North Carolinians will have the option to vote for statewide income and property tax limits this November, and Durham leaders are sounding the alarm bells that these constitutional amendments could affect their ability to fund public schools and other local services.
One proposed amendment on the ballot would lower the cap on the income tax rate from 7% to 3.5%; income tax revenue funds the state budget. The other amendment would direct the state legislature to limit local property taxes, which make up a large portion of municipal budgets, though a specific limit would be determined later through legislation.
Neither of these amendments, if passed, would cut taxes, but rather limit the amount that taxes could increase in the future. The legislators sponsoring the bills have said the measures will help alleviate constituents from a rising tax burden.
Property taxes account for 61% of Durham’s general fund revenue, according to county spokesperson Dawn Dudley, and the county uses that money to fund schools, public safety, roads, and other essential services. Durham leaders say that enshrining the power to cap property taxes in the state constitution will reduce the county’s flexibility to address future spending needs.
The Durham Public Schools (DPS) Board of Education passed a resolution on September 24 encouraging constituents to vote against these measures, and the county commissioners passed a similar declaration against the property tax measure in April.
“A lot of the services that we rely on will decrease,” County Commissioner Michelle Burton told the INDY in regards to the property tax amendment. “There are going to be cuts, particularly in public education. We will not be able to fill in that gap anymore if this passes.”
The county has historically stepped up property taxes to pay for capital improvements and bonds, which are loans that the county uses increased property taxes to pay back. In 2022, voters approved a bond funding construction of a new Durham School of the Arts building, renovations at Glenn Elementary School, and the construction of Murray Massenberg Elementary School.
If approved, the proposed amendment could limit county commissioners’ ability to raise property taxes for projects like this, but it’s unclear to what extent since no limit has been set.
School board member Millicent Rogers said the property tax amendment could severely inhibit the district’s ability to address its nearly $1 billion in maintenance needs. The district has plans to consolidate several aging elementary schools into fewer, newer buildings, which would require funding from another bond.
“But we can’t do that if we don’t know that we have reciprocal revenue coming in to pay for the necessary equipment,” Rogers said.
Each budget cycle, DPS makes a request to the county for a dollar amount, but its requests in recent years have been more than what the county says it can afford. Durham County increased property taxes by 2.5¢ in the budget passed in June to pay for raises for DPS classified staff, and the budget still fell short of the district’s ask.
“The ability to [support DPS] using natural growth and revenue has all but dissipated,” the county’s budget director said in March. “And we’re at the point of needing property tax rate increases every year potentially just to handle some things that we used to be able to in the past handle with natural growth.”
The county also lost out on millions in property tax revenue this past budget cycle after officials granted $4.4 billion in property value reductions, mostly benefitting corporations and far exceeding the revenue loss the county had projected, an INDY investigation found.
While the county is responsible for funding schools’ capital costs, the state covers instructional costs like teacher salaries and transportation. But state funding for public education has declined over the past several decades, leaving counties to fill funding gaps. Durham funds 39% of public school costs, among the highest percentages in the state, as well as 248 teacher positions, according to 2024-2025 data from the nonprofit NC Budget & Tax Center.
While the property tax amendment most directly affects school funding, limiting how much income tax revenue the state receives could put even more of the burden on counties to fund public schools and other services.
Rogers said if these two tax amendments pass, DPS could also see a slowdown in teacher pay increases, cuts to services like mental health programming, and an increase in class sizes.
“We want to get to a living wage in Durham, but we’re not going to get there if the county commissioners can’t raise taxes in the way necessary,” Rogers said.
Durham County has already absorbed federal funding reductions for programs including Medicaid and food assistance (SNAP), Dudley wrote in a statement.
“The central question becomes what residents are prepared to forgo, delay, or scale back while the County continues to meet its mandated obligations,” Dudley said in the statement. “To date, Durham has funded mandated services and invested in resident priorities beyond statutory mandates. A state‑imposed cap could eliminate or severely restrict the County’s capacity to invest in these priorities, which directly affect residents’ quality of life.”
Neither the income tax cap nor the property tax limit would offer a tax cut to North Carolinians. The current income tax rate is 3.99% for individuals, which, under the most recent state budget,will be lowered to 3.49% in 2027. The corporate tax rate is 2% and is on a path toward 0% by 2030.
The property tax amendment would allow the legislature to create a levy limit, which would take the amount of money collected in the previous year and allow it to grow by a certain percentage, considering the fact that property values rise each year. (This is different from the property tax rate.)
An analysis by the NC Housing Coalition used a 2% levy limit (which takes the previous year’s collections in each county and adds 2%) to project how the property tax amendment could affect voters. Applying this limit to each county’s most recent property values showed that the average North Carolina homeowner would save $84 per year in property taxes, and corporate landowners would save millions of dollars. The analysis suggests Durham would have lost 11% of its total property tax revenue, amounting to a local funding loss of more than $32 million.
(The 2% limit was chosen based on projections the tax policy nonprofit Tax Foundation gave to a state House committee on tax reform when pitching the idea of a levy limit.)
Proponents of the amendments argue that the limits will help out North Carolina residents who are seeing their tax bills creep up. Brian Balfour, senior vice president of research at the John Locke Foundation, said taxpayers should be able to keep more of what they earn.
“We don’t want to be too dismissive of what these savings could amount to, even as a relatively small amount,” Balfour said. “What seems like a small amount to a lot of people, could be a meaningful amount to the people who are actually paying the bills.”
With limits to income and property taxes, local governments will have to rely on increased service fees and sales tax to fill in the gaps, said NC Budget & Tax Center Executive Director Alexandra Sirota.
“The reality is, costs don’t disappear, and elected leaders need to look to other sources of revenue to fund those costs,” Sirota said.
Balfour said tax limits will put pressure on local governments to “more wisely spend” taxpayer dollars, for example by hiring contractors instead of full-time employees with salary and benefit costs.
He also suggested there could be provisions in the legislation to allow local governments to raise property taxes above a state limit by getting voter approval.
But Burton said this is a logistical barrier to ask voters each time the county needs more money and that elections are costly to run.
“If you take away that local decision making and you put it in the state, they’re just basically making decisions for the counties and the cities,” Burton said. “You’re just taking away the local control and what’s best for each county, each city, each town, because you won’t be able to do what is needed for the people who live in your community.”
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