More than 50 million K-12 public school students are returning to classes for the start of a new academic year. At the same time, some states are cutting a major source of funding for public education: property taxes.

Property taxes, typically raised by local governments to meet local needs, are critical for maintaining public education across the country, accounting for more than one in three dollars spent by schools. These dollars ensure that our children’s needs can be met — providing them safe buildings where they can learn, technology that prepares them for adulthood in the digital age, and quality teachers who empower them to reach their full potential.

Despite the necessity of the services funded by property taxes, legislators in some states are pushing to cut or eliminate them as part of a broader strategy to defund public schools. The result is that critical revenue for ensuring our children’s success is under threat, local governments’ ability to provide for their residents is undermined, and people whose property taxes have become unaffordable due to rising home values aren’t getting targeted relief. Lawmakers can better address the effects of rapidly increasing housing costs, while preserving funding for crucial local services like education, by using more equitable property tax structures and targeted tax credits to tie property taxes to people’s ability to pay.

Twelve states have cut property tax rates, expanded exemptions for property taxes, or enacted limits on the property taxes local governments are able to raise. Five states have enacted restrictive limits on how property taxes (or local revenue generally) can increase year to year. Two states, Colorado and Wyoming, have pursued both options — cutting property tax rates while simultaneously enacting limits on the revenue local governments can raise. In November, voters in at least seven states will face ballot options to further weaken their state’s property taxes — or eliminate them entirely.

While rising home values are squeezing low- and moderate-income homeowners who are struggling to afford their property taxes, these across-the-board, one-size-fits-all measures are ineffective at addressing housing affordability. In fact, property tax limits provide a windfall to wealthy homeowners while drying up funding for the public services we all need in our communities: schools, roads, parks, libraries, trash collection, emergency responders, and more.

  

In addition, property tax cuts that limit local governments’ revenue also lock in geographic inequalities created by chronic underinvestment in rural areas, urban redlining, and other forms of explicit and implicit racial segregation. For local governments struggling to raise adequate revenue because of very low property values within their jurisdiction, property tax limits can remove their ability to “catch up” to areas with higher property tax bases. This means that even if property values within disinvested communities increase, their schools will remain poorly funded, roads poorly maintained, and local services poorly staffed. Inadequate public services hurt the local economy and lower property values, leaving these communities struggling to recover from their history of disinvestment.

Instead of limiting the resources available to local governments, states should allow localities to decide how best to meet their residents’ needs, which include promoting equitable prosperity through investments in housing and public education.

Some states have taken this more equitable approach by loosening restrictions and structuring their property taxes more fairly.

• This year, Maine granted localities more autonomy by repealing a municipal revenue cap.
• Similarly, Rhode Island passed legislation to allow Providence to set its own tax rates for various classes of property.
• D.C.’s council passed a tiered property tax for properties worth over $2.5 million. Progressive property tax structures like D.C.’s proposal, which charge a higher tax rate for those with more valuable houses, make taxes fairer by asking more from people who have benefited most from economic growth, rather than families who have been left behind.

States that are specifically concerned with property taxes hurting people’s ability to stay housed should consider enacting or expanding property tax circuit breakers. Typically taking the form of an income tax credit, circuit breakers tie property taxes to people’s ability to pay. If a person’s property tax bill exceeds a certain percentage of their income, they receive a partial or complete refund in the excess amount. Circuit breakers ensure that assistance flows to people who need it to stay in their homes rather than funneling public dollars towards the already wealthy.

Circuit breakers can and should be designed to benefit renters, who pay property taxes through their rent and are more likely to be financially struggling than homeowners. While most states that provide property tax assistance to renters include them in their circuit breaker credits, some states have separate “renters’ credits” and would need to expand them alongside credits for property owners.

Lawmakers should adopt progressive rates and targeted circuit breaker programs that include renters to ensure that the property tax revenue necessary to support our communities does not come at the expense of financially struggling families. We can have fair property taxes and continue funding the public goods we all need.