Over 999,000 readers this year!

Property tax reform faces tight legislative timeline

The Legislature started with 20 property-tax bills. With less than two weeks left in the session, lawmakers still have seven options to whittle down.

A Laramie home for sale in 2024. (Tennessee Watson/WyoFile)

by Maggie Mullen, WyoFile

The Wyoming Legislature has less than two weeks to decide how to address its top non-budget priority — residential property taxes. 

As home values have soared for much of the state in recent years, so too have property taxes. That’s because homes are taxed according to their value. But it’s been an expensive and difficult adjustment for a lot of homeowners, many of whom gave tearful and outraged testimony at legislative committee meetings throughout the legislative off-season, known as the interim. 

Picking up where they left off last year, lawmakers filed 20 property-tax-related bills this session. 

Just seven remain in play — more than half of which would create various homeowner exemptions. And even though the herd has thinned considerably, concerns have emerged that the Legislature has yet to narrow its focus this far along in the session. That’s particularly true in the House, where lawmakers voted to send six property tax bills over to the Senate for deliberation this week. 

“There’s still a lot of bills alive at this point in time, which is concerning,” Rep. Liz Storer (D-Jackson) said at a press event last week. “If you add them all up, we would lose a lot of revenue. And these revenues go to local governments and schools.”

(Storer is president and CEO of the George B. Storer Foundation, a financial supporter of WyoFile.) 

The amount of bills left on the table isn’t just a concern for House Democrats.

“As these different tax relief and reform bills start accumulating, it just seems that there’s a great chance that some of them may conflict in some way,” Rep. Art Washut (R-Casper) said Friday on the House floor. 

“Could someone potentially get relief from more than one of these bills at the same time? What’s the cumulative effect of all that?” Washut asked. 

“It’s something we’re going to have to work out,” Speaker of the House Albert Sommers (R-Pinedale) responded. 

The Senate, meanwhile, sent only one property tax bill to the House for deliberation. 

Background

There are a couple of reasons why lowering property taxes hasn’t been straightforward for lawmakers.

For one, the Wyoming Constitution groups residential property in the same tax class as commercial and industrial properties. That lumping together prevents the Legislature from making any isolated changes to how residential properties are taxed. 

In November, however, voters will get the chance to amend the constitution and separate residential property into its own tax class. The measure will be on the ballot thanks to a bill lawmakers passed in 2023 with support from Democrats and both Republican caucuses. If House Bill 103 – Property tax-assessment ratio for residential property passes this session, voters will also be deciding whether to lower the assessment rate for residential property. 

Another challenge is the risk of drying up revenue for local services. 

There’s a popular misconception that when homeowners pay their property tax bill, that money fills state government coffers — even some lawmakers have been confused. 

However, property taxes stay local. 

Property taxes fund: K-12 education and transportation, elections, law enforcement, county jails, hospitals, landfills, libraries, water and sewer, museums, senior citizen centers, animal control, roads and bridges, community colleges, flood control, campgrounds, rodeos and fairs, golf courses, fire protection, weed control, cemeteries, airports and emergency preparedness. 

This funding model is why some lawmakers won’t support legislation that cuts property taxes that doesn’t also include a backfill — a reimbursement from the state to local governments — and an expiration or sunset date. 

Rep. Mike Yin (D-Jackson) has been pushing for 2027 sunset dates. 

“I know that there are definitely several counties where this could have a really large effect on them,” Yin said while bringing a sunset amendment to HB 103. “And I just want to make sure that in three years we’ll be able to take care of everything impacted while still being able to provide relief.”

Yin’s amendment failed, but sunset dates are attached to three other bills, including House Bill 3 – Property tax exemption for long-term homeowners

Across the state, there are 612 taxing districts, which include counties and cities, school districts, water and sewer, fire and hospitals. Each of these entities collects a certain amount of money on the property that is located within its geographical boundaries. This sample calculation shows how a residential property tax bill is calculated using an assessed value and mills. (Courtesy Wyoming Taxpayers Association)

Exemptions

While property taxes depend on how much a home is worth, taxes are not applied to the entire market value of the property. Instead, an “assessed value” is used.

The assessment level in Wyoming for residential property is currently 9.5%. 

So if you own a home that has a $200,000 fair market value, for example, your property taxes will be assessed at $19,000. 

Sponsored by the Joint Revenue Committee, HB 3 would cut that $19,000 in half for certain residents by creating an exemption. 

More specifically, HB 3 would exempt 50% of the assessed value of a home if the owner or the owner’s spouse is at least 65 years old and has paid property taxes in Wyoming for 25 years or more. Military personnel may also qualify. The bill does not contain a backfill but would sunset July 1, 2027. 

House Bill 45 – Property tax exemption-residential structures and land, sponsored by Rep. Barry Crago (R-Buffalo), is a tax cap structured as an exemption. Put simply, the bill would place a 5% cap on annual residential property tax increases. It does not contain a backfill or a sunset date.

Speaker Sommers’ House Bill 52 – Property tax-homestead exemption is the one exemption bill to include both a sunset date and a backfill for local governments. The House voted Tuesday to also include language to address concerns about exemptions piling up. If a taxpayer receives this particular exemption — which will exclude the first $100,000 of the home’s fair market value — the new language restricts them from receiving most other exemptions. 

Senate File 54 – homeowner tax exemption would also create an exemption on a portion of the fair market value of a home. The legislation, sponsored by the Joint Revenue Committee, is the sole property tax bill to survive the Senate.

A home for sale in Lander in 2020. (Katie Klingsporn/WyoFile)

Refunds and deferrals 

The two remaining bills would revise existing programs. 

House Bill 4 – Property tax refund program would broaden the income qualifications for a refund from 125% of the county’s median gross income to 165%. From there, a tiered system would calculate a successful applicant’s refund according to income level. Higher earners would get refunds at a smaller proportion of their property tax bill. 

House Bill 4 has wide support, including from the governor and local government officials who prefer it over other bills since it would not disrupt revenue streams. It also passed third reading in the House with unanimous support. 

Lastly, House Bill 134 – Property tax deferral program would move a program that allows homeowners to defer payment from local county commissioner boards to the Department of Revenue.  

What’s next?

Because all but one of the remaining property tax bills started in the House, it will now largely be up to the Senate to decide what to do with each piece of legislation. 

If the Senate follows the actions of the House and greenlights an entire slate of bills, the ultimate decision may rest outside the Legislature. 

“If we pass three or four bills, the governor’s going to have to sit down and decide which one he vetoes,” Senate President Ogden Driskill (R-Devils Tower) told reporters last week. 


This article was originally published by WyoFile and is republished here with permission. WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.


Back

Related