As early voting continues across North Carolina, local ballots feature more than just candidate races. In many communities, voters are weighing local ballot measures–including school construction bonds and local sales tax increases–that reflect persistent pressures on county governments to fill gaps in public school funding.
Statutory Responsibility for School Capital
Under the North Carolina Constitution, the state bears primary responsibility for funding operational and instructional expenses, such as educator salaries, classroom materials, and transportation. Capital expenses (building, renovating, and maintaining school facilities) are the responsibility of local governments.
That division of responsibility faces growing stress. In 2021, the Department of Public Instruction’s statewide facility needs survey identified $12.8 billion in K-12 capital needs. An updated survey expected this fall is anticipated to show even higher costs driven by inflation and deferred maintenance. In many cases, these capital demands far exceed local economic capacity, occasionally becoming a central factor in local school closure decisions.
While the state has historically issued statewide bonds or leveraged lottery funds to assist counties, state capital support remains limited. The NC Education Lottery, established by the NCGA in 2005, was intended to raise revenues for this purpose. In practice, however, the portion of income from the lottery allocated has dropped dramatically over time, allocating only 16% of earnings to education in 2025.
School Bonds and Sales Taxes on Local Ballots
To cover major capital projects that cannot be absorbed through annual operating budgets, local governments often ask voters to approve school bonds. Five school districts–Brunswick, Cabarrus, New Hanover, Person, and Wake counties–have school bond referenda on the ballot this year.
Other counties are pursuing sales tax referenda to generate revenue for local schools. Voters in Columbus, Guilford, and Sampson counties will decide whether to increase local sales taxes to support education and municipal services. Typically, groceries and prescription medications are exempt from the increased tax.
Sales taxes currently account for about 14% of local government revenues, compared to roughly 40% from property taxes. While sales taxes offer an alternative revenue stream, tax policy analysis notes two key tradeoffs: sales taxes are regressive, taking a larger percentage of income from low and middle-income households, and they are volatile, fluctuating with consumer spending during economic downturns. Property taxes, by contrast, serve as a more stable revenue base for local public services.
Broader Tax Policy Constraints
Local funding decisions do not occur in a vacuum. Beyond local referenda, voters statewide are considering two proposed constitutional amendments that would alter state and local revenue structures: one capping the state income tax rate at 3.5% (down from 7%) and another limiting property tax levy increases.
If property tax flexibility is constrained, local governments may increasingly rely on school bonds and local sales taxes to fund public schools and other county needs. As voters consider the choices on their ballots, understanding how state statutory rules, local tax choices, and statewide constitutional amendments intersect helps clarify what is at stake for the future of North Carolina’s public schools.
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