Wyoming property tax relief law won’t stop bills from rising

Voters in Wyoming and around the country have been clamoring for property tax relief as housing prices have risen almost 27 times faster than inflation since 2020. Legislators answered the call this session—but in a way that’s unfair to many taxpayers, potentially unconstitutional and that will not stop higher assessments and taxes in the future.

First, the backstory. Rising property taxes have been a windfall for local governments around the state, which rely heavily on them to fund schools, pave roads and provide other essential services. According to a 2023 State of Wyoming Revenue Committee report, property tax levies in the state increased 80 percent ($977 million per year) from $1.2 billion in 2017 to $2.2 billion in 2023. Given that 84 percent of total tax revenue collected in Wyoming is generated from property taxes, it’s been a good run for local government.

But long-term residents and those on fixed incomes especially have said they can’t afford to stay in their homes given the pace of their tax bill increases and have demanded legislative action. Last November, Cowboy State residents voted 146,336 to 100,392 to pass Constitutional Amendment A, which split residential property into a new class from other types of property and gave the legislature the power to change residential property taxes.

State legislators then passed earlier this year Enrolled Act 60, which gives residents a 25 percent break on residential property and improved land on the first $1 million of fair market value. It has to be a single-family structure and residents must live at the property for eight months of the year to receive the discount.

For those people who meet the above criteria, the break will be appreciated. But what about renters? They generally have lower incomes than homeowners. Under the new law, rental property doesn’t make the cut, which means that owners will likely pass on the added expense via higher monthly leases. As Manish Bhatt, a senior policy analyst at the Tax Foundation, said, “I worry that the recent legislation is going to have downstream effects that haven’t been considered yet.” He said one of the unintended consequences of non-owner occupied property being punished will be fewer rental properties available, which in turn will drive up prices, making it even worse for renters.

Second, Bhatt said the fact that second-home owners and those who do not live in homes for eight months of the year, as well as business and industrial property, are treated differently under the law, potentially triggers Equal Protection Clause questions under the Fourteenth Amendment of the U.S. Constitution. It also begs the question of how it’s fair for similar houses on the same street to be taxed at totally different rates.

Third, the new law doesn’t stop the elephant in the room – rising property values, which skyrocketed 62 percent in Wyoming from 2014-2024. (Believe it or not, that is on the low side of the U.S. and particularly fellow Western states of Idaho, Utah and Washington, where home prices have risen over 125 percent during the same time frame.) And it certainly won’t stop the government from claiming the sky is falling from a small drop in revenue in the counties.

In Fremont County, where I live, it will be about 2.4 percent loss in total revenue. And that is generous because it assumes all residential property and improved land has a market value of less than a million dollars, which is not the case. There are already rumblings in government circles about creating special taxing districts to make up for the lost revenue.

The better option would have been for legislators to pass a levy limit. A levy limit would set government costs at the prior year, plus inflation and new population growth. Rates would fluctuate based on this formula. The method would provide a stable planning mechanism for local governments and adequate revenue for core services. Just because housing values go up doesn’t mean government revenue must rise in tandem. Besides, does anyone think they’ve gotten 80 percent more services over the last 10 years of explosive tax growth?

Partnered with a reform known as “Truth in Taxation,” residents would achieve lasting and meaningful bounds on their property tax bills. Truth in Taxation laws build on levy limits by requiring local governments to publicize proposed tax increases with specific information about them in order to be as transparent as possible. Utah was the first state to adopt the reform in 1985 and Iowa, Kansas, Nebraska and Tennessee have since followed suit.

Wyoming legislators passed a band-aid this year. Next year, they should target the disease by passing levy limits and Truth in Taxation reform to rein in government growth and protect all residents and classes of property.