Residents receive 10 times the services than they pay for

SHERIDAN — For every dollar in taxes paid by the average family of four in Sheridan County, that same family receives $10.31 in services from the state, city, county and school district.

A new online calculator released by the Wyoming Taxpayers Association as a part of its “Cowboy Family” report will calculate the individual benefits the Wyoming tax structure provides to each state resident, based on residents’ specific data.

“People feel residential property taxes going up, and they wonder where that (money) is going. This is the perfect time for us to roll out the Cowboy Family report,” Ashley Harpstreith, executive director of the Wyoming Taxpayers Association, said in an interview with The Sheridan Press.

Rob Godby, an associate professor in the Economics Department at the University of Wyoming; Dan Noble, director at Wyoming Department of Revenue; and Dr. Wenlin Liu, an economist at Wyoming Department of Health, assisted the Taxpayers Association with the calculator, which provides residents an individual taxes-paid-to-services-received ratio.

Brenda Henson, the director of Wyoming Department of Revenue, says in the report, “taxes are the structure by which we as citizens pool our resources to pay for infrastructure and services we could not afford on our own.”

According to the Tax Foundation, in calendar year 2024, Wyoming has the second lowest effective individual tax burden in the nation at 7.5%.

The calculator highlights some interesting truths about the Wyoming tax structure, Harpstreith said. While Wyomingites pay for a fraction of services they receive, it is the state's mineral industries that contribute a substantial amount of the remaining cost of government services received by the average citizen.

“What we really drill down on is, who else pays for the Wyoming citizens’ (services)?” Harpstreith said.

The "Cowboy Family" receives $56,834.36 of state and local government services “they do not pay for, which is supported by mineral and non-mineral sources of revenue,” the report states.

The minerals industry accounts for $25,451.28 of services to the average Wyoming family, and non-mineral dollars, including state investments, accounts for $31,383.08. Harpstreith said much of the state's investments originated with dollars generated in the mining sector, like the state's permanent mineral trust fund.

For every dollar the average Wyoming family pays in taxes, they receive $13.83 in services. The average family — based on an income of $125,000 in a home valued at $370,000 — pays for $4,429.08 for their own governmental services.

Those dollars fund K-12 education, state services, city and town services, special districts and county operations. The largest category is education, where tax dollars help pay employee salaries and benefits and for special education and transportation. State services include those provided by the Department of Health, the Department of Corrections, the Department of Workforce Services and others. Special districts use tax revenue for things like cemeteries, hospital districts, fire protection and flood control. Cities, towns and counties use tax revenue for street maintenance, libraries, fire departments, police, airports and more.

According to a separate recent WCDA report, an annual wage for someone in the natural resource and mining industry in Sheridan County is $55,133. The median sales price for a home in Sheridan County in 2022 was $372,000, according to the WCDA. The Press used those figures to make its calculations for a family of four, with two working parents and two children attending SCSD2 schools.

What about property taxes?

The Cowboy Family data was released following a Legislative session that focused heavily on rising property taxes, but Harpstreith said her organization was already planning its report before the session. Since 1937, the Wyoming Taxpayers Association has advocated for "sound tax policy for a healthy Wyoming economy."

“Since Tax Reform 2000, it has been very clear that our taxes are unstable, unbalanced and completely dependent on the mineral economy,” Harpstreith said. “While we support our legacy industries 110%, we understand there needs to be balance in it, and low and broad-based taxation to make up for these services.”

If lawmakers continue to make residential property tax cuts, the burden will have to shift, either to cuts in services local and state governments provide, or to place heavier burdens on Wyoming’s major industries.

In 2022, Wyoming’s oil and natural gas operators paid $2.72 billion to state and local governments to fund the services Wyomingites enjoy — equating to nearly $4,700 for each Wyoming resident, according to Ryan McConnaughey, vice president and director of communications at the Petroleum Association of Wyoming.

“You’d be hard pressed to find a revenue source in Wyoming’s tax structure where the industry is not the top taxpayer,” McConnaughey said. “Our industry is proud to contribute its fair share. However, the reality is that Wyoming’s effective tax rate on oil and natural gas operations is much higher than most states. This, paired with an onslaught of bad federal energy regulations, is putting incredible pressure on Wyoming’s industry.”

McConnaughey said any discussions related to the property tax obligations of Wyoming residents must include a clear understanding of the contributions of all businesses and residents, not just the state's bread-and-butter industries.

“Proposals that further entrench the state’s unsustainable tax structure deserve serious scrutiny, and we applaud the Taxpayer's Association for their contribution to that discussion,” McConnaughey said.

In 2019, the estimated property taxes paid by residents in Sheridan County was $22,110,427. That number rose to $36,975,055 in 2023. But a greater housing supply would likely calm rising property taxes, some say.

Rep. Liz Storer, D-Teton County, said the relationship between the need for affordable housing and property taxes is often misunderstood, and that with more supply in the market, taxes would go down.

“Many people want to blame increased property taxes for the lack of housing, but it really works the other way: housing has not kept up with demand, thus causing property values to increase and along with that comes higher taxes,” Storer said.

After its report was released in February, Christopher Volzke, Deputy Executive Director of the WCDA, said added housing supply in all price ranges could help with the affordable housing crisis across the state. Harpstreith said the same.

“It is supply and demand 101,” she said. “If there were a lot of houses, values would be low. Right now, there are not a lot of houses, and Sheridan is a desirable area. That increases your assessment value,” and thereby residents’ property taxes."

This story was published on May 4, 2024.