Opinion
There are few things that we in Wyoming hate more than taxes. This sentiment was on full display at recent meetings of the Legislature’s Joint Interim Revenue Committee, where lawmakers heard significant public comment decrying increases in property taxes and urging the Legislature to do something about it. Some commenters said their property tax bills have nearly doubled since 2020, while certain others suggested cutting state spending, and specifically state spending on mental health treatment, presumably to reduce the need for revenue from property taxes.
Despite how it may seem, property tax rates have not gone up. Instead, the increase in property tax bills has primarily come from an increase in property values. As anyone looking to buy or sell a house will tell you, home prices have increased substantially over the past few years. Because our property taxes are based on the property’s assessed value, as values go up, so does the amount of taxes owed.
Those raising the issue of property tax increases have a point. For some people, the increase can be very serious. Especially for those on fixed incomes, increased property taxes can put them at risk of losing their homes. Fortunately, the Legislature passed an increase in property tax rebates for eligible individuals in 2022 that can help some of those most affected by property tax increases.
Nevertheless, the question remains: What should the state do about increasing tax burdens on Wyoming citizens? After all, despite how much we hate paying taxes, funding for government operations has to come from somewhere.
Before we can address whether property taxes are too high, we must first understand Wyoming’s tax system as a whole. Wyoming is one of only nine states without a state income tax. We do not tax earned income or capital gains on a state level. We have no corporate income tax. Our state sales tax is low and, despite recent comments, Wyoming’s property tax rates are among the lowest in the country. In fact, according to a 2019 study by the Tax Foundation, only two states had lower residential property tax rates than Wyoming: Hawaii and Alabama.
Instead, Wyoming’s government is primarily funded by severance taxes from the extraction industries. For decades, we have been fortunate to depend on the extraction industries to pay for state services and allow us to build sovereign wealth funds to keep funding them into the future.
This system, however, is not without its imperfections. The extraction sector is a “boom and bust” industry where revenues can vary widely over time. While we have grown accustomed to these booms and busts, the trendline shows that the booms have become smaller and the busts deeper. The time is coming when taxes from the extraction industry can no longer support state government.
So how does this tie into increases in property taxes? We in Wyoming have become accustomed to paying very little in the way of taxes, and none of us want that to change. However, unless we make proactive changes to our state revenue system, increases in property taxes may just be the first domino to fall in a series of changes that place most of the tax burden directly on Wyoming citizens. We can keep our sales- and property-tax rates low, and avoid a state income tax, but we are going to need to develop new state funding streams to do so.
Wyoming should look to other non-income tax states to see how they get their revenues. Some have taxed capital gains or investment income at certain high thresholds. Others have attracted major industries to their states to increase the tax base, or they have created special taxes on specialized industries. Almost all of them have far higher sales and property taxes than we do, and most have a broader tax base. The amount of state and federal lands we have that are not paying property taxes is a major disadvantage.
The future system that I hope for is a “little bit of everything” approach. Even if the extraction industries decline further, we will likely always have them in the state. Hopefully, we can retain some revenue from those industries, supplementing it with our existing sales and property taxes, and ideally increased dividends from our state investments. Capable leadership in the Wyoming Treasurer’s Office is key to our future prospects. In addition to that, growing new industries would likely lead to increases in sales tax revenues. It’s also worth looking into smaller changes we can make to add new revenues, whether that be capital gains taxes above certain thresholds, developing and taxing industries akin to what Nevada did with gambling, or finding ways to capitalize on other industries based on our natural strengths. If we begin now, we might be able to avoid creating new reasons to complain about our taxes going up.
Khale – I would like to hear your thoughts about an aspect of commercial and residential property tax ” relief” in Wyoming that never seems to enter the discussion . Please explain why as the property valuations go up, the mil levys assesed against those do not compensate by going down to keep a relative year-to-year balance.
I’m under the impression that at the County and Municipal levels , the governing boards can set each year’s mil levy for their own administrative district. They are limited to a maximum mil levy to establish , but what prevents a City Council , a County Commission and its various sub-boards like Fire Districts , solid waste, hospital districts, weed & pest , cemetaries etc from adjusting mil levies downwards ? I thought any time a new tax is proposed, or an exisiting tax is raised, it must pass a vote of the people. But what about reducing specific mil levies ? Does that also require a vote of the people ?
Here in my Park County, the Commissioners used to set their general countywide mil levy at 8 mils. In 1982 they decided to build an addition to the Courthouse, so they raised the mil levy to the max allowed of 12 mils , and PROMISED at the time once the addition was paid for from the additional revenue, they would lower it back down to 8 mils. That never happened. It’s remained at 12 mils for the past 40 years.
Those city and county boards are mandated by State law to do at least two things every year : pass a publicly derived annual budget , and set their respective mil levies. Why don’t those mil levies travel in both directions?
I may be off in the weeds about this , but would like to know. Thx
I suppose cutting spending would be out of the question.
Wyoming would do well to institute a “residential” property tax structure that mirrors California’s Prop 13. Instituted via a publicly voted “citizens initiative” in 1978, it has stood the test of time and provided significant relief to long term residents. 2% of purchase price and 2% MAX increase on the tax each year.
No millage. No massive increases. Doubling or anything close is huge for those on fixed incomes, Doubling is destructive to rentals. Nobody can plan their lives in this open system. If you plan to live in your home for years – the only ones profiting from price increases are the government!
California makes massive mistakes in so many things – except here. This was a citizens entitative voted in by residents to finally place a major control on one major expense. People in CA can plan. They can retire on a fixed income. They KNOW what the future costs will be. Government and unions – teachers and more – HATE it. They try almost every year to get rid of Prop 13. The public won’t have it!
And the US Supreme Court absolutely approved it in court.
Wyoming needs it own Prop 13. RESIDENTS DESERVE A STABLE FINANCIAL FUTURE!
And their public schools are among lowest ranking in country. Great idea. I have met many expats from the Golden state in wyoming and it sounds like all is not peachy there as they immigrated to wyoming. I actually heard a emigrant from your state, at a city council meeting, ask why a portion of his property taxes goes to public schools when he doesn’t have any kids in the schools. Brilliant fella. Also, the word is initiative not entitative.
Maybe quit subtizing
Bankrupt coal companies
Agree 100%. The cushy days are gone. And harming existing services that need expanded not diminished (mental health services) is not a solution. Whoever brought that up should be chastised.
Agreed. Concerning comment for sure.
Mr. Lenhart, like so many before him, quite correctly points out, “despite how much we hate paying taxes, funding for government operations has to come from somewhere.” He then falls prey to the silver bullet syndrome of thinking there’s some magic elixir that “If we begin now, we might be able to avoid creating new reasons to complain about our taxes going up.” But his prescriptions are mostly just variations on a shell game – hate property taxes? Let’s have a capital gains tax. Hate income taxes? Let’s raise sales taxes. And most seductive of all, let’s find some new industry to come to Wyoming so we can tax them. Anything but stepping up to the plate, recognizing that the gravy train of mineral taxes is leaving the station and we will finally have to either start paying for the government services we’ve come to enjoy or making the painful decisions on what, exactly, program-by-program, highway-by-highway, school-by-school we would prefer to live without.