House Select Committee on Property Tax Reduction and Reform Highlights, March 18 Meeting

March 18, 2026 — The House Select Committee on Property Tax Reform and Reduction met to review four draft bills and receive an informational presentation on impact fees. No votes were taken. The committee will reconvene on April 15, when votes are expected.

Regional Takeaways

• The committee continues to focus on property tax levy limits, signaling a potential shift in how local government revenue growth is managed statewide.
• Speaker Destin Hall has publicly endorsed a levy limit, indicating strong momentum within House leadership.
• The discussion highlighted a key regional tension:
  • The desire for taxpayer predictability and relief
  • The need for local governments to maintain flexibility to fund services and infrastructure
• Importantly, the proposals remain conceptual in several areas, with significant policy details still to be determined.

Legislative Proposals Under Consideration

1. Constitutional Amendment – Property Tax Levy Limit

• Would require the General Assembly to enact limits on property tax increases statewide.
• Does not establish a specific cap. That would be determined through future legislation.
• Would go to voters in November 2026 if adopted.

Committee Discussion:

• Members considered whether to include a specific cap directly in the Constitution.
• There was no consensus:
  • Some supported a defined cap for clarity and consistency
  • Others raised concerns about regional variation, noting that a single cap may not reflect differences in:
    • Growth rates
    • Tax bases
    • Service demands
• No cap was added at this stage, leaving flexibility for future legislative design.

Regional Implications:

• This proposal could have varying impacts across the Centralina region:
  • High-growth jurisdictions may face constraints in keeping pace with infrastructure and service demands
  • Slower-growth jurisdictions may experience less immediate impact but may have less flexibility built into their budgets.
• The ultimate effect will depend heavily on how the cap is structured.

2. Nonprofit Hospital Property Tax Modifications

• Reduces the property tax exemption for nonprofit hospitals from 100% to 50%.

Regional Implications:

• Could generate new local property tax revenue, but impacts will vary:
  • Jurisdictions with major hospital systems may see meaningful gains
  • Others may see limited or no impact
• Raises broader questions about tax equity and service usage across regions

3. Hospital Sales Tax Refund Modifications

• Reduces state and local sales tax refund caps:
  • State: $31.7M → $10M
  • Local: $13.3M → $4.2M
• Requires hospital systems to be treated as a single entity for refund purposes.

Estimated Impact:

• Approximately $65M in additional local revenue statewide.

Regional Implications:

• Revenue impacts will be concentrated in areas with significant hospital activity
• Could create uneven fiscal effects across jurisdictions within the region

4. Low and Moderate Income Housing Property Tax Exemption Modifications

• Updates and tightens eligibility for affordable housing exemptions.

Key Changes:

• Establishes clearer income and rent thresholds (AMI-based)
• Defines ownership and financing requirements
• Adds ongoing compliance and reporting requirements

Regional Implications:

• Aims to ensure exemptions are tied to true affordability outcomes
• Could help:
  • Protect local tax bases
  • Improve consistency across jurisdictions
• May also influence how affordable housing partnerships are structured regionally

Additional Item: Impact Fees (Informational Only)

• The committee received an overview of impact fees and system development fees.
• This was informational only with no legislative action.

Regional Relevance:

• This topic is particularly relevant for Centralina:
  • Highlights the role of growth-related revenue tools
  • Signals potential future discussions around aligning infrastructure funding with population growth across jurisdictions
  • There was also discussion and concern around costs being passed on to customers.

Timeline & Next Steps

• Next meeting is April 15, 2026
  • Committee expected to vote on all four proposals
• If advanced:
  • Bills move through the legislative process
  • Constitutional amendment proceeds toward the November ballot

Ongoing Committee Work

Current proposals are intended as a starting point for broader reform, not final policy solutions.

Committee leadership emphasized that this is an early phase of a multi-step process.

A request has been made to extend the committee’s work beyond this session.