On the ballot

Legislators leery of property tax measure

Mary Stroka

NLJ Reporter

Elected officials have weighed in on a ballot proposal that Weston County residents can expect to see when they vote in the Nov. 5 general election.

In its 2023 general session, Wyoming legislators passed Senate Joint Resolution 3, which –- if voters approve it in November — would separate residential real property from other property classes.

The three classes of property that currently exist are gross product of minerals and mine products, which are assessed at 100%; industrial property, which is assessed at 11.5%; and “all other property, real and personal (residential, commercial, agriculture),” which is assessed at 9.5%, Weston County Assessor Kara Lenardson said in an email. State legislators decide the percentage of fair market value of property to tax for the classes.

Lenardson said she believes that legislators want to be able to change the level of assessment on residential property without affecting the assessment level of commercial or agricultural property.

“This could mean that the legislature can reduce or increase the level of assessment on just residential properties in addition to creating sub-classes, such as ‘owner-occupied residential,’’ she said. “In short, the Legislature could reduce the assessment rate of just owner-occupied residential properties. One must remember, however, that means they can raise it again in any given year as well.”

Lenardson noted that a decrease in property taxes for homeowners, via a reduction in level of assessments for owner-occupied residential properties, would reduce funding for county services.

Rep. Chip Neiman, R-Hulett, who voted in favor of the resolution, said he has some “buyer’s remorse about this thing.”

Even though, from one perspective, separating commercial from residential would allow legislators to create a separate “hopefully lower” level for residential property than it would be while tied to commercial, “it’s not going to necessarily change anything,” he said.

He hopes that, if the referendum passes, legislators will find a way to keep taxes low.

“If we don’t control our spending, they’re just going to raise the amount of taxes that they’re going to need on commercial property in order to compensate for the spending level,” he predicted.

Neiman said if that happens residential property owners would see increased costs of goods and services from commercial property owners

“We can lower the taxes on residential folks and help them reduce some of that pressure on them,” he said. “But we’ve also got to not try to compensate for it by raising it on commercial because all that does is just get forced right down the pipeline and everybody pays it anyway.”

He said it would probably be better to not change the assessment classes and instead just reduce spending.

“People would feel a lot better about it because then we just would need that amount of volume of tax,” he said. “We could reduce it on commercial and residential if we can control our spending.”

Neiman said the prospects of the Legislature being able to control spending look “very promising” currently because he believes the results of the primary election in August made it “loud and clear” that voters want the Legislature to control spending.

“I think there’s a very, very good opportunity here right now to really do some evaluation and some auditing of what we’re doing and do a better job of spending our money and hopefully reducing the need to get into people’s pockets,” he said.

Rep. Allen Slagle, R-Newcastle, said he believes that the separation of residential classes would merely create more ways for legislators to increase taxes.

“We may initially pay less on our residence, but taxes will go up on other properties, so we will still end up with more expenses,” he said. “A second house would now become commercial property and would be taxed as such, meaning higher prices for individuals renting homes.  Overall, I don’t think a fourth class of property tax would be beneficial to anyone except those collecting taxes.”

Sen. Cheri Steinmetz, R-Lingle, voted against the resolution. She said that creating the fourth class of property could make it easier for legislators to raise taxes on many classes of property.

“Voters should do their homework and decide for themselves as to whether this will be beneficial or harmful in the future,” she said.

District 1 Sen. Ogden Driskill said the resolution could be helpful.

“Something needs to be done with property taxes,” he said.

Still, better solutions exist, according to Driskill.

“Hopefully we can enact some more long-term solutions this session,” he said.

According to Lenardson, the last time the assessment levels changed was in 1989.

A Tax Foundation blog post about the proposal criticized Wyoming’s existing distinctions in assessment rates for different types of property. Legislators could raise property taxes on some types of property, “often to the detriment of businesses, to generate additional revenue without being seen as raising taxes on homeowners,” the article said.

“If a new subclass of residential property with its own assessment ratio is created, the tax burden would likely shift to other classes of property to ensure revenue stability,” the article said. “Wyoming voters are effectively being asked to preference property owners who live in their homes over everyone else — including renters.”

According to the post, the Legislature should instead create levy limits. Levy limits can ensure revenue the government collects does not exceed a set amount.

“Lawmakers may also set a revenue growth rate and adjust for inflation,” the article said. “This means there could be variations in property taxes owed but all within the context of an established revenue limit.”

Assessment calculations

Weston County Assessor Kara Lenardson said people should be aware that a drop in level of assessment isn’t a directly correlating decrease in valuation or taxes owed. For example, hypothetically, if the current assessment rate decreased by 2 percentage points, the taxes paid would decrease 21%.

Fair Market Value of an owner-occupied residential property = $250,000

$250,000 Fair Market Value (FMV) x 9.5% assessment = $23,750 Assessed Value (AV)

$23,750 AV x 0.0775 (Newcastle in-town Tax District Mill Levy 77.50) = $1,840.63 Taxes

$250,000 Fair Market Value (FMV) x 7.5% assessment = $18,750 Assessed Value (AV)

$18,750 AV x 0.0775 (Newcastle in-town Tax District Mill Levy 77.50) = $1,453.13 Taxes

“Overall, that would decrease the county valuation/income,” Lenardson said. “The same can be said if the level of assessment is increased; the valuation/income will increase.”