Wake County budget vote Monday includes recommended 2-cent property tax increase

Wake County leaders are expected to vote Monday night on a new budget that could raise property taxes for homeowners.

County Manager David Ellis’ 2027 budget recommendation comes with a 2-cent property tax increase to address a funding shortfall and greater concerns for the future.

“I want to offer some words of warning about the FY2028 budget,” Ellis said. “If the state doesn’t close the Blue Ridge loophole and if the state caps the property tax, we will have to make cuts.”

Ellis suggested those cuts could include slashing funding for education, reducing operating hours or scaling back program investments.

This budget is one Ellis called “the most challenging one yet” in a speech to the Board of Commissioners on Monday evening.

Ellis’ proposal includes a 2-cent property tax increase, which would generate an additional $62 million. It would mean a $90 increase in property taxes for the owner of a $450,000 home.

“I think it’s very concerning,” Ellis said. “We are picking up a lot of the costs for state services here in Wake County. We are judicious in how we raise taxes. We don’t raise taxes here in Wake County on a whim. We raise it to address the growth that we’re seeing in the county.”

Ellis is also suggesting pulling $35 million from its reserves as a one-time withdrawal to plug holes in the general fund. The holes, Ellis says, are due to funding shortfalls from the state legislature. In fiscal year 2026, those budget shortfalls totaled $600 million.

“Our revenue is well below projections, and we’ve had to make tough decisions on what we can afford to fund without overburdening our residents,” Ellis said. “Especially those on fixed incomes.”

If not for filling those gaps, Ellis says the county could drop the property tax by 19 cents, saving an owner of a $450,000 home $900.

Watch: Wake County Manager on proposed 2-cent property tax increase: 'I think it's very concerning'

Typically, the county expects to generate $40-$50 million annually in new revenue. For fiscal year 2027, Ellis estimates it will be $8 million, which he says will need to go entirely to public safety needs.

That would add 16 new EMT positions, continue funding a firefighter recruitment program and expanding Wake County’s detention services by adding 92 new detention positions and 240 beds to expand capacity which, right now, is largely for housing inmates who should be in state prisons versus the county.

“We’re spending county dollars on state responsibilities in our jail,” Ellis said. “It currently houses more than 100 inmates who should be in state custody.”

In his 76-slide presentation, Ellis highlighted the volatile economy, property tax issues, the affordable housing loophole and the General Assembly as major concerns for the county’s budget.

Because the budget’s main revenue source is property taxes, the Blue Ridge, or affordable housing, loophole and a legislative recommendation of capping property tax increases are of major concern to Ellis.

Watch: Property taxes, schools & other costs: Wake County manager presents the proposed budget for the coming year

The affordable housing loophole that WRAL News reported on earlier this year cost the county an expected $12.3 million in lost revenue and could get worse.

Paired with the legislature’s recommendation to cap future property tax increases and Ellis says, “it would take away local control over local budgets. The property tax is the only tax that counties, cities and towns have authority and discretion over. And it’s our largest funding source. Putting limits on it would take away the flexibility we need to plan for the future, as the third fastest growing county of our size in the nation. We don’t have a crystal ball. We can’t always see what’s around the corner.”

Because property taxes account for 75 percent of the county’s budget, other options to supplement that are limited.

“Sales tax is volatile,” Ellis said. “We can’t count on sales tax every year to run a $2.2 billion organization. Sales tax is helpful but again, property taxes are where our revenue comes from.”

In this budget, Ellis is recommending funding of $768.2 million for the Wake County Public School System. It would include $25.3 million in additional funds requested by Superintendent Robert Taylor and $742.9 million for operating expenses. If nothing changes, Ellis says cuts to things like education could be on the chopping block for 2028.

“These are not steps I want to take,” Ellis said. “I know they’re not steps you want to take, either. The good news is, there is still enough time to prevent them from happening if the state acts accordingly.”

WRAL News has reached out to Speaker Destin Hall, Senate Majority Leader Phil Berger and Wake County Rep. Erin Pare for comment on Ellis’ presentation.

Pare provided WRAL News with a comment on Monday.

“My bill to close the 'Blue Ridge Loophole' has bipartisan support and I am confident it will pass in relatively short order,” Pare wrote. “I’m happy to see that the Wake County Commissioners have expressed support for my bill, and that they made this issue a priority after learning more about it through the NC House’s property tax work.

“Unfortunately, Wake County residents are used to their tax bills going up year after year after year by the county. This is nothing new. What is new is who they choose to blame each budget cycle for their decision to increase property taxes. Property tax increases have gotten so bad that the General Assembly is stepping in to provide some reasonable limits and predictability. The Wake County Commissioners evidently oppose those two things. Housing has become unaffordable and so has cost of living in Wake County in large part due to out of control property tax increases. Reform is needed.”

WRAL News will update this story when Hall and Berger provide responses.