Joint Revenue Committee throws weight behind four property tax relief proposals

So legislators are trying again.

The Joint Revenue Committee voted earlier this month to sponsor four property tax relief measures, most remixed versions of bills that died earlier this year.

While there was broad support among committee members for some level of property tax relief, the proposals wouldn’t be easy to implement.

Some officials who offered testimony at the meeting said most of the draft bills would pose significant administrative hurdles for counties and the Department of Revenue. Some would take constitutional amendments to adopt — meaning that even if the measures clear every legislative hurdle in the statehouse next year, they’d still have to go before voters for final approval.

All would come with revenue losses that either the state, or local governments and schools, would have to bear. It would be up to lawmakers during the 2024 session to decide how Wyoming would navigate that trade-off should the Legislature move forward with the bills.

Here’s an overview of the proposals, as well as three additional property tax measures expected to go before the committee for review in November.

Amending the state property tax refund program

The Joint Revenue Committee voted 12-2 to sponsor draft legislation that would grow a popular state program giving qualifying homeowners a partial rebate on their annual property taxes.

The proposed legislation would loosen the program’s income eligibility requirements, allowing a greater number of homeowners to apply.

The program, which is administered by the Department of Revenue, is currently only open to property owners making less than or equal to 125% of the median income in their county, or less than or equal to 125% of the statewide median income — whichever is higher. The draft bill would raise that limit to 175%.

The proposal would also introduce refund tiers for the first time.

To calculate your specific refund, in other words, you’d be sorted into a tier based on your income. Lower-income applicants would get a much larger percentage of their property taxes refunded compared to applicants who earn closer to the upper limit of the eligibility ceiling.

Here’s what the draft legislation says about how the tiers would work:

• If an applicant’s taxable income is less than or equal to 125% of the applicable median income, they’d get the maximum allowable refund — 75% of their property tax bill, not to exceed 50% of the median residential property tax bill in their county of residence;
• incomes between 125% and 135% of the applicable median income would receive 85% of the max refund;
• incomes between 135% and 145% of the applicable median income would receive 65% of the max refund;
• taxable incomes between 145% and 155% of the applicable median income would receive 45% of the max refund;
• taxable incomes between 155% and 165% of the applicable median income would receive 25% of the max refund; and
• taxable incomes between 165% and 175% of the applicable median income would receive 5% of the max refund.

That’s a lot different from what the program looks like right now.

Currently, the statutory parameters of the property tax refund program are more or less one-size-fits-all.

Any qualifying applicants can get a refund equal to up to 75% of their property tax bill, as long as that amount isn’t greater than half the median residential property tax in the county they live in.

If the proposed amendment is adopted as currently drafted, it would be the second time the Legislature voted to grow the property tax refund program in just as many years.

Not long ago, the income eligibility ceiling was 75% of the area median income in the applicant’s county of residence (or the statewide median income, if that value is higher.) The statehouse raised that cap to 125% during the 2023 session.

To keep up with demand, the Legislature also gave the program an additional $5 million for refunds for the 2022 tax year. (Lawmakers originally set aside just $3 million for the program in the 2023 and 2024 state budget.)

But even that $8 million sum wasn’t enough; the number of applications was so high this year that the Department of Revenue ended up $2 million short, Brenda Henson, the agency’s director, told the Joint Revenue Committee.

Henson said the agency ended up asking Gov. Mark Gordon’s office to make up the difference.

The Department of Revenue estimates that the program currently needs roughly $10 million a year to satisfy demand from taxpayers. If the draft legislation to expand the program is approved by the Legislature, that number will only increase, Henson said.

Property tax exemptions for homeowners

The committee voted to sponsor two draft bills that would slash property taxes for qualifying homeowners. The main difference between these proposals and the refund program is that property tax exemptions give homeowners a discount on their taxes before they pay them, not after.

If adopted as currently drafted, the first measure — tentatively dubbed the “homeowner tax exemption” — would allow qualifying Wyoming residents to apply to reduce the taxable value of their homes by 25.6% every tax year, not to exceed an amount of $200,000 annually.

The Joint Revenue Committee voted 11-3 to sponsor the proposal.

Say you live in Casper and the market value of your home is $500,000. If you’re eligible for the homeowner exemption, only $372,000 of that would end up being taxed. That would leave you with an assessed value of $35,340, and given residential property in Casper is currently taxed at 72.89 mills, a property tax bill of about $2,575. That’s about $900 less than it would be without the exemption.

A similar bill reviewed by the committee would create an exemption specifically for Wyoming residents who are at least 65 years old and have owned the same home for 30 years or more. The measure would exempt 50% of the assessed value of an approved applicant’s home from taxation. Under this proposal, the surviving spouse of someone who otherwise would have qualified for the exemption could continue to receive the tax cut.

The Joint Revenue Committee voted unanimously to back the legislation.

Both proposals would be expensive to implement; staff with Wyoming’s Legislative Services Office projected that, if adopted into law as currently written, the homeowner exemption would result in a $87.1 million reduction in property tax collections for the 2025 tax year.

The draft legislation targeting long-term homeowners, meanwhile, was projected to cost the state $10.6 million for the same year.

Capping property tax increases

In a move that could bring more significant structural changes to Wyoming’s property tax system, the Joint Revenue Committee voted to back two pieces of draft legislation that would pave the way for residential property tax caps.

The Joint Revenue Committee voted 13-1 to sponsor a resolution that, if adopted as written, would put a constitutional amendment on the 2024 election ballot to separate four property categories — residential, commercial, agricultural and personal property — currently lumped into the same tax class.

Why break them up?

The fact that they’re in the same tax class means all four property types must be assessed at the same rate of 9.5%. But under the proposed amendment, the statehouse would have the authority to change the assessment for each individual property category.

Lawmakers could decide to give, say, residential property owners some relief by lowering the residential property tax assessment rate without automatically affecting tax revenue on other kinds of property.

The resolution would also enable the state to tax residential real estate at less than full value, enabling property tax caps for the first time. This isn’t currently legal, since the Wyoming Constitution requires all taxable property to be assessed at full value.

A very similar resolution was passed during the 2023 session.

The measure, known as Senate Joint Resolution 3, would only break out residential property into its own tax category, however.

It wouldn’t enable the legislature to cap tax increases, either. That amendment is expected to appear on the ballot in 2024.

The Joint Revenue Committee also voted 10-4 to sponsor a draft bill that would implement an annual residential property tax cap. The legislation, as currently written, would bar the assessed value of residential property from increasing at a rate greater than the year-over-year inflation rate reported in the Consumer Price Index, a metric published by the Bureau of Labor Statistics.

The draft also says that, no matter what, residential property tax assessments could never go up more than 5% in a given year.

While inflation increased sharply in the wake of the coronavirus pandemic, before, the Consumer Price Index typically pinned annual inflation at around 2.5%, Legislative Service Office staff told lawmakers. That could prove to be a pretty low cap for property tax increases, depending on the year.

Legislative Service Office staff said the cap would cost Wyoming governments an estimated $8 million dollars in tax revenue for tax year 2025.

Bills for future discussion

The Joint Revenue Committee is expected to consider three additional proposals aimed at property tax relief at its November meeting.

Two pertain to overhauling Wyoming’s property tax system in favor of an “acquisition” property tax model. The main idea behind an acquisition model is that your home would no longer be taxed based on its current market value, but the value when it became yours.

California is currently the only state that uses a version of the acquisition model. Acquisition-based tax models can take many forms, and the committee didn’t settle on one specific direction during its recent meetings.

But either way, it would fundamentally recreate how Wyoming calculates residential property taxes. The Legislature earlier this year passed legislation setting aside $50,000 to commission a study detailing what it would take to switch Wyoming to such a system.

The study estimated that going to an acquisition model would cost the state about $1.7 billion in tax revenue over the span of a decade.

If lawmakers decide to move forward, they would first have to pass a constitutional amendment and lengthy revisions to state law, the report found.

The Joint Revenue Committee has asked staff with the Legislative Services Office to prepare draft constitutional and statutory amendments to review in November.

A final proposal expected to go before the committee during the meeting would allow county commissioners to limit the ability of special districts to levy taxes if their reserves are over a certain size.