IN DEFENSE OF PROPERTY TAXES

“For years, opinion surveys have identified property taxes as the ones Americans hate the most,” according to the National Conference of State Legislatures (NCSL).

There are lots of reasons this has been the case. For one thing, property taxes are clearly the most visible of the major tax streams that go to municipalities. As Jon Cannon, executive director of the Nebraska Association of County Executives, told us in a recent conversation, “It’s a tax you can’t avoid. You can make purchases across state lines to avoid sales taxes. For income taxes, if I’m sophisticated enough there are ways to avoid it. But dirt is dirt and homes are homes and you can’t escape them. And because it’s so hard to escape, it’s got greater visibility.”

To make matters worse, as the NCSL points out, “payments must be made in large lump sums . . . Unlike sales taxes that are paid in small increments or income taxes that are withheld, property tax bills come with a large sum due.” 

With that in mind, elected officials in a number of states – including Florida, Montana, Texas and North Dakota – have all been considering efforts to reduce or eliminate local property taxes. This seems to us to be a wicked tradeoff. On the one hand, the idea that a state is forcing counties and localities to cut or eliminate their property taxes could be a very popular idea at the ballot box. But on the other hand, this kind of move will nearly inevitably bring enormous fiscal pain to the localities. At the Conference of Minority Public Administrators, which we attended in North Carolina in late February, all four of the panelists – county and city managers or their deputies – pointed to the specter of state intrusion in their property tax streams as one of their greatest concerns.

One of the big problems here, we believe, is that there’s a disconnect between people’s perception of the property taxes they pay and the services they receive in return. Nobody much wants to see public safety budgets cut, but they don’t necessarily see that if their property taxes are eliminated in all or in part, that’s exactly what could happen.

As things stand, nearly every state has some kind of limitation that’s already in place. What’s changed, according to Ginger Delegal, executive director of the Florida Association of Counties, is that in the last 18 to 24 months there are upwards of 20 states now where there is very serious discussion about the elimination of property taxes, either from start to finish, or for at least homestead property.

Florida’s governor Ron DeSantis has been a poster child for the elimination of local property taxes, and even though this move hasn’t made it past the state legislature despite multiple efforts in recent years, his position is clear:  As was posted on his X account the Governor asked "Do you think it's fine that you buy property, you buy a home, you own it outright . . . and yet you have to continue to pony up money to the government just for the courtesy of using your own property?"

He seems to be missing the point here. Property taxes are far from a punitive measure for owning property, but rather the most reliable means for paying for schools,  the police department, fire department, roads and all the other services for which property taxes are a fundamental source of revenue.

But of course supporters of reducing or eliminating property taxes in Florida understand that somehow localities are going to have to pay their bills. There’s no great call for increased sales taxes and the state doesn’t even have an income tax.

Where is the replacement money going to come from? It appears there's some anticipate that it will appear a result of the saving that the state will accrue from its DOGE-like efforts. As DeSantis posted on X, “Florida was DOGE before DOGE was cool,” So far, however, the state has yet to demonstrate the colossal savings it anticipates from its DOGE efforts.

Want a guess? The number is going to be underwhelming and not nearly enough to make up for any future dramatic reductions in property taxes.

Meanwhile, municipalities in states that have already mandated significant cuts in property taxes are already feeling the pain. According to an article by the Pew Charitable Trusts “Indiana passed sweeping legislation to give homeowners $1.2 billion in tax relief between 2026 and 2028 through an annual tax credit of up to $300 on property tax bills and caps on local income tax rates, among other provisions.

But those savings come at a cost to local government coffers—an estimated $1.5 billion over the three-year period. Many localities now face budget shortfalls and are enacting budget cuts in response. Fueled by such concerns, Accelerate Indiana Municipalities (AIM), which represents the state’s cities and towns, is pushing the Legislature to consider several changes to the law during its 2026 session.”

Pew also points to Wyoming as a case in point, writing that “Meanwhile, counties and municipalities in Wyoming are also facing fallout from state legislation that cuts property taxes by 25% for up to $1 million of a home’s property value—without backfilling local governments for lost revenue. Public schools could be the hardest hit. They receive roughly 70% of all property tax revenue in Wyoming with the rest going to local governments. The impacts of these revenue losses are rippling through local government budgets, forcing cuts to libraries, city park maintenance, and hospitals.”

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