Legislation Could Give Wyoming Voters Final Say On Capping Property Tax Rates

Wyoming property valuations were up $7 billion this year. To deal with skyrocketing property taxes, the Revenue Committee approved an act that -- if passed by the Legislature -- would allow citizens to vote on capping property taxes.

Leo Wolfson

November 24, 20228 min read

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(Cowboy State Daily Staff)

By Leo Wolfson, State Politics Reporter

The Wyoming Legislature’s Revenue Committee killed a bill that would’ve capped most property tax growth in the state at 3% a year. 

The opinion expressed by most of the committee and Legislative Service Office is that a property tax cap would require an amendment to the Wyoming Constitution, and any effort less than that unconstitutional. 

Most also said an amendment would also be necessary for a blanket property tax cap to be legal.

The bill was defeated on a 9-4 vote this week.

What did pass was an amendment to a different bill that allows the Legislature to consider legislation this spring that, if passed with a two-thirds majority in both the state House and Senate, would go to the voters on a ballot referendum in 2024. 

The referendum would put the question of a property tax cap to Wyoming voters. And if voters answered yes, the Legislature would determine what level the cap would be assessed at in 2025.

3% Consideration

The Wyoming County Assessor’s Association opposed the 3% cap, finding it unconstitutional and the tax ceiling “unreasonable.”

“It wasn’t ready for primetime in the opinion of the assessors,” said Dixie Huxtable, Converse County assessor.

In 2022, total assessed property values increased in Wyoming by $7 billion.

“We’ve certainly rebounded,” said Jerimiah Rieman, executive director of the Wyoming County Commissioners Association, about the statewide spike of property valuations. 

If Wyoming were to have had a 3% flat annual increase of valuation from 2019-2022, Rieman said the state would have lost $1.6 billion in tax collections, a 15% decrease of actual revenue. He said this would have resulted in the state becoming more dependent on mineral production in making up its total pot of revenue.

“That’s a pretty big number and something you have to think about relative to schools,” he said.

Not Dead

Separate legislation that provides a pathway for the Legislature to continue the property tax cap passed unanimously. 

Although a number of lobbyists testified against the bill, finding the 3% cap too low, state Rep. Mark Jennings, R-Sheridan, motioned to push it forward. 

“There’s John Q. Public out there and they want to see this debate continue on,” Jennings said. “There’s question marks to the constitutionality and will be on other bills as well.”

The 3% legislation would have applied to all property aside from mineral and industrial. Now, any future consideration will only pertain to residential property.

“That’s going to make it a lot harder to pass,” said Rep. Mike Yin, D-Jackson.

Rep. Chuck Gray, R-Casper, disagreed about the unconstitutionality of the bill, but said a constitutional amendment should be crafted to err on the safe side.

Where To Cap?

Nearly all who testified Monday against the 3% cap agreed that a solution needs to be brokered to address Wyoming’s rising property taxes. 

Since 1996, the annual increase of value in agricultural, residential and commercial properties in Wyoming has averaged 6.83%. 

“This is the amount from which Wyoming counties have been budgeting services for decades, and the logic is that it can continue to do so,” said Park County Assessor Pat Meyer.

But in Park County, Meyer said he saw increases of $1,200 to $1,500 with 25%-45% growth this past year. The county as a whole gained nearly $250 million in valuation, which Meyer said was largely spurred by mineral revenues. He said the county is on an even more aggressive revenue pace for next year.

Fixed-Rate State

Wyoming is a fixed-rate tax state, where taxpayers’ property taxes automatically go up with any increase in the assessed valuation of their property. Twelve other states operate on a budget-rate basis, where mill levies are adjustable to alleviate strain on taxpayers. 

Meyer said Wyoming would have to change the way it values mineral production to convert to a budget-rate system.

“If we started lowering mill levies, we’d lose so much money that we’d never be able to get back,” he said.

Twenty-six states, both Republican and Democratic leaning, have property tax caps.

Meyer argued for implementing measures that would make assessment much more uniform in Wyoming by copying Arizona’s laws. Meyer said the state could then annually adjust its tax rate based on how much money is needed.

“These rules have already been done for us,” he said. “We wouldn’t want to reinvent the wheel.”

Fourth Class

The legislation containing the amendment adds a fourth class of real estate property under Wyoming law for residential properties. It also adds a sub-class for primary homeowners. 

Brett Moline of the Wyoming Farm Bureau spoke against the legislation. 

“The part where you divide up the different types of legislation doesn’t sit well and we would not be in favor of that,” he said.

Under this legislation, the value of industrial property shouldn’t be more than 40% higher or more than 4 points more than the percentage prescribed for residential real property, or the percentage prescribed for all other property, other than minerals.

If the legislation makes it through a constitutional referendum, in 2025 the Legislature will have the option to pursue the two options and lower the assessment value below 9.5%. 

By The Numbers

The level of assessment in Wyoming for residential property is 9.5%. So instead of being taxed on the full 100% value of property, owners are instead taxed on 9.5% of the value. 

If the market value of residential property is $100,000, taxes are not assessed on the entire $100,000 value. Instead, because of the 9.5% level of assessment, taxes are assessed on $9,500 of the value. 

That method means “we have a lot more tools in our toolkit,” Gray said.

Gray said he does not expect the problem of skyrocketing property tax increases in Wyoming to go away in the future and thinks the lack of clarity between the relationship of acquisition value and corresponding property taxes needs to be addressed. 

He made the amendment to consider adding property tax increase caps and determining property taxes by acquisition value with a future amendment to the Wyoming Constitution.

“You can guarantee there will be plenty of opposition to this when it’s on the ballot,” said Sen. Cale Case, R-Lander.

Rep. Bill Henderson, R-Cheyenne, said he supported parts of that amendment, but not the part regarding acquisition value. The acquisition value part of the amendment was stripped from the bill.

There also is language in the legislation that would allow the Legislature to grant homestead exemptions at some point in the future. These would create tax breaks for longtime residential homeowners.

Tax Refund Changes

Also considered this week was legislation changing the qualifications for Wyoming’s property tax refund program.

Under the current program, only those who make 75% or less of their county or the state’s median household gross income are eligible to apply. The new legislation would bump that to 125%. 

Rep. Tim Hallinan, R-Gillette, argued for a smaller increase to 100%, saying anything higher wouldn’t be assistance provided to poor people.

“I think poor is a relative word,” countered Rep. Steve Harshman, R-Casper.

This amendment passed with an overwhelming majority.

Growing Refund Applications

In 2021, Wyoming provided more than $1.8 million in property tax refunds. 

Brenda Henson, director of the Wyoming Department of Revenue said the number of applicants for the state’s property tax refund program has increased by 250%, and her department will need an additional $1 million to fund the program for 2023. 

She said the average amount of reimbursement increased from $533 in 2019 to $601 in 2021.

“I would like to fully fund this program,” Harshman said. “If it costs us $10 million per year to grant relief to the poor, the elderly, the people who have been in their home and been in Wyoming for a long time – that’s my goal with this.”

Moline said he supports the legislation.

Under current rules, an applicant’s refund cannot exceed 50% of prior year tax. Harshman recommended upping this to 90%, which also passed.

Harshman mentioned a 96-year-old Jackson woman whose property taxes increased from $4,000 to $13,000 in one year.

“The max (refund) she could get would be $2,000, but her property taxes went up to $13,000,” he said.

The required residing period also was increased from six to nine months.

If the legislation passes as currently written, rules for county tax refund programs would be amended to match the state’s. 

The legislation passed with an 11-2 vote.

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Leo Wolfson

Politics and Government Reporter