Wake County Manager David Ellis openly criticized the state legislature at Monday night’s Board of Commissioners meeting before discussing the property tax hike the county will likely have to implement in order to balance this year’s budget.
“We’re taking on all this additional burden because we can’t let local residents and families in need go unserved,” Ellis said, referencing new expenses the county is facing to keep some 200,000 people in Wake County from losing Medicaid.
“But it’s another example of the state legislature and Congress falling short of their fiscal responsibilities and passing the buck to us … Unfortunately, we can’t wait for the legislature to do the right thing. We have to make decisions based on current conditions.”
All in all, the county spent roughly $600 million last fiscal year to “fill budgetary holes left by the state,” Ellis argued. “If the state did its part, we could have lowered our property tax rate by 19 cents,” he added.
Instead, the county will likely have to raise its property tax rate by two cents, for a total of around 53 cents per $100 of valuation. For the owner of a $450,000 home, that’s an increase of roughly $90 per year.
Nowhere Else to Turn
The tax increase would primarily be used to fund education, including money for Wake Tech, the county’s Smart Start preschool, and an additional $25 million over the current budget for the Wake County Public School System (WCPSS) this year, as the school district deals with its own budget challenges.
Each year, WCPSS asks the board of commissioners for financial support “because they have nowhere else to turn,” Ellis said. “Without our help, they can’t pay staff sustainable wages or provide student support services.”
Funding those crucial education expenses is the state’s job, “but they’re not doing it, and we’ve got the receipts,” Ellis said.
“Even though Wake County Public School System is North Carolina’s largest school district, it remains at the bottom of the state’s list for per pupil funding from the General Assembly,” he said. “Year after year, our investment in Wake County Public Schools grows because the state hasn’t stepped up and fully funded K-12 education.”
Even though commissioners have historically increased their appropriation to WCPSS by an average of $50 million each year—and the district needs far more than a $25 million bump this year—district superintendent Robert P. Taylor tempered his request for FY27 in light of the county’s budget challenges. The WCPSS Board of Education is expected to send its budget request to the county by May 15.
A Legal Loophole
Like other local governments, the county is seeing increased expenses because of a “volatile economy,” Ellis said. Inflation and the spike in gas prices are hitting the county hard.
“Perhaps in a typical year, these increased costs wouldn’t be such a budgetary challenge,” Ellis went on to add. “Unfortunately, as you know, 2026 is anything but typical.”
Also like other local governments, the county is dealing with a shortfall in revenue as more homeowners appeal their property tax bills. As of May, more than 700 Wake County property tax appeals remained open, leaving the county uncertain of how much revenue it will receive and unable to count on appealed revenue, according to Ellis.
The county is also dealing with a massive loss in property tax revenue because of a legal loophole, dubbed the Blue Ridge loophole. Properties that provide housing to low- or moderate-income people are eligible for exemptions from property taxes, according to state law. But some property owners have taken advantage of the law’s ambiguity to earn exemptions even when they do not provide substantial affordable housing, Ellis explained Monday.
In Mitchell County, for example, for-profit company Blue Ridge Housing earned this tax exemption for an apartment complex, even though only 0.1% of the building was owned by a nonprofit and provided low-income housing. And in Wake County, the number of property owners applying for this type of exemption is only going up, Ellis said.
“Let’s be clear, most of these are not what we would call traditional affordable housing,” Ellis said. “They’re old apartment buildings that have been fully taxable for decades. The rents they charge their tenants are already less than 80% of the area median income, and we’ve seen no sign that the apartment owners are passing the savings that they receive on to the residents.”
What’s in the Budget
The county’s budget this year totals $2.3 billion, a slight increase over last year’s budget of $2.1 billion. Although the county continues to grow rapidly—the third fastest for its size in the nation—the proposal is very fiscally conservative given the county’s financial standing this year, according to Ellis.
All in all, the county expects to receive around $8 million in new revenue for this fiscal year, compared with $40-50 million normally, Ellis said. In the proposed budget, all of that new revenue would go towards public safety expenses, including:
- Hiring 16 new EMTs to address the growing number of 911 calls in Wake County;
- Expanding the Wake County jail and hiring 92 new detention officers, as the jail population increases;
- Continued funding for the fire services training manager position, “which leads the recruitment and training of new firefighters,” Ellis said; and
- Continued funding for the Career in a Year Fire Academy, which has produced 53 graduates who continue to work as Wake County firefighters.
Continuing his criticism of the state, Ellis explained that Wake County is “routinely housing more than 100 inmates who should be in state prison and not the county jail.”
“Another issue is offenders are remaining in our custody for longer periods of time … Iryna’s Law, which went into effect in December, restricts bail for violent crimes and increases the length of stay for offenders. A lack of state funding and staffing shortages in a court system also slow down the speed of justice. All these factors increase the need for more beds.”
Also included in this year’s budget is a new facility for foster youth to the tune of $9 million. And again, “that’s $9 million we wouldn’t have had to spend if the state better supported these youth in need,” Ellis said.
Wake County plans to hold its first public hearing on the proposed budget on May 11. Residents can also submit comments online until May 20, at wake.gov/budget.
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