‘Uniform taxation is no longer possible’

Property tax exemptions – and what they mean for local budgets

RIVERTON —- A little more than a year ago, the residents of Atlantic City invited their local legislators to a community meeting. Property taxes were getting out of control, they said – and it didn’t seem fair that someone on a fixed income, who’d lived in the same house for decades, may have to pay more than they could afford because someone making California or New York wages had moved in next door.

“This year, my property taxes are double” the amount they were assessed at, $934, when he bought his one-bedroom cabin 10 years ago, “having gone up $227 – more than 14% – this year alone,” Bob Townsend told the legislators at that time. “Wyoming has … become a destination for retirees and families trying to escape whatever it is they’re running away from. They’ve brought pockets full of money and have been paying ridiculous prices for their new forever homes.”

The people of Atlantic City weren’t the only ones who felt like property taxes were becoming overwhelming.

Around the state, a movement to see property taxes reduced or exemptions put into place for certain kinds of residents has been taking off.

At this last legislative session, that movement bore fruit, and in March Gov. Mark Gordon signed House Enrolled Act 0044.

Now, county assessors are starting to see applications for its tax relief measures roll in.

But tax exemptions don’t just mean that some homeowners are going to pay less. They also have direct implications for local government budgets.

And according to Wyoming State Senator Cale Case, it’s an equal protections violation – it treats different people differently.

“It’s clearly unconstitutional,” Case remarked. “We need laws that are constitutional.”

“The legislature knew that implementing a [property tax] cap, without first amending Wyoming’s Constitution, is contrary to law,” Wyoming State Board of Equalization board member Jayne Mockler wrote to Gordon in July. “What of the constitution’s directives that ‘all taxation shall be equal and uniform within each class,’ that ‘the legislature shall not create new classes or subclasses,’ or that ‘[a]ll taxation shall be equal and uniform within each class of property?’ We shall see soon enough, as the board has already received reports of non-uniformity.”

House Enrolled Act 0044

Passed during the 2024 legislative session, House Enrolled Act 0044 allows long-term property owners – people who have paid Wyoming residential property taxes for 25 years or longer – who are 65 years or older to apply for an exemption of up to 50% of their property tax on their primary residence.

It was one of a number of tax relief measures that the legislature saw in 2024, ranging from bills to a constitutional amendment Wyoming voters saw at the November polls.

Wyoming’s property tax system is written into its constitution, and consists of just three classes of property: mineral and mine products (taxed at 100%), industrial property (taxed at 11.5%) and all other property, including residential property (taxed at 9.5%).

There is a slight exception in the relevant article for agricultural property, which is taxed based on production rather than market value, but two significant factors stand out: The taxation of mineral and industrial properties are indexed to the taxation of other properties, meaning that decreasing the taxes paid by homeowners would mean decreasing property taxes across the board; and that changing this system will require a constitutional amendment.

In Wyoming, residential property taxes are all local dollars, explained Fremont County Assessor Tara Berg.

“It’s all local money, and will affect local services,” she said.

The money people pay on their property taxes doesn’t go into a large pot at the state level. It goes into smaller local pots, ranging from county and city budgets to fire districts.

Every local district that receives funding through the mill levy, from conservation districts to cemetery districts, will see a significant decrease in its budget due to the exemptions.

Many of these districts appear to have been hoping that the state would help fill in the holes, Case said, but he doesn’t anticipate that the state will be sending dollars to every municipality or small local district to make up for the shortfall.

“We’re up to 1,970 applications” for the exemption as of December 27, Berg noted.

That’s $1,689,353.80 less in taxes than for the 2024 fiscal year.

Fremont County’s 2024-2025 total budget is $32,346,980; so far, the applications that have been submitted represent a 6% decrease from that budget total.

There are still months to go before the May 26 application deadline, and Berg expects to continue to see that number to grow.

“The incidents of this relief is very spotty, and it’s going to hit different counties very differently,” Case pointed out.

Counties that have high property values and relatively few long-term homeowners are set up to benefit from it; counties like Fremont County, which have somewhat variable mineral royalty income and more long-term residents, are in a less optimistic position.

“This is a Teton County windfall,” Case remarked. “[The tax exemption] is a Jackson Hole thing.”

“Uniform taxation,” Mockler wrote, “is no longer possible.”

Local districts, local services

“It’s been interesting to me the people that come in and say ‘I don’t want to turn this [exemption application] in, because I know … what it could do to our services,” Berg observed.

She still encourages them to turn in their application; a person not applying for an exemption won’t prevent his neighbors from doing so, she points out.

Local roads are often paved with local dollars, and every special district that qualifies for a mill levy is liable to see a decrease in its budget.

Some of these districts have few other avenues for funding.

The argument at the state level, Case explained, goes that if a municipality or district is forced to tighten its budget, it will simply carve away its extravagances.

That’s not his view, though.

“We need government services,” he commented. “Our policies do have an impact.”

Wyoming is the slowest-growing among the Mountain West states, he pointed out, and it seems apparent to Case that the low-tax approach isn’t actually encouraging growth in the state. Instead, it seems to him that states that have emphasized factors like livability are growing – while Wyoming lags behind.

The Lower Wind River Conservation District is among the local districts that has recently been able to expand its services due to funding coming in from the mill levy – and may have to dial those services back now.

However, said District Manager Cathy Rosenthal, it’s too soon to jump to any conclusions about what this may or may not mean for any given district’s budget. There are a lot of factors that play into budgets, ranging from state funding to grants to taxes.

Berg isn’t in charge of budgeting, she pointed out, just assessing taxes – but she can see prices going up and exemption applications rolling in, and can do the math on what that could mean for some of these small local districts.

Constitutional and fair

Case believes that it’s highly likely that the long-term homeowner property tax exemption and the recently-passed constitutional amendment will be challenged in the courts.

The exemption treats different people differently based purely on how long they’ve lived in the state – which, he said, is a violation of the Equal Protection Clause.

“[The legislature] ‘worked around’ that prohibition with a massively expanded exemption,” Mockler wrote. “It misused and distorted the commonly employed tax exemption to ‘work around’ the constitutional requirement that properties in general be taxed at their full market value.”

Case also pointed out that the tax exemption violates the fair-market approach to taxation outlined in the Wyoming state constitution.

If two identical, side-by-side houses are being evaluated differently based purely on how long the residents have lived there, “you can’t call it fair value.”

Case isn’t opposed to tax relief as a concept, he emphasized, but it needs to be for the people who need it the most – such as the elderly and those living below the poverty line.

“We need to come up with tax relief that’s more based on need,” he commented. “They make more sense – and they’re constitutional.”

“This year I voted against certifying the 2024 values for all counties,” Mockler continued. “While I am confident that the market and assessed values presented by the county assessors are in statistical compliance with the Board’s rules, I am unable to reconcile the exemptions and refunds passed by the 2024 Legislature with my responsibility to ensure that all residential properties meet full market value standards, are assessed at the statutory rate, and are uniformly taxed within their assigned class.”

This story was published on January 8, 2025.