government professor Whitney Afonso discussed costs being shifted to state and local governments through changes affecting programs including SNAP, FEMA and Medicaid. She described the basic choices local governments face when costs rise, like potentially reducing expenditures or finding additional revenue.
The committee then heard from Abir Mandal, Senior Policy Analyst with the Tax Foundation. He compared several approaches to property-tax reform and recommended levy limits. Among the concepts he discussed were limiting growth in revenue from existing property, treating new construction separately and allowing voters to approve additional revenue. His presentation also identified the ten North Carolina counties with the highest property-tax revenue growth during FY2018–FY2023.
Watauga County was one of them.
March 18: Legislative staff presented “Legislative Proposal #1: Constitutional Amendment Property Tax Levy Limit.” Committee discussion included voter education, later implementing legislation and approaches used in other states. The committee’s final report described the constitutional amendment as a first step, with details to be developed through later legislation.
April 15: The Select Committee recommended the proposed constitutional amendment.
April 28: HB1089 was filed. Its primary sponsors were Reps. Brian Echevarria, Julia Howard, Mitchell Setzer and Erin Paré, all members of the Select Committee leadership.
May 20: The House passed HB1089 73–46 and sent it to the Senate. The Senate received it that same day, moved it through Finance and Rules, considered three amendments, tabled all three 30–16, and then passed HB1089 31–15.
May 21: The bill was ratified as Session Law 2026-5. Because it proposed a constitutional amendment, it did not go to the Governor for signature or veto; it went onto the November ballot.
SOURCES: House Select Committee on Property Tax Reduction and Reform final report and meeting materials; HB1089 bill history; House Roll Call #662; Senate Roll Calls #544–548; Session Law 2026-5.
THE NC SENATE WAS OFFERED SOME SPECIFIC DETAILS
A look at the three Senate amendments is useful because they show some of the choices legislators could have written into the proposal before sending it to voters.
— Sen. Michael Garrett proposed allowing a higher property-tax rate on residential property valued at $2 million or more and allowing revenue from those properties to exceed the eventual levy limit. His proposal also would have disclosed that authority in the ballot question.
— Sen. Val Applewhite proposed constitutionally requiring separate property-tax exemptions for primary residences owned and used by people age 65 or older, disabled veterans and first-time homebuyers.
— Sen. Kandie Smith proposed changing “may include exceptions” to require exceptions for funding public schools and public-safety services, while still allowing the General Assembly to create other exceptions.
Each of these proposed amendments was tabled 30–16. None became part of the constitutional amendment sent to voters.
SOURCES: Garrett Amendment A1 (H1089-ABAXR-47-v-2); Applewhite Amendment A2 (H1089-ABA-46-v-2); Smith Amendment A3 (H1089-ABA-43-v-6); Senate Roll Calls #544–546.
DON’T STOP NOW. LET’S LOOK EVEN DEEPER UNDER THE HOOD
The Tax Foundation did not merely endorse levy limits after the amendment appeared. Its representative appeared before the Select Committee on February 18, compared several approaches to property-tax reform and specifically recommended levy limits. One month later, legislative staff presented the committee with a proposed constitutional amendment requiring a levy limit.
While that sequence does not establish that the Tax Foundation wrote HB1089 or that legislators simply adopted its model, it does establish that committee members heard the organization advocate this policy approach immediately before the committee moved toward a constitutional levy-limit proposal.
The conservative John Locke Foundation also advocated property-tax levy limits, and House Speaker Destin Hall publicly cited Locke Foundation research in discussing property-tax reform.
Both organizations have discussed levy-limit systems containing details such as inflation adjustments, separate treatment of new construction, voter overrides and exceptions.
Again, none of those details is contained in the constitutional amendment voters will see in November.
SO WHERE DOES THAT LEAVE US?
By the time legislators recommended this Constitutional amendment, the committee had heard about different kinds of property-tax limits, local-government cost pressures, inflation adjustments, new construction, voter overrides and possible exceptions.
But none of those details appears in the constitutional amendment now before voters.
What the amendment establishes is the order: there must be a limit. What it leaves for a future General Assembly is nearly everything about how that limit will work:
- What will the limit be?
- How will it be calculated?
- How will population growth be treated?
- What happens with new construction?
- What happens after another Hurricane Helene or other disaster?
- What happens when state or federal government shifts additional costs to counties?
- Can local voters override the limit?
- What exceptions, if any, will there be?
Which takes us back to the central question:
Should North Carolina voters amend the Constitution to require limits on local-government property-tax levies before the limits themselves have been enacted—or even specified in the amendment voters are being asked to approve?