Originally published May 10, 2026, by Elevation Strategies
Reprinted with permission from Elevation Strategies

Budget Update

Republican leaders in the House and Senate report "substantial progress" in closed-door negotiations, but no final deal yet. Key issues include tax cuts, teacher and state employee raises, and spending priorities. Both chambers return next week to continue deliberations. Optimism remains for a compromise, and we suspect a deal will be reached soon.

Property Tax Discussion

• Property Tax Reappraisal Moratorium - Senate Bill 889: The Senate gave final approval this week (vote of 35-8) to a one-year pause on new property tax valuations from 2026 reappraisals. The bill affects most counties conducting revaluations this year (e.g., Guilford, Buncombe, Onslow, Pender, and others), requiring them to use prior-year values for the 2026-2027 fiscal year. The measure now heads to the House for consideration.

• Property Tax Constitutional Amendment: The House appears poised to advanced House Bill 1089, which would call for a constitutional amendment that would require the General Assembly to enact limits on local government property tax levy growth. If approved by three-fifths of both chambers and then by voters in November 2026, it would require the legislature to establish new limits on property taxes.

These efforts are a reaction to concerns that many voters have about potential increases in property tax bills. At the same time, many local governments are making the case that their budgets are primarily focused on core services, and that their operational costs have escalated due to inflation. Many local governments are also asserting that they would have to cut core services, such as public safety, if they cannot generate proper revenue to operate.

Other Key Developments

• Data Centers: Growing bipartisan support to modify or roll back sales tax exemptions for data centers due to their massive energy use and infrastructure impact. Bills like HB 1213 are gaining traction.