Most Wyoming residents right, some lawmakers wrong about taxes

Wyoming residents are asking two good questions these days:

• Why do certain state legislators think it’s a good idea to eliminate residential property tax and replace it with higher sales tax rates?
• Do these same lawmakers care what the people they represent think about this issue?

The answer to the first question is unclear. The answer to the second question — based on the almost unanimous votes by members of the Legislature’s Joint Revenue Committee after listening to public opposition at a recent meeting — seems to be “not really.”

What’s left are serious concerns among both average residents and local government officials that these lawmakers will inflict additional pain in the upcoming budget session when it comes to tax policy.

Proposals advanced last month by the Revenue Committee include:

• Extending the existing 50% long-term homeowner property tax exemption by repealing its July 1, 2027, sunset date.
• Amending the Wyoming Constitution to eliminate property tax on residential property. (This would have to go to a statewide vote.)
• Increasing the statewide sales and use tax rate from 4% to 6%, allocating the increased revenue received to local governments.
• Allowing the Legislature to use alternative valuation methods, such as acquisition value, which taxes property based on its price when purchased, rather than its current value.
• Reducing the taxable assessment rate for residential real property from the current 9.5% to 8.3%.

All five of these are bad ideas, mostly because of the large-scale negative financial impact they’d have. A legislative staff analysis of Department of Revenue data estimated that just the current 25% across-the-board homeowner tax exemption on property worth up to $1 million will cost Wyoming an estimated $113 million in the 2026 fiscal year. Around $70.9 million of the loss will impact K-12 education funding, and $42.1 million will impact counties, municipalities and special districts.

Here in Laramie County, officials say eliminating residential property taxes would drain almost $62 million in annual tax revenue from the county. While there’s likely some waste in local government, there’s no way it’s that much.

Nearly every member of the public who spoke at the Revenue Committee meeting was opposed to more changes to the current tax system. And these weren’t just lobbyists with local government associations; they were average citizens who don’t want to lose basic services. Which leads us to another question: Besides certain lawmakers, who is asking for the complete elimination of property tax?

Supporters insist it’s the people who elected them. We don’t doubt that those who have struggled to pay the higher taxes that resulted from increased property values in recent years were asking for help. But not everyone with property valued at up to $1 million needed tax relief. Targeted programs that already existed have been expanded nearly every year to cover those truly in need. (In fact, in his 2027-28 biennium budget, Gov. Mark Gordon has once again asked for $27.2 million to provide direct property tax relief to struggling homeowners.)

And we certainly can’t imagine very many people telling state legislators they want to pay more sales tax. Even those lawmakers who didn’t realize that state government doesn’t benefit from residential property tax in Wyoming have to know that sales tax is regressive, meaning it has a greater negative impact on low-income residents than wealthier ones.

Plus, as sales tax rates here move higher than surrounding states, guess where people living in border communities are going to shop.

Lawmakers also seem to be ignoring the experts who say a sales tax hike of 2 percentage points won’t come close to replacing the revenue lost by eliminating the property tax. Which means either they sincerely believe local government is wasting large amounts of money, or they don’t care whether small towns and rural residents have emergency services like fire, ambulance and police; quality infrastructure like roads, water and sewer services; and quality-of-life assets like libraries and senior centers.

Back in June, during a meeting in his own community, Revenue Committee co-Chairman Sen. Troy McKeown, R-Gillette, said the intent is not to get rid of property tax, but rather to open it up for “new reform.” He said “it puts the onus back on the Legislature.” If that’s true, why did they forward legislation to do just that to next year’s session?

When they gather in Cheyenne on Feb. 9, lawmakers should quickly set aside this proposal. They also should reject any other changes to the existing property tax system and make the Revenue Committee evaluate the current exemptions during next year’s interim period.

Most of all, they should spend some time asking themselves the questions their constituents are asking about what kind of communities they want to hand down to future generations. Do they want places where immediate response to an emergency isn’t guaranteed? Do they want failing infrastructure that makes neighborhoods, and even whole communities, unlivable? Do they want to drive even more of our current workforce to other states?

If the answer is no, it’s time to set aside the fantasies and get real about tax policy in Wyoming.

BREAKOUT BOX:

How Wyoming’s tax rates rank

According to experts at the nonpartisan Tax Foundation, here’s how Wyoming’s current tax rates rank when compared with other states:

Property tax

Effective tax rate (2023): 0.55%

Effective tax rate (2022): 0.47%

Rank (2023): #38

Sales tax

State sales tax rate: 4%

Combined state and average local sales tax rate: 5.56%

Rank: 43rd

Gas tax

Rate: 24 cents per gallon

Rank: 38th

With no individual income tax or corporate income tax, Wyoming’s tax system ranks first overall on the 2026 State Tax Competitiveness Index. (Found online at taxfoundation.org/statetaxindex.)