After the Wyoming Supreme Court ruled that counties can charge the state government property tax for its lands, some lawmakers are looking to undo that decision with a law change.
One of those proposed changes is headed to the Senate floor after clearing the Senate Agriculture Committee with unanimous approval Thursday.
Wyoming’s state government owns lands throughout the state and can lease those for a governmental purpose or for a non-governmental purpose. When the state rented a lot to a truck stop in Uinta County, the county assessor charged the state $8,160 in property taxes.
The Wyoming Supreme Court ruled in October that the state has to pay the county that amount since the truck stop is for a non-governmental purpose. For governmental purposes, the state is still exempt.
The ruling has broad implications. It impacts ranchers who rent state lands for grazing.
People who want to see legislation pausing that ruling say this creates a sudden burden on tax assessors, who have not been assessing government-owned grazing lots, and could create a burden on ranchers, if state property taxes on grazing leases get passed down to them.
Conversely, those who are in favor of the ruling have said it puts government and private landlords on an equal footing.
What The Bills Are
Two bills now pending before the Wyoming Legislature seek to undo the ruling – at least for a while – so that tax authorities can figure out the government-to-government property tax scheme in Wyoming.
Senate File 81 received unanimous approval Thursday after a five-person vote in the Senate Agriculture Committee. If, passed it would pause the high court’s decision for two years, by declaring all property owned by Wyoming (including those used for non-governmental purposes) exempt from property taxes – until Dec. 31, 2026.
If the Legislature wanted to renew the bill at that point it could, or it could let it die with its repeal date.
Another, similarly-worded bill is pending in the Legislature but hasn’t yet had a committee meeting: Senate File 68.
It, too, would declare state lands exempt from property taxation, and for basically the same time period, ending Jan. 1, 2027.
This bill also specifies that counties still could tax other properties not owned by the state – like a barn a rancher put on state grazing land but which the rancher, not the state, owns.
When the high court’s ruling emerged in October, the Wyoming Department of Revenue scrambled to identify state leases that would be taxable in the taxation period starting Jan. 1, Ken Guille, Administrator of the Wyoming Department of Revenue Property Tax Division, told the committee Thursday.
It would cost Wyoming $3 million to pay taxes on all the grazing parcels it’s leasing this year if the bill doesn’t pass. That money would transfer from one government to another – from state to county.
Ag Says Yes, Please
Representatives of both the ranching and farming communities voiced their favor of the bill Thursday.
Jim Magagna, of the Wyoming Stock Growers’ Association, said the ruling already prompted an attempt by the Wyoming Board of State Land Commissioners to enact a rule passing those property taxes on to the ranchers and others leasing state lands.
“We were successful in getting the board to not move forward with that,” said Magagna, adding that it would have had some bizarre results for people who renewed their leases after the high court’s ruling before any Wyoming legislative pause of it.
“It (would have) created a real inequity,” he said.
Magagna urged lawmakers to pause the ruling by passing the SF 81.
But …
When the ruling first came down in October, Sen. Cale Case, R-Lander, who is a doctorate-level economist, said the great tax shift could turn out well for private landlords in the end.
He said he could envision the state passing the cost of its property taxes onto leaseholders, who would then pass those costs on to consumers, which would put people who rent from the same government on the same footing as those who rent from private landowners.
Case theorized that would force the state to consider the same financial obstacles as other landlords, which makes the state a fairer competitor in the landlord’s economy.
“It’s not fair to have businesses treated different ways depending on what land they sit on,” said Case at the time.
In other words, the state, as a landlord, wouldn’t have the advantage of offering a lower lease price that doesn’t consider property taxes.
Clair McFarland can be reached at clair@cowboystatedaily.com.
