With property tax relief the centerpiece of political gamesmanship this year, we should all understand how the property tax system works.
According to Smartasset.com, Wyoming has among the lowest property taxes burdens in the United States. The state's average effective property tax rate is 0.55%, the 10th-lowest in the country (including Washington, D.C.). The $1,452 median annual property tax payment in Wyoming.
Last year, 46 percent of Wyoming property taxes were paid by the minerals industry and has been as high as 71 percent in production year 2005.
Taxes are calculated by multiplying the assessed value of the property, times the assessment rate, times the mill levy to equal taxes paid.
Different types of property are assessed at different rates. Mineral production is assessed at 100 percent of fair market value. Industrial property like utilities, railroads and manufacturing is assessed at 11.5 percent of fair market value. Residential and agricultural property is assessed at 9.5 percent of fair market value, or 90.5 percent less than that of the minerals industry.
Property taxes are collected and distributed at the county level. Median residential property taxes run from a high of $10,784 in Teton County to a low of $572 in Niobrara County.
The mill levy is composed of several different types of taxes, depending on where you live. Here is a summary of the potential mill levies.
The School Foundation program receives 12 mills. The school foundation levy is statewide.
The money is collected at the local level, and then sent to the state of Wyoming to be distributed to the schools based on a complicated formula, based essentially, a per student calculation.
Local school districts must levy 25 mills, and counties must levy an additional 6 mills for schools. In addition, there are additional mills that can be levied for recreation and cooperative education.
Counties also can levy up to 12 mills for county operations. Those funds are used for county memorial hospitals, libraries, fairs, museums, law enforcement, public assistance and social services, airports, county building funds, road and bridge, public health, recreation, agricultural and home extensions, and fire protection. In addition, if the voters approved bond issues, additional mills can be levied to repay county debt.
Only Campbell and Teton County do not levy the full 12 mills.
Community Colleges are authorized to levy up to 4 mills with a vote of the people, plus an additional one mill approved by the board of trustees. Gillette College does not levy the full mill amount.
With a vote of the people, the community college can levy an additional 5 mills for the operation of the college. No county levies the additional 5 mills.
Cities and towns are allowed to levy not to exceed 8 mills. Cities and towns with a fire district must reduce their mill levy by the amount of a fire district levy.
In addition, if the voters approve special districts, those special districts are able to levy taxes. Hospital districts are authorized to levy 3 mills, and with the approval of the voters, can levy an additional 3 mills.
Cemetery districts and fire districts can levy 3 mills. Sanitary, museum, weed and pest and conservation districts, after approval by the voters, can levy an additional 1 mill.
Communities also have the ability, with the approval of the voters, to form multiple other special districts with taxing authority, including water and sewer districts, conservation districts, senior citizens districts, regional transportation districts, flood control districts, downtown development districts and recreational districts, for example.
Wyoming’s tax structure allows local communities to assess themselves for those projects they deem important.
With the demand for property tax relief, simply cutting the tax rates will impact all of the local services listed above. If the legislature cuts taxes by a certain percentage, there will be a dollar-for-dollar reduction in funds available for local services.
To reduce the political consequences of cuts in local services like law enforcement, fire, road and bridge repair, legislators are talking about “backfill.”
What backfill means, essentially, is that the legislature taxes other people to refill tax dollars lost by tax relief from one particular tax. The idiom “robbing Peter to pay Paul” is the perfect description of backfill.
Since the minerals industry pays nearly half the property taxes, it is likely the burden of the backfill will be shifted to the minerals industry.
If mineral income declines, and no substantial cuts are made, you might find the legislature in future years talking about a state income tax to pay for the property tax relief given this year.
Tax relief is a complicated process, with many moving parts. We will all have to watch with interest and see how the legislature balances the burdens and benefits of the promised tax cuts.
Tom Lubnau served in the Wyoming Legislature from 2004 - 2015 and is a former Speaker of the House. He can be reached at: YourInputAppreciated@gmail.com
