Wyoming should look to North Carolina on property tax reform

Wyoming voters rightly rejected a flawed property tax-relief ballot measure on Tuesday that promised short-term relief without addressing the underlying problem: government spending.

Proposition 1 would have exempted 50 percent of a property owner’s primary residence from property taxes, but fell 57 to 43 percent at the polls at a time of rising anger nationally over steep hikes in property tax bills as home values exploded during the COVID era.

Wyoming Secretary of State Chuck Gray’s office estimated that if passed, the law would reduce state government revenue by $92.6 million in 2028 and $95.9 million in 2029. Opponents successfully argued that schools, fire, police and other essential services would be decimated and would require new taxes to compensate for the loss. Sen. Cale Case (R-Lander) and economists spoke publicly in the run-up to the election about enacting an income tax to compensate for the loss of revenue.

While residents’ anger is understandable given the rapid rise in assessments and corresponding hike in property taxes over the last five years, in the future the state should pursue reforms that target government spending, provide transparency, protect low-income residents from losing their homes and ensure all property owners are treated fairly.

North Carolina set the right example with its Property Tax Levy Limit Amendment, which was referred to voters by state legislators in the November election. This constitutional amendment requires the state legislature to set limits on how high local governments can raise property taxes and passed with 60 percent support.

As Mountain States Policy Center has recommended, limiting property tax increases to inflation plus new growth via levy limits like the one enacted in North Carolina protects taxpayers and provides a stable budgeting tool for local governments – which don’t deserve 75 percent more revenue simply because home prices rise that amount.

When paired with a reform known as Truth in Taxation, which would require local governments to advertise proposed tax increases and provide adequate time for the public to respond before any changes are made, levy limits are a powerful tool to protect taxpayers from outrageous bills. The reform exists in Iowa, Kansas, Nebraska, Tennessee and Utah. In those locations, rates adjust up or down to provide a consistent revenue stream based on the prior year’s collection.

State legislators could also enact what are known as “circuit breakers” to protect lower-income homeowners of any age. They work by providing relief when property taxes reach a set percentage of income or by lowering property taxes for those under a specified income level.

Proposition 1 would have sowed chaos in local communities, prompted new taxes, and most importantly, let government spending remain unchecked. Reformers should instead focus on levy limits, Truth in Taxation, and circuit breaker reforms in the coming years that protect homeowners and require fiscal responsibility of local governments.

North Carolina set a good property tax reform example for Wyoming to follow in the next session.