CHEYENNE — Even with support from the industry lobby, a push to amend Wyoming’s agricultural property tax failed to find traction with lawmakers in Cheyenne.
House Bill 23 – Agricultural land qualifications-annual gross revenues proposed limiting access to bargain tax rates that are intended for legitimate farmers and ranchers.
Rep. Steve Harshman (R-Casper), who co-chairs the Legislature’s Joint Revenue Committee, dubbed the proposed bill a “tough” one as he advocated for the reform on the House floor Tuesday morning.
“The idea is really to work on this issue of these hobby ranches,” Harshman said. Many such ranches, he said, “have pretty nice” homes and buildings. And those same establishments, which aren’t bonafide agricultural operations, are qualifying for friendlier tax rates and sometimes saving tens of thousands of dollars by haying their land, throwing a single head of livestock on it or leasing out their land to cattlemen or haymakers.
“One cow, one horse, whatever,” Harshman said.
County assessors in places like Teton and Park counties have struggled to rein in abuses of the current tax code, a structure wealthy second homeowners often exploit. The Wyoming Farm Bureau Federation supported a revision, as did the Wyoming Stock Growers Association.
Still, the possibility of punishing small-time agricultural producers spooked some legislators, and Harshman’s worries about the reform being “tough” proved prescient. Minutes after his bill introduction, the proposal to hike the agricultural products sales requirement from $500 to $5,000 to qualify for the lower tax rate was shot down. HB 23 died 34-25, failing to reach the two-thirds support needed for bills to advance during a Wyoming Legislature budget session.
Defining agricultural land
“I’m still a little peeved about it this afternoon,” Teton County Assessor Melissa Shinkle said later Tuesday.
Few aspiring farmers and ranchers are moving to Jackson Hole, where lots can fetch north of a million dollars an acre. Yet, Shinkle’s office is receiving “a lot of new applications” for agricultural status, she said.
Agricultural land in Wyoming is appraised based on the land’s output instead of its overall value: The annual bill reflects the value of livestock sent to slaughter or of crops sold. The taxable value of the agricultural products is then shrunk about tenfold, calculated at the fractional rate of 9.5%, according to the Wyoming Department of Revenue. To be eligible, landowners must also yield $500 in agricultural sales. The threshold is $1,000 if the land is leased, although the leasee doesn’t need to generate all $1,000 of product from any one property. Yet, all the landowners the leasee works with are then eligible for agricultural tax rates.
The now-dead bill the Legislature considered would have changed the threshold from $500 or $1,000 for leased land to $5,000 for all producers. For over a dozen years, the Wyoming Farm Bureau Federation’s internal policy has supported increasing the threshold higher yet, to $10,000, according to the bureau’s director of public and governmental affairs, Brett Moline.
“It would have raised the taxes for some individuals, even some of my members,” Moline said.
The reason the farm bureau supported an increase in the agricultural sales threshold is because the $10,000 requirement is consistent with a Wyoming Department of Transportation program, Moline said. The agency offered a 70% fuels tax exemption to agricultural producers, he said, and the floor for eligibility was $10,000.
Industry support
The Wyoming Stock Growers Association also supported a hike. “It needs to be higher in today’s world,” Executive Vice President Jim Magagna said. “I don’t like the term abuse because they’re using the law the way the law is written, but [the $500 threshold] is not meeting its intended need to promote commercial agriculture.”
In Teton County, Shinkle has been trying to curtail what she sees as abuse of the tax code, auditing Teton County’s 200-plus agricultural tax accounts. Initially, she reverted more than 10% of them to property value-based appraisals. It’s not only wealthy newcomers who are being scrutinized. Some multi-generational Teton County landowners who have held onto their agricultural tax rates say the lower assessments allow them to keep their land open, and they’re even changing their lives in order to do so.
Jackson Hole’s non-farmers and ranchers aren’t the only folks in Wyoming pursuing agricultural tax rates to save a buck. Park County Assessor Pat Meyer said that some people buying ranches in the Bighorn Basin lawyer up while seeking the status.
“It is worth their money,” Meyer said. “We have people who own 2,000 acres in the mountains and they run cattle, but not to make money. They’re already multimillionaires. They do it for the ag rates.”
One property Meyer assessed in Park County would have appraised at $32,000, he said, but instead was valued at $1,900 because of the agricultural rate.
“We have people who own 2,000 acres in the mountains and they run cattle, but not to make money. They’re already multimillionaires. They do it for the ag rates.”
Park County Assessor PaT Meyer
Meyer’s been pushing the Wyoming Legislature to change the law for decades, but has become inured to defeat. Revisions to the agricultural tax requirements have failed historically.
“When they change [the law],” he said, “I’ll go after them.”
According to HB 23’s fiscal note, smaller-acreage operations would have been most at risk of losing their agricultural status. Statewide in 2021, there were 5,920 parcels less than 35 acres classified as agricultural.
Collectively, they consisted of about 65,000 total acres. Assuming that 20% of that acreage was reclassified, the bill would have increased tax revenues by $461,000 annually, the Legislative Service Office estimated.
Representatives who voted down HB 23 seized on those estimates.
“This bill harms the small agricultural landowners,” Rep. Evan Simpson (R-Afton) said on the floor. “The benefit to the state is really, really minor, but the damage to those individual agricultural users is significantly greater.”
CORRECTION: This story has been updated to correct the spelling of Pat Meyer’s first name. —Ed.
Many years ago I worked in a county court house in North Dakota. The office next door was the county tax man. He had many visitors during tax time. My observation was that all State Laws in North Dakota favored farmers in one way or another. However, when it came to tax rates landowners had to have a net income of over 50% from their land to qualify as agricultural. The example is; if you were qualified as agricultural your house had 0% property tax, if not, a rural house was taxed as if it was in a residential neighborhood in Bismarck. Most of the arguments the tax guy was over this fact.
and the rich get richer
Would someone please explain the agricultural tax rate vs the a standard tax rate for those of us that live in towns and cities?
Raising the agriculture sales threshold to $5,000 to 10,000 would favor the largest and wealthiest producers in Wyoming at the expense of the small producers. We have a struggling agriculture industry of alfalfa farmers, truck farms, goat raisers, chickens, tomato growers, garlic raisers,etc. who need the agriculture tax rate in order to survive. Its extremely difficult for these producers to compete against producers in states with higher rainfall, lower elevation and shorter winters. We need to encourage these smaller producers not penalize them.
It also needs to be said that our larger producers are trying to survive in an environment of low productivity ( 25 to 50 acres per animal ) and rapidly rising ranch values, that, if taxed at full value would jeopardize the whole operation. Higher taxes, including estate taxes, could force them to sell to wealthy out of staters. We need to protect both small and large producers in this state – its a tough state to run a profitable business in – lower agriculture taxes are essential to preserving our agriculture heritage.
Lee Campbell hit the nail on the head. It’s reasonable to stop tax rate abuse but HB23 has the potential to take down abusers and legitimate smaller ag operations at the same time. Wealthier landowners who may be misusing the ag tax rate probably have the means to alter there ag operation to meet a $5000 gross revenue threshold…not so with smaller, startup operations.. There has to be a better way to capture the fairly small amount of tax dollars being lost because of abusers other than simultaneously shutting down legitimate small ag operations. And with the limited data and records available today, there’s no way to know in advance which or how many legitimate ag operations will be negatively impacted.