State legislators will have another shot at a radical plan to eliminate residential property taxes for most Wyoming homeowners when they reconvene next month as one of the most talked-about bills during the 2024 legislative session is making a comeback.
State Rep. Steve Harshman, R-Casper, told Cowboy State Daily on Wednesday he’s bringing back his proposal to cut property taxes for most Wyomingites in return for increasing the state sales tax rate.
“It’s a way to really change that tax from a property tax payment to a consumption tax,” Harshman said.
The driving inspiration behind the bill is to provide homeowners a break on escalating residential property taxes while continuing to give local governments funding, one of the main benefactors of property tax revenue.
Harshman does not support simply slashing property taxes for cities and counties without a mechanism to replace that lost revenue.
“I think it creates more problems than it solves,” he said. “Everyone wants the fire truck to come when you call 911.”
When introduced earlier this year, Harshman said that a sales tax spreads the burden more evenly, including collecting from people who rent and out-of-state visitors.
Harshman also mentioned how non-residents are estimated to pay more than 15% of the sales tax and that the property tax reduction for the overall homeowner would greatly outweigh the increased sales tax burden.
“It’s a huge tax break overall no doubt broadens it out,” he said.
What It Does
Harshman’s House Bill 203 would have eventually forgiven $1 million of fair market assessed value for all single-family residences in Wyoming, thus completely eliminating property taxes on about 97% of Wyoming homes. It also would have increased the state sales tax rate from 4% to 6%.
As written earlier this year, the bill would start out by exempting $200,000 of home value in its first year of existence, and then bump up to $1 million of home value every year thereafter.
Property taxes increased significantly throughout Wyoming after the COVID-19 pandemic, but those increases have dramatically slowed. In addition, Wyoming has one of the lowest property tax rates in the country.
Residential property tax revenue increased by about 6% in 2024, marking a significant slowing after double-digit percentage property tax increases seen in many Wyoming counties in 2022 and 2023, representing a much larger growth than historical norms. This year, two counties saw double-digit percentage increases and a couple saw their taxes decrease.
Potential Pushback
HB 203 got through the House Revenue Committee but died on a third reading vote in the House, with a bipartisan group of representatives voting it down by a large margin.
Harshman still hasn’t determined the final version of his bill for this coming session yet, but he’ll have to find a way to convince his colleagues that it won’t dramatically hurt state funding or disproportionately benefit homeowners over renters. A version proposed before the Joint Revenue Committee this summer was rejected.
The minerals industry has also voiced complaints about the proposal, unhappy that it would have required them to fill out a rebate application to get an exemption from the sales tax increase.
The previous version of the bill would have also allowed the state auditor to borrow up to $10 million from the state’s Legislative Stabilization Reserve Account as a backstop to reimburse the department for any shortfalls in the refund program.
Other Property Tax Bills
The Legislature will also bring back a bill Gov. Mark Gordon vetoed last year that would cut property taxes by 25% for single-family residential home values of $2 million or less. The bill is almost identical to the legislation Gordon already vetoed earlier this year.
The bill appropriates up to $225 million a year from the general fund and Legislative Stabilization Reserve Account to the Department of Revenue to reimburse local governments and schools to make up for lost revenue from the exemption. The sourcing of this money is exactly what Gordon didn’t like about the bill.
Harshman said he has no problems with the fact that the Legislature is going back to the same well and expecting a different result from Gordon.
“I voted for the bill. I was disappointed it was vetoed,” Harshman said.
The bill, Senate File 54, received near unanimous support in the Legislature before getting vetoed.
Harshman said it may not matter if the governor strikes it out again as legislators likely plan to bring it early enough in the session where they would have time to override a potential veto.
“I think we’ll get it done now in this session early,” he said.
The Legislature will also consider a bill making a 50% property tax exemption for long-term homeowners that was passed earlier this year permanent.
Harshman said another bill to watch will be legislation exempting people who own $50,000 or less in fair market value of business property in one county from property taxes.
“It’ll be a good thing for small businesses,” he said.
In October, the Wyoming Supreme Court decided that state-owned land is not exempt from all property taxes based on current law.
A bill is now being proposed for the upcoming session to change this so that the state doesn’t have to charge lessees for property taxes and/or increase rates.
Leo Wolfson can be reached at leo@cowboystatedaily.com.
