As Home Values Rise, Lawmakers Discuss Property Tax Relief Options | Wyoming News
A booming real estate market, coupled with inflation, are two reasons why property taxes have increased recently. Owners’ incomes are expected to grow with them, at least eventually. Or that residents can hold on until property values come down.
But high property taxes can be burdensome, especially for people on fixed incomes, like retirees and people with disabilities.
A task force within the Joint Revenue Committee met virtually Thursday to discuss more than a dozen different ways Wyoming could provide property tax relief.
A major point of interest was changing Wyoming to a property tax system based on acquisition value.
Under this model, the state would no longer tax your home based on its current market value, but on the value when it became yours.
People also read…
But there’s a lot of uncertainty about what that could or should look like.
“The acquisition is certainly not out of place, but there are a lot of issues that would need to be addressed to enable us to administer it,” said Converse County Assessor Dixie Huxtable, representing the Association of Wyoming County Assessors.
One proposal suggested setting a base year for this system. The bill would tax owners of existing residential properties based on the market value of their homes in 2019. All residences that change hands thereafter would be taxed at their acquisition value.
A stroll through downtown Casper
The working group discussed the development of a bill to study the acquisition model in more detail.
The study, which would likely be conducted by a third-party company, would explore what Wyoming would need to do to implement this system and how it would affect property tax revenues.
There was also the question of whether or not to amend the Wyoming State Constitution to make residences their own tax class.
Currently, the constitution groups residential property into the same tax class as agricultural and commercial property.
A constitutional amendment could give residential property its own category — that way, the state could make changes to how residential property is taxed without affecting the money it makes from commercial and farm property taxes.
But the working group was not sure what form this amendment should take.
The simplest version of the amendment would only allow the state to lower the assessment rate applied to property taxes. The assessment rate determines how the market value of a home translates to the assessed value of the property.
For residential, commercial and agricultural properties, this rate is currently 9.5%.
In other words, if your home was assessed at $565,000, its assessed value would be $53,675. Your county assessor’s office would apply your local tax rate to determine what you actually owe in property taxes. In Casper, for example, the tax rate is $72.89 for every $1,000 of assessed property. This means that for an estimated land value of $53,675, you will pay $3,912.
Other proposed constitutional amendments would introduce more significant changes to this system.
A proposed amendment proposed by Rep. Mike Yin, D-Jackson, would allow lawmakers to lower the assessment rate for residential properties and pave the way for additional tax exemptions.
An even broader constitutional amendment could also allow tax caps on residential properties – which set limits on how much local governments can raise property taxes – or let the state adopt a property tax model based on the acquisition value.
In a separate proposal, Brenda Henson, director of the Wyoming Department of Revenue, suggested relaxing eligibility requirements for the state’s existing property tax rebate program.
Currently, the program is limited to households earning less than or equal to three-quarters of the median household income in the state, or three-quarters of the median income in their county of residence – whichever is higher.
Henson said as of Wednesday, about 4,400 households have already applied for property tax refunds this year. Of these, 1,263 were rejected, mainly because they exceeded the income limit.
The relief program typically costs the state about $1.5 million a year, Henson said. This year, the Department of Revenue expects it to cost about $1.7 million.
Raising the cap to 100% of median household incomes at the state and county level would cost the state at least $900,000 a year, according to a study presented at the meeting by the Wyoming Office of Legislative Services.
There was also talk of implementing a $50,000 property tax credit for homeowners. Essentially, this bill would make $50,000 of owner-occupied properties tax-free.
This is estimated to cost the state $56.6 million per year.
Yin suggested expanding this exemption to include rental properties. This would, at least in theory, encourage landlords to lower rents, so tenants could also benefit from the tax relief.
Other proposals included:
- reviving a state program to provide tax relief to people 65 and older and people with disabilities;
- expanding property tax relief for veterans;
- calculate property assessments based on a multi-year moving average, rather than their current market values; and
- provide relief using money from existing revenue sources (Alaska, for example, gives its residents a cut of its oil revenue each year).
Lawmakers reject proposed housing trust fund program
Members of the task force also discussed modifying Wyoming’s property tax deferral program.
The program was introduced as a way for low-income residents of participating counties to delay paying property taxes.
Counties pay property taxes on behalf of eligible owners, which are transferred to liens on their properties. Homeowners pay that money back at a later date, when they refinance or sell their home, for example.
This can be a costly arrangement for counties, as they may not be reimbursed for several years. Currently, only Teton County makes the program available.
It also hasn’t been very popular with owners, said Cale Case, R-Lander rep.
Case proposed introducing an alternative version of the program that would not involve state or county governments, but rather a “tax relief authority”. Liens would be due to banking institutions, not counties.
Lawmakers reject proposed housing trust fund program