True property tax relief can’t come from assessment limits that just shift the burden—it’s about controlling local government spending. Reducing wasteful spending is the real solution to lower taxes.
“If someone bit an apple and found a worm in it, [President Herbert] Hoover would get the blame,” remarked humorist Will Rogers, describing the animosity directed toward the President during the Great Depression. A similar bitterness is often directed at county assessors, who are blamed for high property tax bills. This is especially true when assessments increase significantly, and taxpayers assume their valuation notices are the reason for rising property tax bills.
In property tax discussions, it is easy to focus on assessments, but true tax relief must come from limiting local government spending. Assessment limitations are problematic and should not be considered a viable solution for future property tax reform.
Iowa’s property tax system is complex and in need of reform. For decades, local governments have engaged in a “blame game” over high property taxes. Cities, counties, and school districts often point fingers and blame each other, the State Legislature, or the local assessor. Many taxpayers also fault the assessor, but it is important to remember that assessors have no authority over city, county, or school district budgets.
An assessor’s job is to determine the market value of properties based on real estate transactions. This ensures property taxes are equitably distributed based on market conditions. Local governments, however, often benefit from rising assessments, as higher valuations increase their revenue. This is why taxpayers frequently hear local officials claim they are lowering tax rates while their bills continue to rise—a result of the “gravy train” of assessment windfalls.
Given the focus on assessments, policymakers often believe the best way to provide tax relief is to limit assessment growth. Many look to California’s Proposition 13 as a model for successful assessment limits.
Iowa already has an assessment limit in place, known as the “rollback,” which serves as a taxpayer protection. The rollback restricts the growth of total taxable value for all residential properties in Iowa to no more than 3 percent per year.
Assessment limits are popular because they are well-intentioned and offer a seemingly easy solution, avoiding the harder task of addressing local government spending. The goal of assessment limitations is to protect property owners from steep valuation increases and keep tax bills manageable. As the Tax Foundation describes:
The purpose of assessment limits is to constrain increases in individual homeowners’ tax burdens caused by rising home values. While property owners may be wealthier on paper due to property appreciation, their income and ability to pay higher taxes may not have risen proportionally. Assessment limits seek to cushion the blow, limiting the amount by which rising property values can increase exposure to taxation. They do this in various ways, such as freezing or rolling back assessment increases or setting a cap on the maximum annual assessment growth. Under assessment limits, a home’s value is only reset to market rates when a triggering event occurs, such as a change in ownership or a significant renovation.
Although this may seem like a good policy, assessment limitations have unintended consequences, as the Tax Foundation explains:
These unintended consequences are evident in California’s Proposition 13, which limits property tax assessment increases to 2 percent annually unless ownership changes. While Proposition 13 has helped lower property tax bills, it has also created significant problems. By benefiting existing homeowners, it contributes to housing shortages and higher costs for new construction. It also shifts tax burdens to new buyers and forces localities to rely more on sales and income taxes.
To address these issues, Proposition 13 includes portability provisions that allow homeowners to transfer their tax assessment to a new property under certain conditions. However, portability regulations introduce additional complexities.
The Tax Foundation illustrates the impact of Proposition 13 with this example:
Imagine two homes side by side in Los Angeles, both valued at $1 million. One was purchased in 1975, while the other was purchased in 2023. At a tax rate of 1 percent, the homeowner from 1975 pays $451 in property taxes, while the new buyer pays $10,000.
This demonstrates the disparities created by assessment limits.
Florida’s “Save Our Homes” Amendment, enacted in 1995, similarly caps annual assessment increases for homesteaded properties at 3 percent or the change in the National Consumer Price Index, whichever is lower. Like Proposition 13, it results in higher taxes for new homeowners once the cap resets upon sale.
An example from Miami highlights this issue:
Two identical townhouses in the same condo complex have drastically different tax bills. One owner, who bought their home in 2006, pays $4,092 in property taxes for 2024, while their neighbor, who purchased in 2023, owes $14,693.
As the Lincoln Institute for Land Policy explains, by capping assessed value increases, assessment limits protect some homeowners but create barriers for new buyers, adding financial stress.
Assessment limits appeal to taxpayers frustrated by rising valuations, but even Iowa’s rollback has not prevented property taxes from soaring. The real driver of high property taxes is local government spending. Local governments continue to collect more revenue to fund increased expenditures.
This is why any future property tax reform must focus on controlling local government spending. A levy or budget limit is the best path forward. By capping the amount of property tax revenue localities can collect, they will be forced to manage spending more responsibly. At its core, taxation is driven by government spending—and if taxpayers want lower taxes, government at all levels must spend less.
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