Local leaders have mixed reactions to state's possible cap on property taxes

Potential restrictions from the state could limit how much property tax revenues local governments within Burke County can collect, raising concerns among local leaders about funding public safety operations and other essential services.

The mandate for the General Assembly to limit property tax increases could appear as a constitutional amendment on November ballots, and is intended to relieve the tax burden on North Carolina residents as property values rise. Although the amendment doesn’t state how increases would be restricted, it’s expected that lawmakers will make that decision in later legislation.

Recent property tax reform work began at the state level in December 2025, when Speaker of the House Destin Hall created a House Select Committee to focus on the issue. Hall is local to Caldwell County and his law office serves as Burke County’s legal counsel.

In Morganton, City Manager Sally Sandy said she’s concerned that a uniform cap could directly impact core services that residents have grown accustomed to having access to every day.

The City of Morganton collects about $12 million annually in property taxes, accounting for less than half of its general fund. About 45% to 47% of the budget goes toward public safety, she said.

“Basically, property taxes for Morganton fund public safety,” Sandy said. “There’s nothing left over for recreation. There’s nothing left over for building inspections. There’s nothing left over for the general administrative type of services.”

“I think you’ll find that’s pretty true across North Carolina,” Sandy said, adding that reduced revenue would force difficult decisions.

“You cut services, and you get to decide (from) recreation, sanitation, street maintenance, public safety,” she said. “That would have to be what the city council would have to decide, and what level of service you can provide for the dollars that you’re collecting.”

Mid-sized cities like Morganton could feel an impact more than larger cities with broader tax bases. For example, the city’s recent $2.5 million ladder truck purchase carries more weight locally than in a city like Raleigh, she said.

“In smaller, rural communities, I think some of these things could have effects much deeper than in more urban areas,” Sandy said.

“It has never been Morganton’s goal to set a tax rate that we collect every dollar that we can grab,” she said. “It’s really based on trying to provide the services that our citizens deserve for the most cost-effective way that we can, and that has long been the tradition here.”

During the Town of Drexel’s budget workshop Tuesday afternoon, Manager Bill Carroll brought up the potential constitutional amendment in November, briefed board members on the issue, and advocated for municipalities.

“I highly advise you all in any conversations you have with our state representatives … that they do not need to go with Mr. Hall’s recommendations to cap our property tax increases,” Carroll said. “Not that we want to raise them outrageously, but I think municipalities should have the right to set our own.”

Carroll urged board members to back municipalities’ rights in any conversations with Rep. Hugh Blackwell or Sen. Warren Daniel.

“Municipalities do not support limiting our abilities to tax what we think is the right amount,” Carroll said. “I think the state, instead of focusing on local municipalities and how they tax, I think they should be focused on adopting a balanced budget.”

At the county level, Burke’s Manager Brian Epley said property taxes make up about 53% of the county’s revenues and remain a critical funding tool.

“It’s not that property tax isn’t important. It’s incredibly important, and it is one of the only tools that we can control to make sure we’re adequately funding the government,” Epley said. “But as it relates to what recommendations or strategies this committee may develop, I feel confident that we won’t see any service interruptions.”

Epley said the proposed changes to property tax policy come at a time when residents in Burke County and beyond are feeling tremendous financial pressure.

“Without question, cost of living has gone up tremendously, and property taxpayers and folks that are members of our community have felt that in their housing costs, their grocery costs, their fuel costs,” Epley said.

Local governments are also facing higher costs, he said.

“Every component of operating the county government, every component of operating your family budget is higher now than it probably was a few years ago,” Epley said. “And when you have that type of tightening, everything has to be reviewed.”

The broader conversation at the state level comes as no surprise, he said, adding that as property tax burdens are increasing, private sector wages are not trending upward at the same rate. Epley said Burke County, which has the 17th lowest property tax rate in the state, operates in a lean and efficient manner, and he doesn’t see that changing.

Property tax caps already exist in some forms, Epley said. For rural fire departments, the rate can’t go over 15 cents, and a supplemental school property tax rate can’t go over 50 cents.

“I’m more than confident that the recommendations they (the committee) come up with will not have a negative impact on Burke County,” Epley said.

At the committee’s Feb. 18 meeting, members heard a presentation from the Tax Foundation’s Abir Mandal, who outlined several approaches to property tax reform. He proposed a cap on how much revenue local governments can collect from existing properties each year. In New York and Massachusetts, a municipality’s property tax revenue can only increase a certain amount compared to its last budget.

Mandal recommended applying the cap only to existing properties, allowing revenue to grow alongside new development. He also noted that local governments could exceed the cap with voter approval through a referendum.

Anthony Starr, executive director of the Western Piedmont Council of Governments, has heard concerns from local leaders throughout the region and said the issue is complex.

“It’s all a tough balance,” Starr said.

He noted that North Carolina, which operates as a Dillon’s Rule state, already limits local governments’ ability to raise revenue as local government’s powers are granted through state permission, compared to neighboring state South Carolina, which is a Home Rule state.

“When you further restrict the local decision-making of local governments, it just leaves them with fewer options to address the needs of their citizens,” Starr said.

The committee will meet again at 10 a.m. on Wednesday, April 15, with Co-Chair Rep. Mitchell Setzer, who represents Catawba and Iredell counties, presiding. The committee, which is also taking a closer look at tax refunds for large nonprofits, specifically hospitals, is expected to form a recommendation before the North Carolina General Assembly reconvenes on April 21.

Hall and Setzer did not respond to requests for comment in time for publication.

If approved, the changes could reshape how local governments within Burke County plan their budgets for years to come, forcing local leaders and residents alike to weigh the cost of tax relief against the level of services their communities expect.