More and more states are weighing property-tax cut plans during what’s an election year for governors and legislators in most states, but the push is colliding with political resistance centered on whether local governments and public schools can be funded if property taxes fall. The Associated Press described the moment as a “property tax revolt,” drawing comparisons to California’s 1978 Proposition 13, which limited property tax rates and constrained how much local governments could increase home values for tax purposes.
Tax policy experts say the thrust of the proposals is aimed primarily at homeowners. “The overwhelming trend across the states is relief for residential property owners,” said Manish Bhatt, of the Tax Foundation, a Washington, D.C., group that studies taxes. AP said new proposals have been debated recently in Iowa, Kansas, Michigan, Missouri, Oklahoma, South Dakota and Wisconsin, with debates in some states expected to continue for months.
While homeowners’ anger and political pressure are expected to keep some legislatures moving toward changes, AP reported that eliminating property taxes on a homeowner’s primary residence is proving far more difficult. Thomas Brosy, a senior research associate at the Urban-Brookings Tax Policy Center, said eliminating property taxes is “very unlikely to happen.” Brosy said “Completely slashing them is really unrealistic,” because property taxes remain “the largest source of on revenues for most local governments in the United States.”
Georgia’s stalled effort illustrates the challenge of constitutional supermajorities. AP reported that a state constitutional amendment that would have cut property taxes for homeowners by 75% or more failed on Tuesday after all but one Democrat voted against it. AP said the amendment required a two-thirds vote by legislators and that Republican House Speaker Jon Burns’ plan needed at least 21 Democratic votes. House Republicans said the bill could be revived, but AP reported that they also indicated they would consider more limited property-tax relief options that would not require a constitutional amendment.
Florida lawmakers, meanwhile, are advancing a different approach that faces questions about how broadly it will pass. AP said Florida House lawmakers passed a proposed constitutional amendment to phase out property taxes for nonschool purposes over 10 years. The proposal was estimated to cost $13 billion in forgone revenue and awaits Senate action. A key state senator signaled the Senate is unlikely to approve the plan as written, with senators instead saying they favor something less generous and more tailored to the needs of individual counties, and lawmakers said reaching a deal could require a special session.
In Georgia, supporters and opponents framed the political stakes sharply. AP reported that House Ways and Means Committee Chairman Shaw Blackmon said the measure would have provided “dramatic savings for homeowners,” adding that lawmakers have heard from constituents worried their “skyrocketing property tax will force them from their homes.” State House Democratic Minority Leader Carolyn Hugley countered that the proposal was an election-year “exercise in cold, hard politics,” arguing that local governments might not be able to raise sales taxes enough to replace billions in property-tax revenue that would be lost—saying, “The math’s just not math-ing.”
Beyond constitutional amendments, AP said some states are also exploring shifts from property taxes to other revenue sources, including sales taxes. South Dakota Gov. Larry Rhoden proposed allowing counties to impose a half-percent sales tax and dedicate the proceeds to property tax credits for homeowners, and AP reported that he launched a website estimating potential annual savings ranging from $428 to $1,227. AP noted that the estimate does not account for what residents would pay through higher sales taxes.
In Michigan, AP reported that Republican House Speaker Matt Hall proposed raising taxes on services that are currently untaxed and using the money to erase the state’s share of property taxes, the state real estate transfer tax, and Michigan’s personal property tax. AP said any agreement may not arrive until lawmakers finalize the state budget in the fall, and said timing and negotiations could determine how far the plan goes.
Tax experts said such sales-tax shifts raise distribution and local-budget concerns. Brosy said the sales tax can be “a lot more regressive and tends to fall a lot more on lower-income families compared to the property tax.” Bhatt of the Tax Foundation said not all areas have the same opportunities to generate retail sales revenue that could replace property-tax funding, and that the issue is often overlooked in discussions.