Property taxes come up in a lot of the conversations I have these days. On one hand, it is true that the citizens of Wyoming enjoy one of the least onerous taxing environments in the United States, mainly because we have figured out how to get somebody else to pay our bills for us—namely, the mineral industry. It is true that we pay an average of $3,300 a year in taxes, and receive something in the neighborhood of $33,000 in government services in return. Not a bad deal, some would say.
On the other hand, when you are looking at your property tax bill, and you see that the value of your residence, and consequently the taxes that you pay, have doubled, tripled, or even quadrupled…it is pretty easy to get up in arms. Then you look up, and see that the state, cities, towns, counties, and special districts are spending money like there is no end—megalithic capitol construction; gigantic infrastructure projects; programs of every imaginable style and ilk from low-income assistance, to mental and physical health services; recreation; beautification; economic development; fire suppression; water development; and more, and more, and more—all crying for more to feed the insatiable ‘essential’ needs. Where does it stop? And, how did this happen?
It happened partly because the system, as it stands, makes it almost automatic. The Wyoming Constitution addresses taxes in several sections. Firstly, it states that “No tax shall be imposed without the consent of the people or their authorized representatives.” Secondly, the constitution states that all property shall be uniformly valued at its full value. The constitution designates three classes: 1) the gross production of minerals and mine products in lieu of taxes on the land where produced, which are assessed at 100%; 2) property used for industrial purposes, assessed at 11.5%; and 3) all other property, real and personal, assessed at 9.5%. While the three classes are designated in the constitution, the percentages for each class are set by the legislature.
Herein, lies one part of the problem—the constitutional requirement to value all property at its full value. That means that if you are fortunate enough to live in a pretty place that is attractive to movie stars and millionaires, or in an area of booming economic expansion, or just next to a subdivision where people are moving in and developing nice homes—that the value of your property is going to inevitably ratchet up as the properties around you are bought and sold and built for higher and higher amounts. Say, for instance, that you are the typical Wyoming family with Mom, Dad, and a couple of kids living on an acreage with a good house that you bought some years ago for under $100,000. Since then, you’ve built a shop, put in some nice landscaping, made some other improvements, and have comfortably increased that value to $150,000, or even $175,000. Then, the big pasture next door gets sold to a developer who starts putting in multi-million dollar home sites—all of the sudden, your property is enormously more valuable—and you’ve got the tax bill to prove it that has exponentially exploded.
Some would say, “you lucky family, your net worth has just gone through the roof through no effort of your own…live it up.” That, however, is small consolation to a family struggling to make ends meet. What are they supposed to do? Sell it and go start over someplace else? How fair is that?
Now that we have taken a look at the individual end of the taxing spectrum, let’s move to the other end, and take a look at what happens on the governmental level. Taxes are always levied in mills, and one mill equals $.001 or 1/1000 of a dollar. In the Wyoming Constitution all taxes are addressed in terms of language that says a levy “shall not exceed” a certain number of mills. Currently, the mill levies for schools are statutorily set as “mandatory” at the maximum not to be exceeded in the constitution.
Here is a streamlined version of how the taxing system works from the government end. The County Assessor certifies the value of all property in the county every year. There are mechanisms in place whereby the State Board of Equalization makes sure that this is done properly. Budgets are developed by the various entities and submitted to the county commissioners, who then has the taxing authority to actually levy the mills necessary, up to the constitutional and statutory limits that are in place.
So, if the property valuation increases dramatically within a taxing district, the actual revenue garnered from the same mill levy results in substantially more income for the government. Currently, there is very little accountability, or even visibility, when this happens, and for elected officials it is apparently a lot more fun to spend money, then to give it back to the taxpayers by not taking it in the first place.
To address this specific problem I have asked the Legislative Service Office to draft legislation that would tie property tax valuation to the mill levies so that when the valuation goes up, the mill levies automatically come down, with a formula to account for inflation, so that the end result is essentially the same amount of actual dollars available to the government from one year to the next. The draft legislation also removes the mandatory language from the various school mills, so that they can be adjusted like every other property tax.
This legislation does not impede the ability of any taxing authority from setting mill levies, as they have always done, up to the limits, but it does bring the whole process out in the open—which makes it a much more transparent, and accountable process. Instead of a stealthy windfall to spend freely, your elected taxing authorities would now have to publicly take action to raise the mills from their adjusted amount, and in the process, would have to justify why they need the extra dollars.
Since it would work both ways, in that in a district where the valuation is dropping, the mill levies would be automatically adjusted upward, within the limits—this should be comforting to smaller, and more vulnerable districts, as it would provide a reliable, steady, amount of dollars to meet the budget from year to year.
Now, let’s take this back to our typical Wyoming family—what would this do for them? The end result would be that their property value has still increased to meet the constitutional requirement for full fair market value, but their tax bill has stayed level because the amount of mills that they are taxed on that value have been adjusted downward, and their local governments have been provided with the same revenue as they had in the previous year to supply the necessary services. Everybody wins.
As we prepare for the Wyoming Legislative Budget Session in February, I ask for your support with this initiative. If you would like to talk to me about this, or any other issue, please call me at 307-685-8248, or email at sue.wallis@vcn.com.
