Soaring property values led to a widespread problem across Wyoming last year – extremely high tax bills.
That has lawmakers considering solutions for relief in the 2023 legislative session, particularly as the problem relates to affordable workforce housing, which has been an ongoing problem in many areas of the state.
Among solutions being shopped around the Wyoming Legislature is a constitutional amendment that would put residential property into its own category, giving lawmakers more flexibility in setting property tax rates for homeowners.
There are actually two constitutional amendments that would do that, House Joint Resolution 2 and Senate Joint Resolution 12.
Members of the Senate Revenue Comittee took up the latter this week, but the measure failed.
House Joint Resolution 2, meanwhile, has the backing of Wyoming Realtors Association, which sees it as part of a larger solution to the state’s affordable housing puzzle. It has not yet been heard at the committee level.
Laurie Urbigkit, spokeswoman for the group, told Cowboy State Daily that she believes solutions to affordable housing are possible, but it will take a collaborative effort.
“At every level, there is something that can be done to help workforce housing,” she said.
One Among Many
Sen. Dan Dockstader, R-Afton, sponsored the bill on the Senate side.
State data shows that property tax assessments had been rising around 3% to 4% annually prior to the COVID-19 pandemic.
But last year, they took an average 16% leap across the state.
The rate was much higher, however, in some counties. In Teton County, for example, the increase was 36%, based on Department of Revenue data.
“After those tax notices went out, you’d almost want government security with you,” Dockstader said. “It was a difficult time, and so we looked over several possibilities.” Commercial, agriculture and residential properties now are all lumped into a single tax category in Wyoming and are treated the same.
Breaking out residential would give lawmakers more flexibility for homeowners, Dockstader said.
The legislation would use 2019 fair market land values as a starting point. That would require followup legislation to adjust rates appropriately, Dockstader said.
“When we were having people testify in one of the forums this summer, they seemed agreeable if we have it around that 2019 level,” he said.
Solution Has Some Good Points
Sen. Bo Biteman, R-Ranchester, serving as chairman of the committee, said he likes the flexibility the measure offers.
“That just makes it easier,” Biteman said. “It gives the Legislature a tool, like we just talked about with (Senate File 136) to give relief, or if we have to raise it, if times are lean and assessed valuations go down, we can adjust that very easily.”
Senate File 136, which was debated just prior to Senate Joint Resolution 12, proposes to lower the taxable value for property tax assessments from 9.5% to 7.5% for the “other” property class, which includes residential as well as commercial and agricultural property.
It passed the committee on a 4-1 vote.
Sen. Bob Ide, R-Casper, also liked some aspects of the bill, but wasn’t sure about treating residential property differently.
Commercial properties were hit hard with soaring property values as well, he said.
Homeowners More Vulnerable
Residential homeowners in general have less discretionary income to deal with sudden, dramatic increases in taxes, Dockstader said.
“I got a call at the close of the session last year from my commissioners and they were in a panic,” he said. “They said, ‘An old, beat-up doublewide trailer on a little, itty-bitty lot in the northern part of our valley just sold for $675,000.’ And they said, ‘You know what’s gonna happen?’”
Dockstader knew exactly what it meant: An avalanche of letters from constituents complaining about higher-than-normal property taxes.
“I got notes and letters and people said this is 30%, and I had one that said 50%,” he said.
Commercial business also were hit hard, Dockstader acknowledged, saying that, “I’m open to amendments there.”
Widespread Opposition
But opposition to the bill proved to be more widespread than support, with more than one group pointing to concerning similarities with California’s tax reform.
David Davis, Sweetwater County assessor and president of the Assessor’s Association, commended the Legislature for trying to help homeowners with the unusually high jump in property taxes.
But he added, “Who are we trying to help?”
The answer, he suggested, is the “little old lady” who is being taxed out of her home.
Helping her is laudable, Davis said, but “this bill is not tax relief. This is tax reform.”
And he said it’s tax reform that’s already been tried elsewhere, in California with “huge consequences over a long period of time, where tax revenue was dropped significantly.”
That meant other taxes and fees had to be implemented to keep providing the same services for constituents.
“I think this may be just a little bit too far,” he said. “I think you, as the Legislature, have already addressed the problem. And this might be, just like I said, one notch too far in helping those taxpayers out.”
Discouraging Growth, Crippling Free Market
Ashley Harpstreith, executive director of the Wyoming Taxpayers Association, was critical of the proposal as well.
“If implemented, this policy would discourage growth and cripple the free market,” she said. “It will be a disincentive to relocate or update residential homes.”
It also will likely decrease the stock of starter homes and other, more affordable housing on the market, she suggested.
“This will penalize our younger, lower-income homeowners, as (more) property tax revenue will be generated from newer properties or those with improvements,” she said.
Harpstreith added her organization is not opposed to studying the issue further, which is proposed in House Bill 100.
“We think this major policy decision and restructure of the tax system deserves further consideration,” she said. “It’s hard to compare what works in other states to what happens in Wyoming, as our tax structures are very different. If this is something the legislature would like to consider, we support beginning with a study.”
Keep It Simple
Meanwhile, Brett Moline with the Wyoming Farm Bureau Federation urged lawmakers to keep Wyoming’s tax code simple.
“We appreciate the simplicity of having just the three tiers,” he said. “We do not want to add. We want to keep the three that we have, keep agriculture, residential and commercial in the ‘other’ and not operate out residential from that.”
Likewise, Wyoming County Commissioners Association Executive Director Jerimiah Rieman was concerned it would complicate matters by creating a system where one neighbor might have a different tax rate than another.
“We’re also concerned it might create the same 1980s situation that we found ourselves in that ended up in the Wyoming Supreme Court, with courts telling us that we couldn’t rely on a system that tied home values to a 1967 value,” he said.
He also suggested interest in further conversation about the situation though, and signaled support for House Bill 100.
“It’s never a bad thing to have conversations about these things and try to gather information,” he said.
Where The Bill Stands
Senate Joint Resolution 12 failed to get a recommendation from the Senate Revenue Committee, failing 4-1.
House, Joint Resolution 2, meanwhile, which would also separate out residential property into its own category but lacks tax caps and an index to 2019 property values, has not yet been heard in committee.
