Bills removing property tax, increasing sales tax advance

by Noah Zahn, Wyoming Tribune Eagle Via Wyoming News Exchange

The Wyoming Legislature’s Joint Revenue Committee on Wednesday advanced two controversial measures that together would fundamentally restructure taxation and government revenue in the state.

One is a constitutional resolution to eliminate residential property taxes entirely, while an accompanying bill would replace the lost local revenue primarily through a significant increase in the statewide sales tax rate.

The committee also passed several other pieces of legislation regarding property taxes.

Extension of long-term homeowner exemption

The first item the committee discussed was a bill intended to make permanent the existing 50% long-term homeowner property tax exemption by repealing its July 1, 2027, sunset date. 

Wyoming Department of Revenue Administrator Ken Guille estimated the exemption’s 2025 impact was approximately $47 million to $48 million statewide. 

Jerimiah Rieman, executive director of the Wyoming County Commissioners Association, noted that this financial consequence was fourfold higher than the original $10 million projection.

“That obviously magnifies as we go out in time — just something we have to be very careful as we look at those fiscal notes and what the potential impact is,” he said.

Converse County Assessor Dixie Huxtable advocated for changes to make the transition smoother, stressing the need to change the application deadline to March 1 from the existing deadline of the fourth Monday in May to allow timely processing of values before the June 1 abstract deadline.

Co-Chair Rep. Tony Locke, R-Casper, stated that lawmakers are working to ensure that the exemption sticks to those who live in the state and are residents, regardless of whether they have lived in one home or two homes in the preceding year.

The committee passed the bill 9-1, as amended, incorporating the change to the March 1 application deadline.

Property tax elimination and sales tax replacement

The majority of the committee’s focus was on the linked measures designed to completely eliminate residential property tax: one to propose a constitutional amendment to repeal property taxes and one to replace the lost revenue through sales taxes.

The former states that “the percentage of value prescribed for residential real property shall be 0%, and no property tax shall be assessed on residential real property.” If signed into law, it would put the revocation of residential property taxes to a statewide vote.

The latter introduces an additional 2% sales and use tax, bringing the statewide rate up to 6%. 

The Department of Revenue estimated this would generate about $475 million in additional revenue. It would then be transferred to a new state account to reimburse local governments.

Lawmakers asserted the proposal was not a cut, but a reform aimed at changing the government funding philosophy. 

Sen. Bob Ide, R- Casper, argued that a consumption tax, such as a sales tax, is fairer than property tax. Rep. Robert Wharff, R-Evanston, agreed, asserting that property taxes constitute a “perpetual tax.”

“Doing nothing is not an option for us,” he said. “... We don’t have a taxing problem; we have a spending problem.”

However, the opposition was vocal and wide-ranging. 

Josephine Carlson, testifying as a Wyoming resident, opposed the change.

“Eliminating residential property tax is not reform; it’s destabilization disguised as relief,” she said. “Property taxes fund the backbone of community safety.”

She warned that shifting the burden risks cutting essential systems like fire departments, emergency medical services and mental health services.

Sen. Cale Case, R-Lander, labeled the sales tax idea as “erratic” and “regressive.” 

“To think that we can fix the distribution problem — I know this bill tries really hard to do that, but I don’t think it can possibly achieve any kind of distribution in conformity with existing taxes on the bill,” he said. “I think it’s poor policy.”

Casper attorney and tax expert Jennifer McDowell testified in an email to the committee that a sales tax is more regressive than property tax, and disproportionately hurts lower-income individuals and families.

“To the extent that increasing property values overburden a minority of existing Wyoming homeowners, targeted solutions such as means testing exemptions are a better solution to solve this specific problem than the across-the-board property tax exemptions currently proposed,” she wrote.

Department of Revenue Director Bret Fanning and Administrator Guille raised administrative alarms. 

Fanning noted that raising the sales tax rate to 6% in already high-tax counties like Laramie County would increase the sales tax on a $100,000 car from $6,000 to $8,000. Guille said that eliminating the residential property tax also would shift the burden of paying off existing county-wide bonded debt solely onto commercial, industrial and agricultural properties.

Beth Blackwell, grants and loans manager for the city of Newcastle, worried that replacing reliable property tax revenue with volatile sales tax revenue would cut off the ability for communities to secure debt and fund infrastructure projects.

“It makes my stomach hurt, in the sense that you are cutting off the legs of our communities and pulling the blanket out from under them,” she said.

Ultimately, the committee passed both bills. 

The measure to eliminate property taxes passed in a 9-1 vote, with Case casting the lone vote in opposition, and the sales tax replacement bill passed as a trigger bill in an 8-4 vote.

The sales tax bill was amended to only go into effect if voters approve of the constitutional resolution, and it would delay implementation until April 1, 2027, allowing for the 90-day delay needed to implement the sales tax increase.

Acquisition value and assessment rates

The committee then turned its attention to potential constitutional and legislative ways to stabilize property values outside of complete elimination.

One bill sought to give the Legislature the flexibility to use alternative valuation methods, such as acquisition value, which taxes property based on its price when purchased, rather than being solely constrained by the “full value” language in the Constitution.

Marty Hardsocg, vice chair of the State Board of Equalization, expressed concern about the language, arguing it was “oblique” and non-specific, leaving the measure vulnerable to court challenges. 

Despite these concerns, Locke argued the language was structured to leave options open for the Legislature. The resolution passed 9-2.

The associated implementation bill, titled “Property tax-fair market value on transfer,” was also discussed. 

Huxtable noted that the current draft was confusing and risked causing property values to increase in some areas by setting an annual 2% increase on a 2019 base value.

The Revenue Department requested that the effective date be delayed to Jan. 1, 2028, to accommodate the extensive programming needed to roll back property values and track new metrics. The committee adopted this delay and further amended the bill to ensure it focused on true acquisition value tied to the purchase price. It passed 11-1.

The legislators also reviewed a bill that proposed reducing the taxable assessment rate for residential real property from the current 9.5% to 8.3%. The Legislative Service Office estimated this measure would reduce residential property tax revenue by approximately $81.3 million per year. 

The bill passed 11-0.

Finally, a bill regarding revisions to property tax appeals that sought to make statements of consideration public records and extend the contest filing window from 30 to 45 days was tabled.