When the Greensboro City Council passed a new city budget last week, it was not what its members had hoped.
The nearly $910 million budget was $3.4 million less than City Manager Nathaniel “Trey” Davis’s recommended budget, but still came with a property tax rate hike of more than 12 cents per $100 of assessed value—a steep rise for any single year.
That was nearly inevitable, council members said, given the N.C. General Assembly’s passage of a one-year moratorium on property revaluations for 12 counties, including Guilford. Under state law, all counties must pass their budget before the beginning of the next fiscal year on July 1. But large and complex budgets take months to properly prepare. With Gov. Josh Stein signing the bill into law on June 19, local governments like Guilford and Greensboro had little time to reconfigure their budgets based on last year’s lower tax property values.
“A higher [tax] rate is necessary to support the same level of services, personnel, infrastructure and operations that council has already identified and the priorities we’re looking to continue,” said Davis in presenting the compromise budget.
It wasn’t the budget anyone was looking for—but both the manager and the council were clear about how they got there.
“The revaluations brought large increases,” said Councilmember Adam Marshall at last week’s meeting. “The state, who can’t seem to pass their own budget, then says that we can’t use the values that they in fact made us—or made the county—do.”
Republicans who championed Senate Bill 889 said it would offer homeowners relief from skyrocketing property values. But county and municipal leaders said the state shouldn’t meddle with their ability to set property-tax rates based on state-mandated reappraisals—especially during the height of budget season. With lingering high inflation and fuel prices driving up costs everywhere, both Greensboro and Guilford County were crafting budgets that would have taken advantage of higher property values, letting them get more revenue, though they had technically lowered the city tax rates.
Instead, both Greensboro and the county will likely have to work from outdated and much lower property tax values and increase their rates. The Guilford County Board of Commissioners delayed its budget vote until next week to see if Gov. Josh Stein would sign the moratorium into law.
When he did last Friday, Commissioners Chairman Melvin “Skip” Alston warned it would probably mean the county schools, fire, and sheriff’s departments, as well as emergency management services, wouldn’t get what they’d asked for—or what his board had hoped to provide. It would also likely mean a property tax rate hike at the county level, he said—pegged to the old values.
While the city’s budget did cut millions from the manager’s initial proposal, the council decided to move forward with fully funding services that have gotten more expensive.
“So what we’ve tried to do in this budget is to address the critical reality that prices and the cost of doing business in the city have gone up dramatically,” Marshall said. “Health insurance for city employees has gone up, materials have gone up. All costs and prices have gone up—as they’ve gone up for all of our citizens.”
It isn’t easy to continue to provide the level of services residents expect while acknowledging the hit people’s pocketbooks have taken, Marshall said—but the council both asked for cuts while insisting on tackling things like deferred maintenance and expanding benefits for firefighters.
“Nobody likes to raise taxes,” Marshall said. “But we have to prepare ourselves for the moment that we’re in so that we can position Greensboro to succeed going forward.”
The new city budget set the tax rate at 79.85 cents per $100 of tax value. That’s 12.6 cents higher than the previous 67.25 cents rate. But it’s still less than taxpayers would have faced under the new revaluations, which would have set the rate at 58.3 cents per $100—but for dramatically higher values.
Not Just Greensboro
Greensboro is hardly the only city to see dramatic spikes in property values over the last few years.
“We’re really seeing it almost everywhere,” said Logan Rockefeller Harris, director of research at the non-profit and non-partisan North Carolina Budget & Tax Center (BTC).
“There are certainly problems with the current assessment system,” Harris said. “One of them, I think, is that assessments don’t happen frequently enough. So that’s what leads to shock when there’s a huge leap every four or eight years when people see these assessments.”
“Those really rapidly rising housing values are kind of a housing market issue rather than the property tax issue,” Harris said. “So that’s really a result of a lack of supply of affordable housing, more so than a problem with the property tax system.”
Greensboro Mayor Marikay Abuzuaiter said she would support going to a two-year assessment model.
“I think that would give you a better idea where things are heading, and you wouldn’t have, as they say, the sticker shock of seeing the value from four years ago or eight years ago,” Abuzuaiter said. “Especially in an environment like we have now, when the values are going up the way they are.”
Economic wins for the state, the region, and the county, like the Toyota battery plant, JetZero’s $4.3 billion aerospace facility, and FAA approvals for HondaJet, have come with increased pressure on current housing stock, dramatically rising rents, and a flurry of new construction to meet growing need. Out-of-state owners and large corporate landlords are increasingly buying up houses and apartments in North Carolina’s largest cities—and winning appraisal appeals that cost counties and cities millions in revenues.
Those are all issues Greensboro’s new city council, a majority of whom had never handled a city budget process until this year, were keeping in mind as the tension between budget needs and state legislation came to a head the last few weeks.
Councilmember April Parker recalled her time as a community activist calling for Greensboro to lead in raising the minimum wage for its own employees, acting as an example for others in the city and the state. Investments in employees and their health benefits, as well as in things like public parks and libraries, are an investment in the Greensboro in which we all want to live, she said.
As a new council member, she said, she has learned some unfortunate truths about budget matters.
“There are, I just want to explicitly say, unfunded mandates from the state,” Parker said. “Not only do you have inflation and the cost of doing business rising, but other things like our water and the PFAS regulations, and even with the body-worn cameras and the police technology that has advanced. Those things are state-mandated, and the state and federal don’t always give us the tools to negotiate that.”
Local leaders face twin problems, council members said—the inescapable reality of rising costs and state and federal government cutting corporate and income taxes that contribute to the bottom line for communities that need to operate public schools, make infrastructure improvements and additions, and provide a standard of public safety and quality of life their residents expect.
“I think some people think that if there’s this moratorium and the assessments stay where they are for the next year, they’re going to pay less and they’ll have the same level of services,” said Greensboro Councilman Hugh Holston. “But that’s not what happens. Either you have to raise the tax rate to continue having those services, or you begin to cut things.”
Possible Solutions
Harris, the director of research at BTC, said a one-year moratorium isn’t going to fix any of the underlying problems with tax assessments.
“We do have property tax relief programs for people who may be on fixed incomes, or may be lower income and are being disproportionately impacted by very high property taxes in comparison to their incomes,” Harris said. “But they are often very complicated, underfunded, and they happen at the local level. The legislature hasn’t really moved to change that.”
Another option is what is known as “circuit breaker policies,” which credit back property taxes that go beyond a certain share of household income.
Instead, state lawmakers are floating a constitutional amendment that would cap property tax increases at much lower levels.
“State law already caps property taxes at $1.50 per $100 of assessed value,” Holston said. “But if you take it down below that, to what I’ve heard the legislature talking about, a cap of only being able to go up 3 cents per year, that becomes a problem. If they’re cutting income taxes and corporate taxes, and what we have left to work with at the local level is property tax, it creates a problem when you then cap that as well.”
Eventually, Holston said, it leaves local communities having to cut people and services or impose new fines and fees to raise the money they need.
“What happens when suddenly your trash isn’t getting picked up as often?” Holston said. “What happens when you can’t add new police officers? You have to cut police officers. Toll roads within the cities are not off the table at that point. Nothing is off the table.”
Watching the current drama unfold, Guilford County’s Register of Deeds Jeff Thigpen said he observed there was plenty of blame to go around. As a former member of the Guilford County Board of Commissioners, Thigpen didn’t like the way the state legislature passed the moratorium bill at the end of budget season, when state lawmakers had to be aware that new budgets could not be thrown together in a week or two. But he also doesn’t love the county and city waiting until revaluation time to change the tax rate. That’s a common trick, he said, because government knows they can technically say the rate has decreased while actually taking in more revenue from increased property values.
“That’s a lot safer, politically, than doing small increases over time to keep up with growth and increased expenses,” Thigpen said. “It might look better, but people still end up paying more, and most people realize that or figure it out.”
A true solution to the problem may be even more politically unpopular, he said.
“I know I’m throwing a feather into the wind here, but I really think we need a bipartisan tax commission,” Thigpen said. “You could convene a bipartisan commission to look at local, state, and federal issues that are impacting taxpayers at the local, state, and federal levels.”
“You need to look at the federal government in terms of cost-shifting,” Thigpen said. “Like you look at SNAP, Medicaid, at FEMA, and reimbursement that we didn’t get around Helene, public health, inflation, all these different things that are impacting our economy, to where you know they’re pushing them down to states and they’re not giving them the money to pay for them. And that gets pushed down to the states, and it impacts the local communities.”
When thinking about how to bring warring parties and leaders from the state and local level together, Thigpen said he thinks not just about the average taxpayer but about the average taxpayer’s grandma.
“If the grandma has a heart attack, and because we’ve capped tax increases and cut services, she can’t get EMS to her house, and the fire department is not able to get there on time to help her then—God forbid—she dies,” Thigpen said. “That’s one side of this thing.”
“On the other side, we have grandma on a fixed income whose value of her house has gone up a tremendous amount, and she can’t figure out how to pay, and she may lose her house,” Thigpen said. “Nobody wants that either.”
“If we can come together and say, let’s everybody try to help grandma—maybe we can actually get somewhere.”
