Budget shortfall could prompt Raleigh to raise homeowners’ taxes, city says
AI-generated summary reviewed by our newsroom.
- Raleigh property tax base to drop about $900M this year, pressuring budget.
- City budget director warns lower revenue may force higher homeowners' taxes.
- Developer tax exemptions are among factors reducing property tax revenue.
Raleigh homeowners will likely face higher property tax bills as the city faces a bleak budget situation.
The city’s property tax base has shrunk, budget director Sadia Sattar told the Raleigh City Council on Monday, a situation she described as “doom and gloom.”
A number of factors are affecting property tax revenue, including specific tax exemptions for developers.
So far, the city’s nearly $120 billion tax base is projected to decrease by roughly $900 million this year, according to city documents.
The Iran war also adds a lot of economic uncertainty into the picture, including how rising gas prices will affect next year’s budget.
“That wasn’t happening when we started the budget,” Sattar said. “That wasn’t even happening when we were meeting in January to talk about the budget.”
Property taxes cover nearly half the city’s operating budget and have historically been its most stable source of revenue, growing about 2% per year, Sattar said.
For the fiscal year that begins July 1, that’s no longer the case.
Even if Raleigh kept spending the same as the current year, the upcoming budget would be $13 million short, she said.
Why is property tax revenue an issue?
City officials were briefed in March on three primary factors affecting property tax revenue.
County Tax Administrator Marcus Kinrade explained that a tax loophole could reduce the city’s tax base by as much as $830 million.
State law allows a tax exemption for affordable housing, Kinrade said, but it does not define affordable or ownership.
Kinrade said tax exemptions for developers to build on brownfield sites — areas contaminated by former industrial uses — reduce the tax base by another $514.5 million.
Wake County’s last property revaluation, effective in 2024, saw residential property values rise by an average of 53% since the previous revaluation in 2020.
And many ongoing property value appeals by homeowners and businesses have yet to be resolved, placing another $125 million of Raleigh’s tax base in limbo.
How it affects property owners
To fill the $13 million gap without cutting anything in the current budget, Raleigh would have to raise its tax rate by 1.11 cents per $100 of assessed property value.
The city’s property tax rate is currently 35.5 cents per $100, making the city’s property tax on a $400,000 home $1,420.
A 1.11 cent tax rate increase would equal about $44, and that’s not counting any other increases the council might make.
City taxpayers also pay a separate county property tax.
What’s next?
The city administration will submit its fiscal year 2027 budget proposal to the council on May 19.
The council will hold budget work sessions every Monday in June and hold a public hearing on the budget June 2, Sattar said.
This story was originally published April 8, 2026 at 5:30 AM.
