Constitutional change could end up hurting renters, if lawmakers aren't careful

On Election Day, Wyoming voters gave state lawmakers the power to adjust residential property tax by separating it into its own classification.

Voters also gave them the authority to make a change that could end up penalizing renters while helping homeowners. The question is what legislators will do now that Constitutional Amendment A has passed.

The Nov. 5 ballot measure read, “The adoption of this amendment would separate residential real property into its own class of property for purposes of property tax assessments. The amendment would authorize the legislature to create a subclass of owner occupied primary residences.” The first sentence made sense. It’s the second one that has the potential to create problems.

Before Amendment A passed, there were three classifications of property for taxing purposes: mineral, industrial and “all other property, real or personal.” Now, “residential real property” will be divided out into a separate category, leaving commercial and all others, including business personal property not used for residential purposes, to potentially be taxed at a different rate.

The current level of assessment in Wyoming for residential, commercial and agricultural property is 9.5%. That means that instead of being taxed on the full value of a home, residential property owners pay taxes on 9.5% of that value. So, if the assessed value of a home is $300,000, the owner pays taxes on $28,500 of that value.

Senate Joint Resolution 3, passed during the Legislature’s 2023 general session, stipulates that industrial property can’t be valued more than 40% higher or more than four percentage points higher than all other property except that used for mineral production (which is taxed at 100% of its assessed value). The current assessment rate for industrial property is 11.5%.

So, as a result of the constitutional amendment passing, the Legislature could decide to drop the assessment percentage for residential property as low as 8.22%, but could not go lower in order to remain in compliance with SJR 3.

It remains to be seen whether lawmakers will lower the assessed value percentage for residential property, and, if so, by how much. After all, lower property taxes also means less money for cities, towns and counties, as well as K-12 school districts, community college districts, fire districts and many others. Without the state backfilling that lost revenue, these entities would likely be forced to cut staff and reduce services.

The second sentence of the ballot measure is where the potential problems arise.

Although not required, it gives legislators the ability to create a subclass of residential real property for “owner occupied primary residences.” The intent seems clear, based on the debate lawmakers had before authorizing the ballot measure by a single vote.

Supporters were seeking another way to grant residents relief from taxes that have risen exponentially as their property values have gone up in recent years. Some, though, wanted the “owner occupied primary” language included to avoid granting property tax relief to rich people who own large homes, mostly in Teton County, that aren’t their primary residence.

What they likely didn’t consider is the negative impact this language could have on renters in Wyoming. Let’s say a former Cheyenne resident moves to Laramie, and rather than selling their home here, they decide to rent it out. If this subclass is created, that property owner would get a tax break on their Laramie home, but not on the one they own here. That means renters — many of whom already pay much higher rates than they should based on their incomes — would see no relief from this constitutional change.

If lawmakers really want to help low-income residents, why not create a property tax subclass for “all residential dwellings,” including apartment complexes?

Besides, we have to wonder how officials plan to enforce such a distinction. Would they knock on people’s doors and ask them if they’re the person listed on the deed? Would they spy on them to make sure they’re living there a specified number of days? Doubtful.

While the intent is understandable, the potential negative impact on those who can least afford it is simply too high. Besides, legislators passed several bills earlier this year that extend property tax relief to Wyoming residents, including expanding an existing state refund program, capping annual property tax increases, doubling an exemption for military veterans, and creating a new exemption for those 65 and older who have paid property taxes in the state for at least 25 years.

We encourage readers to reach out to state lawmakers and tell them to approach additional property tax relief with caution. Such efforts should help homeowners who need it most without harming renters who need a break just as much.