The system is broken

Wyoming’s property tax system is deeply flawed. The recent burden that rapidly rising home values placed on residents illustrated those flaws. Rising home values mean steep property tax increases for everyone who owns real estate, including elderly homeowners on fixed incomes. 

Certainly a 20% or more hike in property taxes is a tough pill to swallow for anyone. But for those residents living solely on social security, it is devastating.

Because property assessments are governed by state statute, there is nothing that county-level administrators or elected officials can do to change a property’s assessed value. 

Any changes to the state’s property tax rules must be made legislatively. 

And our local elected officials could play an important role in crafting property tax relief legislation and shepherding that legislation through the Legislature and to the governor’s desk for a signature. 

There are some ideas being floated for providing residents with property tax relief. One measure would cap property tax increases at no more than 5% in a given year. 

Under the proposal, if property values went up 25%, for example, the county would be able to assess, at most, a 5% increase in property taxes for the next four years. If property values only went up less than 5%, the tax increase would be limited to no more than the increase in property values. 

Another idea is a real estate transfer tax. 

Real estate transfer taxes are imposed by counties, municipal authorities and states on real estate transactions. Property owners pay the transfer tax when they sell a property. Wyoming is one of only five states that does not have a real estate transfer tax. 

Unfortunately, the flaws in our tax system exposed by rapidly rising real estate values goes much deeper than just our system of taxing real estate. For years, retired Rep. Mike Madden, R-Buffalo, railed against the lack of diversity in Wyoming’s tax system. The vast majority of funding for state and local government comes from four major sources. Mineral taxes, such as severance and royalties, earnings from the Permanent Wyoming Mineral Trust Fund, the state sales and use tax and property taxes comprise the vast majority of all tax collections in the state.

Other states, including conservative, Republican-dominated states, are funded from dozens of sources including gross receipt taxes for businesses, income taxes and real estate transfer taxes. 

Make no mistake. The steep rise in property tax was not a “spending problem” at the local or state level. In fact, state and local government spends less now than they did 10 years ago. However, having multiple sources of tax revenue not only creates more stability in funding, it also allows the legislature to address the exorbitant increases in citizen’s property taxes without endangering one of the primary pillars of revenue for the state.  

As the Legislature digs into our flawed real estate tax system, we hope they will be bold and address the larger problem — lack of diversity in our overall tax system. If they fail to do so, the band-aid fix to property taxes will only exacerbate the long-term problem of stable funding for basic government.

-Buffalo Bulletin