This week saw significant legislative activity, including the rapid advancement of the long-anticipated constitutional amendment limiting property tax levies by local governments, a gubernatorial veto override, and numerous other bills impacting counties and high-profile topics such as data centers and income taxes. With the legislature planning to take next week off for Memorial Day, legislative activity moved at a fast pace as lawmakers worked to advance major legislation before the break. With reported progress on budget negotiations between House and Senate leadership, there is a sense of urgency to complete policy legislation before the budget is released and legislators’ attention shifts to the complexities and discussions around the budget.
House Bill 1089, the constitutional amendment requiring legislators to enact a property tax levy limit, moved through both the House and Senate in just 48 hours, something rarely seen at the General Assembly and often reserved for legislation involving prolonged debate over sensitive topics. Reflecting Republican leadership’s emphasis on this referendum as a priority, the vote was almost completely along party lines, with only one Democratic senator voting in support of the bill. The language will now appear on ballots in the November general election for voters to decide to support or oppose it. The NCACC will continue to research and develop ideas to assist lawmakers throughout this process to ensure that counties have the resources needed to meet the needs of their residents.
Bills on the Move
House Bill 144 – Elect SBE/Superintendent as SBE Chair
Bill Summary: The bill is a constitutional amendment that would make all State Board of Education members elected statewide rather than appointed representatives. It would make the superintendent of public instruction the chair of the State Board of Education. The board would consist of elected members equal to the number of U.S. House representatives apportioned to the state, with members elected to four-year overlapping terms from districts established by the General Assembly. The amendment would be submitted to voters in a statewide election in November 2026. If approved, it would take effect on January 1, 2028, and apply to terms beginning January 1, 2029.
Changes of Note: None this week
Bill Next Steps: The bill passed the House Education K-12 Committee on May 19 and will now head to the House Rules Committee.
House Bill 369 – Parking Lot Reform and Modernization Act
Bill Summary: The bill modifies reform measures as follows:
- Prohibits local governments from requiring a minimum number of off-street parking spaces per development or structure and amends the current restriction on the regulation of parking space dimensions to apply only to off-street parking spaces.
- Authorizes local governments with delegated stormwater authority to implement additional stormwater control measures for certain pre-existing development and redevelopment dealing with stormwater recapture.
Changes of Note: The bill was amended to prohibit local governments from requiring a minimum number of off-street parking spaces regardless of building occupancy or use, change the calculation requirements for stormwater control measures for new development on already developed lots, and require local governments to update their stormwater management programs to match the bill’s requirements within 12 months.
Bill Next Steps: The Proposed Committee Substitute was approved by the Senate Committee on State and Local Government and sent to the Senate Committee on Agriculture, Energy, and Environment.
House Bill 921 – ABC & Gaming Omnibus Bill
Bill Summary: This bill outlines various changes to laws governing alcoholic beverages, game nights, and raffles. Under this bill:
- Bars, restaurants, and hotels will be allowed to purchase liquor from any ABC store in the state if a local ABC board cannot fulfill the order.
- Grocery stores will be allowed to sell premixed cocktails as long as they contain less than 10% of alcohol by volume.
- Mobile bars will be able to obtain a permit to serve alcoholic beverages at events and businesses that do not have an ABC permit.
- Nonprofits, local governments, and political organizations will no longer be required to obtain a special one-time permit to serve alcoholic beverages at events or fundraisers held on the premises of a business that holds a permit.
- ABC stores will be allowed to mark liquor produced in North Carolina using a shelf tag or price tag rather than dedicating an area of the store solely for North Carolina products.
Changes of Note: The bill originally included a provision to allow ABC stores to operate on Sundays. This provision has been removed.
Bill Next Steps: The Proposed Committee Substitute (PCS) was approved by the House ABC Committee and referred to House Finance.
House Bill 1042 – Affordable Housing Exemption Mods.
Bill Summary: The bill closes a property tax loophole created by a lawsuit in 2013 that allowed for-profit companies to use nonprofits with extremely small ownership shares in housing developments to receive a property tax break, despite not adhering to the intent of state law. The bill closes that loophole and ensures that only charitable organizations designed to provide below-market-rate housing can receive the tax breaks as intended. This bill was a recommendation of the House Select Committee on Property Tax Reduction and Reform, and NCACC supports it.
The bill was modified with technical changes, requirements for deed restrictions to be recorded with the register of deeds, and changes to the compliance process for properties that qualify under the bill.
Changes of Note: None this week.
Bill Next Steps: The bill was passed in the House and will be sent to the Senate.
House Bill 1089 – Const. Amend. Property Tax Levy Limit
Bill Summary: This bill proposes an amendment to the North Carolina Constitution that would require the North Carolina General Assembly to pass a law limiting the amount a local government could increase its property tax levy year over year, with exceptions that are not described in the referendum language. If passed, the amendment would be included on the November ballot and would need to be approved by a majority of voters.
Levy limits in other states have been used to restrict year-over-year growth in local government spending, often tied to inflation and population growth factors. This bill was a recommendation of the House Select Committee on Property Tax Reduction and Reform. The NCACC has stated its opposition to this bill.
Changes of Note: None
Bill Next Steps: This bill has been ratified by both the House and Senate, and the language is eligible to be included on the November ballot.
House Bill 1143 – Principal Fellows & MSA Intern Stipends
Bill Summary: This bill significantly expands support for the North Carolina Principal Fellows Program by increasing funding, adding innovative training grants, and creating a paid internship program for future school leaders. The program receives $5 million in recurring funding to support more principal candidates and statewide leadership development. The bill also establishes stipends for full-time master’s in school administration interns starting in 2027-28, ensuring they are paid at least the equivalent of a beginning assistant principal’s salary during their internship. Additional provisions strengthen reporting, accountability, and flexibility in how program funds may be used.
Changes of Note: None this week.
Bill Next Steps: The bill passed the House Education K-12 Committee on Tuesday, May 19 and will now head to the House Appropriations Committee.
Senate Bill 445 – Regulatory Reform Act of 2026
Bill Summary: This bill is the annual compilation of miscellaneous regulatory reforms that legislators produce, modifying laws governing such topics as environment, business, and local governments. Some of the bill provisions impacting counties include:
- Section 10 – Lengthens vesting periods on properties from two to five years and limits the application of new regulations on vested properties.
- Section 13 – Requires local governments to allow residential development in nonagricultural commercial, business, or industrial areas.
- Section 14 – Requires local governments to permit accessory dwelling units (ADUs) on single-family and multifamily lots and limits what local restrictions can be placed on ADUs.
- Section 16 – Prohibits local governments from denying or withholding licenses, permits, incentives, or zoning approvals based on an employer’s utilization of union workers unless stipulated by state or federal law.
- Section 20 – Enables local governments to contract with third-party vendors for criminal history checks for a limited period.
Changes of Note: This was a gut-and-amend bill, replacing previous unrelated bill language with entirely new language for legislators’ use.
Bill Next Steps: The post-committee substitute was approved by the House Committee on Regulatory Reform and was sent to the House Committee on Rules. The bill sponsor announced that they expect further amendments to the bill, and NCACC is watching for further changes to local government authority.
Senate Bill 730 – Ratepayer Protection Act
Bill Summary: The bill enacts numerous requirements for data center construction, including requiring data centers to pay for their own infrastructure, requiring that they use closed-loop water cooling systems to reduce impact to regional infrastructure, and preventing countries viewed as hostile to the United States from owning them. The bill also prohibits local governments from providing economic development incentives for the creation of a data center in their jurisdictions.
Changes of Note: This was a gut-and-amend bill, replacing previous unrelated bill language with entirely new language for legislators’ use.
Bill Next Steps: The bill was approved by the House Committee on Energy and Public Utilities and sent to the House Rules Committee for consideration.
Senate Bill 1006 – K-12 Innovation and Transformation Act
Bill Summary: The bill makes major changes to North Carolina’s K-12 and community college systems to better prepare students for college and careers. It expands STEM programs, competency-based learning, AI-powered tutoring, and workforce training partnerships. New pilot programs connect high schools and community colleges, allowing students to earn college credit and industry credentials more flexibly. The measure also invests in teacher recruitment, mental health education, support for at-risk students, and advanced manufacturing training.
Changes of Note: None this week.
Bill Next Steps: The bill passed the Senate Education/Higher Education Committee and will now head to the Senate Appropriations/Base Budget Committee.
Senate Bill 1080 – Lower Taxes for All NC
Bill Summary: The bill creates a constitutional amendment to cap the state income tax rate at 3.5% for both personal and corporate income tax. If successful, this ballot measure would reduce the maximum income tax rate from 7% to 3.5%, effective for taxable years after January 1, 2027.
Changes of Note: None this week.
Bill Next Steps: This bill has been ratified by both the House and Senate and is eligible to be included on the November ballot.
Legislation Filed This Week
Senate Bill 1081 – Constitutional Right to Farm
Bill Summary: The bill adds a new section to the North Carolina Constitution establishing the right to engage in various farming activities, subject only to laws or rules passed or authorized by the General Assembly. The language may cause ambiguity over whether certain practices on private land are or are not allowable, depending on whether existing rules already govern the activity.
Changes of Note: None this week.
Bill Next Steps: The bill was approved by the Senate Committee on Agriculture, Energy, and Environment and has been sent to the Senate Committee on Rules.