One Property Tax Increase Dies—Another One Takes Its Place

by Philip Baron, MBA

A draft bill to raise property taxes by nine mills died with a tie vote of 6 – 6 in the Joint Revenue Committee Meeting on September 19th, 2019. This legislation was first proposed in the spring 2019 legislative session and was not considered for introduction into the house chamber. The proposed property tax increase was to take place in three steps, with an increase of 3 mills each year for a total 9 mill increase starting in the third year of implementation.

The bill died after opposition from the Wyoming Mining Association, Rocky Mountain Power, and the trona¹ industry. Their members would bear the biggest burden from the tax increase because they are amongst the top ten property taxpayers in the state.

For a homeowner of a $200,000 house, a nine-mill increase would be a $171 yearly tax increase that goes to fund public schools. These proposed taxes are aimed at closing the gap on Wyoming's education spending problem. It is estimated that this tax increase would raise about $104 million in tax revenues earmarked for the School Foundation Account. Funding in this account is collected by the state and then redistributed to schools based on a formula.

The committee carried an additional motion, that passed narrowly by 6 – 5, to draft a bill to raise the tax assessment ratio on residential property from 9.5% to 11.5%. Representative Zwonitzer, R – Cheyenne suggested that the increased assessment ratio would raise about as much money as the proposed mill levies that had failed.

The increase in the assessment ratio would place the tax burden on residential properties instead of both residential and industrial properties. On a $200,000 home in Cheyenne with 72.20 mills levied, an increase in the assessment ratio from 9.5% to 11.5% would mean an increase in taxes of $289 per year.

Raising the assessment ratio brings this bill back in another form and shifts the tax on to residential properties and away from the industrial taxpayers who objected to the proposed mill levy increase. Since property tax increases have proven unpopular, it is advisable that the legislature look at other solutions to the problem.

One solution is for Wyoming's public education system to cut back its spending and become more efficient. Another would be to allow for greater access to school choice programs in Wyoming where taxpayers can vote with their feet and use the tax dollars to send their children to the school of their choice. Increased competition from additional school options would over time drive down price and increase the quality of education.

¹ Mineral that is mined as the primary source of sodium carbonate in the United States. It is commonly used to make glass and sodium bicarbonate (baking soda).