Out-of-Control Spending by Local Governments Leads to Soaring Property Taxes
Key Findings
- Property taxes increased by seven percent in 2023 alone, leaving the average homeowner with a tax bill of more than $4,000.
- Spending by local governments has more than doubled over two decades, exceeding $2 trillion.
- Cities across the country show how local governments have lost control of spending.
- Wasteful spending on DEI, football stadiums, toilets, and garbage cans has left taxpayers with unnecessarily large bills.
Overview
Property taxes are on the rise across the country.1-2 This increases financial pressure on homeowners who have already been blindsided by historic inflation.3-4 But it is not just current homeowners who are affected, rising property taxes are putting the dream of owning a home out of reach for many who can afford a mortgage but not the taxes.5
The reason for these punishing taxes is massive increases in spending by local governments from coast to coast. The spending is not borne out of necessity but is instead the result of waste and excess. These unnecessary local spending increases are seen across the board, from education to transit and housing to natural resources. Examples of this inexcusable spending by cities and counties are plentiful.
Many states have already heard enough from their citizens and are taking steps to reduce property tax burdens. State lawmakers from across the country should follow suit to rein in property taxes and stop unnecessary local spending.
Property taxes are stifling taxpayers across the country
Local governments rely heavily on property taxes as a revenue stream, accounting for nearly three-quarters of all taxes collected.6 Unfortunately for homeowners and would-be homeowners, property taxes are on the rise across the country.
From 2001 to 2021, local governments increased property tax revenue by 141 percent, to more than $600 billion.7 And since then, property taxes have only increased.
Across the country, property taxes increased by nearly 25 percent from 2019 to 2023, with an increase of seven percent in just the last year alone.8-9 By now the average homeowner is left with a property tax bill of more than $4,000 each year.10 This surge has not been clustered in one region of the country, the highest jumps were spaced out: Charlotte (31.5%), Indianapolis (19%), Kansas City (17%), Denver (16%), and Atlanta (15%).11
Rising property taxes are making it much more difficult to find an affordable home, as even with a reasonable mortgage, property taxes can push the home out of affordability.12-13 It is little wonder that several states are taking steps to cut or even abolish property taxes.14-17
But taxpayers have more to worry about than property taxes. Municipal bonds are increasing, which must eventually be paid back with interest by taxpayers.18-19 Growing property taxes and bonds both fuel local spending.
To provide relief to both present and future taxpayers, lawmakers must take steps to rein in local governments and reduce residents’ overall property tax burden. Fortunately, there is plenty of fat for cities and counties to trim from their budgets.
Local spending is out of control
In 2001, local spending eclipsed $1 trillion.20 In 2021, local spending ballooned to more than $2.2 trillion—an increase of 107 percent.21
But it has not just been one line item that has caused the skyrocketing costs—spending is rising across the board.
Education spending is up 94 percent to nearly $800 billion, with elementary and secondary spending accounting for the vast majority of the spending.22 Housing and community development has increased by 117 percent and is now more than double what local governments spend on the judicial system.23
Transit—think buses, light rail, and other public transportation—has increased by a whopping 144 percent.24 This line item is growing faster than money spent on highways, which would help reduce congestion and repair and patch potholed roads.25
Meanwhile, spending classified as “protective inspection and regulation” and “natural resources” have both doubled over this time.26
Other types of spending also cause local governments to bust budgets and turn to property owners for additional funding. Two of the cities with the largest property tax increases have recently implemented guaranteed income programs.27-28 These programs cost taxpayers millions all while discouraging work and trapping people in dependency.29
Local governments’ finances are also negatively impacted by local labor ordinances. Local governments employ 14 million workers, nearly nine times the amount Walmart employs across the country.30-31 At least 61 localities have higher minimum wage laws than their state—a twelvefold increase since 2012.32 Localities are also starting to require extra paid leave for employees.33-34 Paid leave is the second most costly benefit for employers after insurance, accounting for 7.4 percent of all compensation.35 Every time a city or county increases its minimum wage or requires paid sick leave, it increases its labor costs which taxpayers must pay.
All this spending has increased local government debt from less than $1 trillion in 2001 to more than $2.1 trillion in 2021.36-37 Interest payments on this debt reached nearly $83 billion in 2021 alone, roughly equivalent to what they spend on highways or water.38
The explosion of local spending is further shown by analyzing individual cities.
New York City increased its spending from $41 billion in 2002 to $106 billion in 2022—a 159 percent increase, all while hemorrhaging citizens.39-40 Phoenix’s budget grew from $1.1 billion in 2014 to $2 billion in 2024.41-43
Orlando has increased spending from $251 million in 2003 to $934 million in 2014 to $1.8 billion in 2024.44-47 Kansas City, Missouri increased its taxpayers’ bill from $976 million in 2004 to $1.4 billion in 2014 to $2.1 billion in 2024.48-51 Milwaukee increased its spending from $1.1 billion in 2004 to $1.4 billion in 2014 to $1.9 billion in 2024.52-55
In just a short time frame, Austin increased its spending from $4.63 billion in 2020 to $7.57 billion in 2024.56 Likewise, Charlotte’s budget has increased from $2.6 billion in 2021 to $4.2 billion in 2025.57-59
Skyrocketing spending is not only hitting big cities, as suburbs and even small cities are burdening their citizens with excess spending. In 2021, Lee’s Summit, Missouri, a suburb of Kansas City, proposed a budget of $234.4 million, and the annual budget has now swollen to $397.5 million.60-62 Terre Haute, Indiana’s citizens witnessed their city’s budget rise from $111 million in 2022 to $140 million just two years later.63-65 In 2024, Leavenworth, Kansas, doubled its budgeted expenditures from its actual expenditures from just two years prior.66
Pointedly, these cities are not congregated in any one region. The growth in local government spending is seen throughout the country. Much of this growth comes not from providing services citizens need, or even want, but from inexcusable or outlandish spending.
Examples of wasteful spending are plentiful
Examples of wasteful spending by local governments are easy to find and no government is a perfect steward of taxpayers’ money. The following are just some examples of local government spending at its worst.
Diving into social issues with taxpayer money
Diversity, equity, and inclusion (DEI) is divisive, ineffective, and costly, but local governments continue to waste taxpayer money by offering these trainings and even making attendance mandatory. This includes police departments and schools using taxpayer money to pay for lectures from the controversial author of “How to Be an Antiracist” Ibram X. Kendi and host diversity training programming.68-69
This is not an issue with limited reach to a handful of school districts—these trainings are widespread. A survey of 42 large school districts showed that 60 percent required equity-related professional development for all teachers, and 95 percent offered it voluntarily.70 More than a third even required the training for all staff in the building, from teachers to janitors to cafeteria staff.71
Nearly half of school districts with more than 15,000 students, and 89 percent of those with more than 100,000 students, had a chief diversity officer in 2023.72 These are not departments with a single employer, either. A district in Kentucky operated a DEI office with a budget of $6.3 million in which the top official made 140 percent more than the average district salary.73
In total, public schools spend $20 billion annually to train teachers on equity and racial identity.74 All with little or no positive results and causing angst among teachers.75-77
An education need not cost an arm and a leg
While education is undoubtedly important, local spending on public education is also undeniably filled with waste.
New York City spends an astonishing $38,000 to educate a single student for one year.78 Atlanta spends $32,000 per student, whereas area counties spend between $12,000 and $20,000, and even prestigious area private schools spend as little as $24,000.79
Spending out of the Atlanta area shows that a public school education need not cost the same as a new car—school districts bake plenty of waste into the cost of educating students. Coming off two abnormally large annual increases in spending, the national average to educate a student sits at $15,633.80-81 Why are some school districts doing so at twice this cost?
A K-12 education in New York City or Atlanta is more expensive than even a college education, where the average cost of attendance and on-campus living at an in-state public university is just over $27,000.82 In fact, the national average spending on public K-12 education is nearly $6,000 more than the average cost of in-state tuition at a public four-year institution.83 A student could finish a community college program for about the cost of a single year in the Atlanta City School District and less than in New York City.84
Much of the reason for the excessive spending on K-12 public education is that so much spending goes to things other than educating students. Less than 60 percent of all public elementary and secondary school spending across the country is spent on instruction, with some states falling below even this low threshold.85
Sparing no expense on buildings
Everything is bigger in Texas, including their high school football stadiums. Regrettably, Texas taxpayers are left paying for these indulgences.
Seven different school districts in Texas alone have built football stadiums costing taxpayers more than $45 million each.86 The most expensive was built by Cypress-Fairbanks Independent School District for $80 million, surpassing the $72 million paid for by taxpayers in Katy Independent School District.87-88
Prosper Independent School District hoped to break this record by building a $94 million stadium, just four years after building a $53 million stadium.89-90 Voters rightly rejected this obscene use of funds but gave the go-ahead for a $125 million performing arts center.91-92
Local governments outside of Texas are wasting money on building projects as well. Broward County, Florida, is building a $140 million, 29-story luxury hotel that will be owned by the county but operated by a private company.93
With building projects like these, it is little wonder why property taxes have shot up in recent years.
Golden toilets and “smart” garbage cans
Both toilets and garbage cans can be beneficial in public areas, but there is no need for them to be expensive. But cities from coast to coast are building them at enormous cost to taxpayers.
San Francisco city officials were unashamed of their proposed $1.7 million toilet and sink, they actually planned to throw a party for its opening.94 The bathroom project was not completed in time for the party, and when it was finished, it did come in under budget but was an underwhelming experience for such a pricey toilet.95
Not to be outdone, New York City spent $5.3 million to install five toilets in its parks—not five toilets in every park—but five toilets in total.96 The city spent what many would say is the cost of an extravagant home.
Back in San Francisco, the city spent $537,000 to test which trash cans residents liked best.97 Included in the survey was one prototype costing $20,900 and another costing $18,800.98 A reminder that these are simple trash cans, not anything fancy like robots that wander the city collecting and disposing of waste. If these trash cans ever appeared on The Price is Right every contestant would undoubtedly be bidding over.
Across the country in Baltimore, taxpayers were forced to pay $9 million to purchase “smart” garbage cans.99 The citizens would surely prefer to stick with traditional garbage cans and keep their money to help pay for gas and groceries.
The Bottom Line: Local governments disregard their citizens by taxing excessively and spending on unnecessary and outlandish services. State lawmakers should take steps to rein in burdensome property taxes.
To keep up with out-of-control local spending, property taxes have been increasing dramatically, making homeownership more difficult and expensive. The increased spending does not come from necessity, instead, taxpayers see their hard-earned dollars wasted on unnecessary or outlandish services.
States should protect their citizens and taxpayers by reining in local governments which have gone wild with their tax-and-spend ways.
This paper was last updated on March 10th, 2025
To view endnotes, download the paper below.
