A lesson in property tax
Property tax bills like HB169 and SF69 are working their way through the legislative process. They haven't yet been worked by the second house so analyzing them might not be the most productive use of our time. While debating property tax issues I have realized there are a few misconceptions and misunderstandings on the issue. I would like to share a few things I was reminded of or have learned as I have worked on this topic. Let’s talk about property taxes and where they go and what they do. Sometimes we hear things like “My property taxes went up because the State spends too much money.” This isn’t accurate for the following reasons. First, property taxes don’t end up in the state’s general fund, they stay in the county. And second, property taxes go up when the assessment or the value of your property goes up. Assessments have gone up in Wyoming as more people have moved here who are willing and able to pay higher prices for real estate, which has driven the value of our property up. Again, property taxes and State spending are not related. In the state of Wyoming residential property taxes account for 29% of the property tax revenue. 69% of property taxes are categorized as Mineral, Industrial, or Commercial with Agriculture paying around 1.3% of Wyoming’s property taxes. Property taxes stay in your local counties, and in your communities. Property taxes help pay for local schools; schools accounted for 69% of our property taxes in 2024. The school portion goes into a common account and then is redistributed to all of the counties. The counties in HD 2 are backfill counties which means we receive more than we contribute. 17% of property taxes go to Counties to fund operations like Sheriff and Road & Bridge. 8% goes to special districts to fund local services like rural fire departments, weed and pest, rural hospitals, soil conservation districts, senior citizens centers, solid waste districts like garbage service and landfills. Cities and towns receive 2% for things like water and sewer, cemeteries, and museums. Community colleges receive 4% of property tax revenue if you are fortunate enough to have one of those in your community. The numbers might vary a little from county to county but these are the state averages. If you ever have property tax questions stop by your courthouse and talk to your local elected officials. I learn something every I see them. In short, property taxes fund counties.
The state is funded in a different manner. Our state revenue is supplied primarily by Sales and Use tax, Interest Income from the Permanent Mineral Trust Fund, Severance taxes, Federal Mineral Royalties, and Coal Lease Bonuses. So really, other than the fraction of sales tax that we pay personally, the rest of the state's bills are shouldered by our mineral industries. That is why Wyoming has one of the lowest personal tax burdens in the nation. Only Alaskans pay less taxes than we do. We are one of only 7 states that do not have an income tax.
The largest expenditures of state dollars are the Health Department, K-12 Education, Department of Family Services, Department of Environmental Quality, National Guard, our community colleges and the University. About $1 out of every $5 the state spends are federal dollars. So, with an annual budget of over $5 billion, just over 1 billion of those dollars are federal. But, that’s not the whole story because there are Federal Funds that are sent directly to local governments that are not included in these numbers. In addition, most of the Wyoming Department of Transportation’s funding for road construction is also Federal money that is administered by the Transportation Commission instead of the Legislature. The Wyoming Department of Transportation has an annual budget of almost $900 million with a majority of those funds coming from federal sources added to the fuel taxes and vehicle registration revenues that are collected in state.
A little closer to home, local governments are funded in part by the state through sales and use taxes, federal mineral royalties, severance taxes, fuel taxes, and lodging taxes. Local governments are also funded by grants and loans through the state, as well as direct distributions from legislative appropriations. The direct distribution formula considers county and municipal property taxes, sales and use taxes, and population. Revenue hardship counties and municipalities like our counties in HD 2 benefit a little more from the direct distribution formula because of our lower assessed values and lower sales and use taxes.
Our Saturday meetings have been well attended as the state is waking up to some of the short-sighted policies that have been introduced in the legislature. You are doing a great job keeping me informed on the issues important to you. Encourage your friends and family all across the state to get involved and contact their legislators. If your legislator is not responsive to you, keep that in mind the next election cycle. Looking forward: jd.williams@wyoleg.gov, 307.340.6006