States take action on property taxes as property values rise 54%

July 12, 2024

When Carol Shepard bought her modest three-bedroom home in a quiet Denver suburb in 2018, she never imagined property taxes would cause her so many sleepless nights. But as the value of her home has increased nearly 40% in just five years, her anxiety about the rising tax bill has grown, too.

“It feels like I’m being punished for making my home good,” Shepard, a 47-year-old teacher, told Benzinga. “I love my neighborhood, but I’m scared I won’t be able to afford my own home anymore.”

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Shepard is not alone. Across the country, homeowners are wrestling with a double-edged sword: the rising property values that have boosted their equity and the skyrocketing property tax bills that are straining their budgets. Now lawmakers in several states are trying to address the problem, and their solutions range from targeted relief to radical overhauls of the entire property tax system.

This November, voters in at least seven states will vote on property tax reform. The initiatives come at a time when tensions are rising between cash-strapped local governments and homeowners suffering from the rising real estate market.

In Colorado, where Shepard lives, voters will consider a measure to limit annual increases in property tax revenue. Georgia is considering a similar proposal to limit increases in assessed value.

The most dramatic reform, however, is planned in North Dakota, where a grassroots movement is pushing for the complete abolition of property taxes.

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“Do you really own your property if the government can take it away from you?” asks Rick Becker, a former GOP state representative who is leading the discussion. His group argues that property taxes are at odds with personal liberty and real property ownership.

Critics warn, however, that drastic measures could harm local services. After all, property taxes finance many municipal services, from schools to fire departments.

“Our coalition is not coming together to say property taxes are perfect and nothing should be done,” said Chad Oban, chairman of Keep It Local, a group opposing the North Dakota measure. “Our coalition is basically saying this is not a solution.”

Other states are taking a more moderate approach. Kentucky, for example, is considering tax exemptions for homeowners over 65, while Virginia and New Mexico want to expand property tax relief for veterans.

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The effort mirrors California’s landmark 1978 Proposition 13, which capped property tax increases and sparked a nationwide anti-tax movement.

As states wrestle with these thorny issues, they are performing a balancing act. If cuts are too low, basic services will suffer. If cuts are not high enough, homeowners like Shepard may be forced out of their communities.

“All of these proposals are really about how much the total tax should be and who should pay it,” said Danielle Hale, chief economist at Realtor.com. “Homeowners should remember (and many do remember) that with property taxes they are funding local services, including things like schools, libraries, parks and local amenities that can make a community a better place to live.”

Back in Denver, Shepard is watching the upcoming vote. “Something has to change,” she told Benzinga. “I just hope we do it right, whatever we do.”

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This article, “States Take Action on Property Tax as Home Values Rise 54%,” originally appeared on Benzinga.com