For retirees Tom and Beverly McAdam, the good news is that the value of their two-bedroom home in suburban Denver has increased 45% since they bought it more than six years ago.
That’s also the bad news: It costs them thousands more in property taxes and leaves less for discretionary spending.
“Paying the higher property taxes just means we have to get more money out of our investments when it comes time to pay those big bills,” Beverly McAdam said.
She supports a ballot proposal in Colorado that could limit growth in property tax revenue. It’s one of several measures states are taking this year to limit, reduce or offset escalating property taxes in response to complaints.
According to S., single-family home prices have increased nationally by about 54% over the past five years&P Dow Jones Indices.
That means higher tax bills for homeowners if governments don’t offset higher property values by lowering tax rates. And with office vacancies rising as people continue to work from home after the coronavirus pandemic, the value of some commercial properties is falling, putting even more pressure on residential properties to generate income.
“As assessed values have soared in recent years,” said Jared Walczak, vice president of state projects at the nonprofit Tax Foundation, “homeowners are crying out for help, and public policymakers are increasingly exploring ways to provide it.”
Colorado, like Alabama and Wyoming, also has a new law that will limit the growth of tax-assessed values for homeowners. The property tax cut will be part of a special legislative session from June 18 in Kansas, while Nebraska also has a special session to reduce property taxes.
Voters in Georgia will decide in November whether to authorize it a new law limiting the increase in assessed home value for tax purposes to the rate of inflation, unless local governments or school boards opt out.
Five years ago, Lanell Griffith and her husband paid just under $2,700 in property taxes on their home in Topeka, Kansas, in a historic neighborhood with tree-lined brick streets. Their bill last year was more than $3,700.
“The government shouldn’t be able to arbitrarily increase what they say you owe them without some kind of guardrail on that,” Griffith said.
Kansas lawmakers passed three measures this year that would have reduced state taxes on public schools. But that was everyone vetoed by Democratic Gov. Laura Kelly due to concerns about other sections to reduce income tax. The special session marks a fourth attempt at consensus.
In Vermont, Republican Governor Phil Scott has vowed to veto a bill that would do so increase property taxes by an average of almost 14% to provide more money for public schools. Scott said people “simply cannot afford historic double-digit increases in property taxes.”
In many states, property taxes are primarily the responsibility of local governments, such as counties, cities, school boards, and special districts for libraries, fire departments, and water systems. Each entity sets its own property tax rate, which is added to the others to obtain an overall tax bill for property owners.
State legislatures can intervene in several ways. They could set statewide limits on how much assessed property values can increase, create partial tax exemptions for all homeowners or provide income tax credits to help offset property taxes for certain people, such as those 65 and older.
But every relief has consequences. Restrictions on the growth of property assessed values could provide greater benefit to the wealthy. Exemptions for homes used as primary residences could shift more of the tax burden to rental properties and businesses.
“If you do this too often, you can now start to tie the hands of your local government and cut them off from the ability to generate revenue,” said Richard Auxier, a senior policy fellow at the nonprofit Tax Policy Center.
While I signed several property tax relief legislation This year, Wyoming’s Republican governor, Mark Gordon, vetoed a measure that would have exempted 25% of a home’s value from property taxes. He said it “jeopardized the financial stability of the state and the counties.”
In 1982, voters in Muscogee County, Georgia, passed a local ordinance that froze property values for homes used as primary residences. The result: Longtime homeowners pay very little, newcomers pay more and businesses face some of the highest property tax rates in the state, said Suzanne Widenhouse, the county’s chief appraiser.
Last year, two similar homes worth about $330,000 had dramatically different tax bills. One, whose assessed value was frozen in the 1980s, owed less than $8. The other, whose appraised value was frozen when it was purchased about five years ago, owed $3,236, Widenhouse said.
“Every time you grant an exemption, you create inequality,” she said.
a Ballot measure in Georgia would amend the Constitution to allow the increase in assessed property values to be limited to the rate of inflation. But it would not reverse previous increases.
In the eight years since Rob Romeijn bought a ranch-style home on 10 acres southeast of Atlanta, Rockdale County has increased the assessed value of his property from $127,000 to $230,000, which also increased his property tax bill, he said.
As a Dutch immigrant with permanent residency, Romeijn cannot vote in the Conyers election, but he was so dissatisfied with the increase that he made a sign urging people to vote out Rockdale commissioners and protested in front of the county offices in April.
Colorado has also been at the center of the property tax debate. The state has seen decades of growth in the number of new residents, which has increased the demand for housing. Meanwhile, the country has struggled to find a balance between providing tax relief for homeowners and adequate funding for local governments.
A 1982 constitutional amendment limited residential properties to 45% of Colorado’s total property tax base, while also establishing a flat tax rate for commercial properties. To balance the ratio as home values rose, housing tax bills were reduced, leaving less revenue essential services such as fire districts.
Colorado voters repealed that constitutional provision in 2020. Since then, assessed home values have risen rapidly and the General Assembly has responded. The latest law, signed in May, is expected to save more than $1 billion annually in future property tax revenues by lowering tax rates and imposing limits on growth.
But that’s not enough to satisfy some residents. The conservative group Advance Colorado backed a grassroots initiative asking voters in November to limit property tax revenue growth to 4% annually and is collecting signatures for another ballot initiative to cut property taxes.
“People say this is too much growth; The government doesn’t need that much money,” said Michael Fields, president of Advance Colorado. “People are really afraid of losing their homes.”
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Associated Press writers Jeff Amy, John Hanna and Lisa Rathke contributed to this report.