Real tax relief won’t come from simply adjusting appraisals – it requires tackling inefficiencies in government spending.
“Spending is the problem. Outrageous property taxes are the symptom,” stated a letter to the editor in The Wall Street Journal. This letter correctly identifies spending as the core issue driving high property taxes. Too often, debates around property tax reform focus on property valuations—also known as assessments or appraisals. While there may be areas for improvement in the valuation process, focusing solely on assessments distracts from the most important reform: limiting government spending.
Currently, Iowa, Kansas, and South Dakota are three Midwestern states considering some form of property tax cap that would limit the amount of property taxes local governments can collect.
As ITR Foundation followers may know, Iowa lawmakers have introduced a significant property tax reform bill that would implement a 2% cap on the general fund levy of city and county property tax revenue. In addition to these caps, another key provision would gradually reduce the school foundation property tax levy. This comprehensive proposal aims to curb local government spending and create a more predictable, taxpayer-friendly property tax system.
The Kansas Legislature is considering a 3% levy limit or property tax cap. Jim Howell, a county commissioner in Kansas, argues that “beyond appraisals, the broader concern should be the efficiency of government spending…The frustration with property taxes is real and justified. But That is the real challenge ahead.”
In South Dakota, some legislators argue that “property tax reform should start with government spending cuts and include difficult discussions about public education funding.” South Dakota Representative Greg Jamison stated regarding property tax reform that “generating new revenue isn’t what this body wants to do, it’d rather cut spending.”
Rep. Jamison introduced a bill that would limit local government spending. The proposed legislation would “lower limits on local governments’ annual increases in property tax collections — for schools, counties, cities and others — from 3 percent to 2.5 percent, which could force local governments to make cuts and lower property tax burdens for all types of properties.”
“Our first look should be how we can reduce the government, how we can provide cuts, before we start thinking about how we’re going to increase taxes to pay for a tax,” stated South Dakota Speaker of the House Jon Hansen.
Efforts to rein in property taxes are not limited to the Midwest. Across the country, leaders are considering measures to limit local government spending to address rising property taxes.
In New Hampshire, lawmakers are considering legislation that would apply a spending limit to local school budgets. The proposed bill would limit school budget growth to the rate of inflation and enrollment increases. State Representative Dan McGuire argues that a local spending cap is needed because spending is “burdening taxpayers without clear benefits to students. There is no correlation between spending and outcomes. What we do know is that there is a huge correlation between spending and property taxes.”
In Maryland, Montgomery County Republican Chair Reardon Sullivan is pursuing a ballot initiative to limit local government spending. “The Committee to Control Montgomery County Spending (Control MoCo Spending) has a goal of capping spending increases approved by the county executive and County Council.” The initiative “would seek for future spending increases to be based strictly on the prior year’s Consumer Price Index (CPI).”
“It is disappointing that the County Executive and County Council have a long history of excessive spending with little return on investment,” stated Reardon in describing the need for the spending limit. Further, he argues that “County spending on top of the pending state tax increases, without looking at cutting spending will make Montgomery County unbearable. These policies will force people and businesses to leave the County and further erode our tax base.”
As property taxes continue to rise across the country, state and local leaders are rightly shifting the focus to the root cause: government spending. Without addressing the unchecked growth of local budgets, any effort to reform property taxes will fall short. Real relief will come only when lawmakers prioritize fiscal discipline, limit government growth, and ensure taxpayers are no longer treated as an endless source of revenue.
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