Red States are Racing to Roll Back Property Taxes

Dow Jones
08/13

Voters in several states are about to have a chance to rein in surging property tax bills.

North Carolina, Wyoming, Florida and Oklahoma all have some kind of property-tax limit or rollback on the ballot this November. This follows bills passed in more than 10 states since early last year, including Iowa and Georgia recently, aimed at hemming in a growing source of frustration for many homeowners. Lawmakers in yet more states are debating the issue.

The ballots and bills are largely coming in Republican-led states, in some cases as part of political platforms in state-level races. The rollbacks are generating pushback from local government officials who say they will lose vital revenue needed for everything from schools to paying firefighters.

Many homeowners, meanwhile, are looking for relief from spiraling housing costs that have been outpacing inflation.

Average annual property taxes for single-family homes rose about 34% around the U.S. between 2016 and 2025, reaching more than $4,400, according to Attom, a property data company. Several states have seen much higher increases. For many homeowners, the taxes are compounding bigger bills for things like insurance, maintenance and home improvements.

"Property taxes are very visible," and that makes them a target, said John Diamond, who directs the Center for Tax and Budget Policy at Rice University. "A lot of people have to write that check every year in order to pay their taxes or when they go in to fill out their mortgage documents. Unlike sales tax, where you buy stuff and you don't really know how much you've paid."

Take Wyoming, where the Republican-led legislature and governor last year enacted a 25% property-tax exemption on the first $1 million of a primary home's fair-market value -- lowering the amount of home value that is taxed shrinks how much people pay. While the state had one of the nation's lowest effective property tax rates before then, rising home values are still pumping up tax bills.

Since the beginning of 2019, values for single-family homes and condos there have risen 52%, according to Zillow. In the five years between 2019 and 2024, before that tax cut, average property taxes there were up 65%.

The state may not be done: A ballot measure would let voters exempt 50% of their home values from property taxes, further lowering their bills. This push started with a petition launched by Brent Bien, a Republican running for governor in the Aug. 18 primary.

"We're a blue-collar retirement state with roughly about 42% of the people living on fixed income," Bien said in an interview. "Property taxes are unsustainable for a lot of folks."

Jim Lewis, 80 years old, said property taxes on the Jackson Hole, Wyo., home he and his wife bought in 2001 more than tripled to about $16,250 by 2022. They have since moved to a smaller property, and now qualify for a state tax exemption aimed at long-term owners, but he supports the planned cut.

"There are a lot of people here in Teton County and certainly elsewhere in Wyoming where property taxes are a significant piece of their expense, " he said.

Property-tax cuts have come before, including in the 2000s, when home prices were climbing before the housing busts. California in the late '70s famously added tight limits on increases unless a home is sold. The U.S. is now in a renewed surge of anti-property-tax fervor, said Jared Walczak, a senior fellow at the Tax Foundation in Washington, D.C., a right-of-center tax-policy nonprofit.

The group broadly views property taxes as an efficient, pro-growth tax that is tied directly to services homeowners need, Walczak said.

"You have people who are mad about their higher tax burden joining with people who don't believe property taxes should exist in the first place, " he said. "There's always been a strain of conservatism that just distrusted any tax on property -- in a more populist era, that strain is larger."

To address the issue of revenue loss, lawmakers in some states have proposed higher sales taxes or using state surpluses to fund local government services. Others, like Gov. Greg Abbott in Texas, who signed a $10 billion property-tax-relief package last year, are also looking to restrict the growth in local government spending. Abbott has called for a law that would limit annual growth in local spending to no more than 3.5%.

"Stop the spending that leads to property tax increases to begin with," Abbott said at a February rally where he outlined a proposal for deeper property tax cuts.

Oklahoma's ballot measure would set a new 1.75% limit on how much annual property assessments can grow. Voters in North Carolina will decide on a proposed constitutional amendment that would require state lawmakers to add property-tax growth limits there. In both cases, the ballot measures were launched by votes in the Republican-led state legislatures.

Florida has made headlines with a ballot measure that would dramatically reduce property taxes.

Cities there are already cutting spending to prepare for a potential massive revenue drop. A recent University of North Florida poll found that if the ballot language mentioned a possible $12 billion municipal shortfall over two years, support from likely voters fell from 61% -- just above the 60% threshold the state requires for approval -- to 45%.

This is a worry elsewhere, too. Property taxes comprised 29% of total U.S. collections in 2023, making them the single largest source of state and local tax revenue, according to the most recent Tax Foundation data.

In Wyoming, GOP candidate Bien said he envisions covering lost property-tax revenue by scaling back government spending and ensuring that local counties re-prioritize the programs they fund. He said he plans to protect funding for essential programs like fire services and emergency medical services.

Erin Taylor, the executive director of the Wyoming Association of Community College Trustees, said the eight community colleges in the state have already seen a $14 million loss due to property-tax cuts in the past year.

The Laramie County Fire Authority saw its budget for the most recent fiscal year slashed by more than one-third, or about $800,000, said fire chief Jason Caughey. The mostly volunteer-staffed department has managed this by reducing its training budget and tapping an emergency fund, but will struggle to absorb more cuts, he said.

"Our citizens will end up seeing the impact of that with delayed response times, and potentially with not as many firefighters," Caughey said.

 

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