Khale Lenhart

Property tax is a hot issue in Wyoming politics. Residential property tax assessments have increased in recent years, and some are feeling the squeeze. These concerns are not entirely without cause, as some genuinely struggle with the increase. However, the reasons why assessments have increased are not well understood and the main proposed response would do more harm than good.

It is important to understand that Wyoming’s property tax rates have not changed. In fact, Wyoming’s property tax rate is among the lowest in the nation. According to a 2021 study by the Tax Foundation, Wyoming’s property tax rate was 47th lowest out of 50 states.  

Rather, the increase in property taxes has been solely caused by an increase in property values. Residential property is worth more now, so — because our taxes are based on the market value of our homes — our tax assessments have also gone up.  

One major reason that property values have increased is inflation. According to the U.S. Bureau of Labor Statistics, it would require over $244,000 in today’s dollars to match the purchasing power of $200,000 in January 2019. These inflationary increases also impact home values, so if assessments accurately capture that increased value, that means higher taxes.

Property values have also increased because buyers are increasingly coming from out-of-state areas and bringing property valuations from their home state with them. A buyer from the coast who is used to higher property values will not think twice about market prices far higher than what we are used to in Wyoming. These homebuyers are willing to pay more for houses, thereby increasing the market price, again leading to higher taxes.

Wyoming also faces a housing shortage, meaning that we do not have enough housing stock to fit all the people who would like to buy homes. The simple law of supply and demand dictates that, with a supply shortage, prices increase, again leading to higher assessments and higher tax burdens.

All of this is to say that, while increased property tax payments are real, they have increased due to inflationary and market conditions, not because of increases in our tax rate. Unfortunately, the proposals floated to address the issue have been poor. The main proposal would have property taxes based on purchase price, rather than market value, and would artificially limit any market adjustments.  

This system has been tried already — most notably in California. It resulted in a majorly skewed real estate system where homeowners were heavily disincentivized from selling property. Rather than fixing a tax problem, it caused a housing market crisis.  

This proposal also comes with a major big-government red flag: it requires everyone who purchases real estate to publicly disclose the terms of all their real estate purchases. Rather than allow private transactions to remain private, this proposal would require the government to collect sale data on every real estate transaction. I believe that most would much prefer that private transactions remain private, rather than be forced to open them to public view.

An interesting statistic illustrates perhaps the greatest problem with this proposal: It primarily benefits those who do not need the help. Rather than tailor relief to those who are truly struggling with the increase in property taxes, the California-style proposal changes the system for everybody. The Wyoming County Commissioners Association analyzed the data and found that over 40% of the tax payment reductions would go to property owners in Jackson and Teton County. Over 47% of the residential property tax savings would be in Teton County alone. Lincoln County, Teton County’s neighbor to the south, would account for another 13%. This proposal is less a property tax relief proposal, and more a Jackson real estate subsidy.  

Lastly, we must not ignore the impact of this proposal. Property tax is a primary source of income to local government and education. It does not go to the state Legislature to dole out. If there are concerns about the Legislature overspending, this proposal does nothing to address it. Instead, it undercuts the government closest to the people — the cities and counties that use those funds to maintain our streets, sewers and water lines, provide local law enforcement and educate our children. Property taxes are the lifeblood of local government, and this proposal would severely limit their ability to do their needed work.

Fortunately, the Legislature’s Revenue Committee declined to sponsor this proposal, so it will likely come forward as only a private bill, with much lower odds of success. But the question remains, how should we address the problems caused by increased property taxes on our most vulnerable citizens? It is certainly not by subsidizing our most affluent. Instead, the best proposal at this time is the one brought by the governor: an increase to the existing property tax rebate program.  

Wyoming already has a rebate system for those who meet criteria showing that property taxes are a genuine burden. Those are the homeowners we should be focusing on, and the current program allows those who meet low-income thresholds to receive rebates for taxes paid on their property. It is a tailored program with relief targeted to those who actually need it. Rather than knee-jerk reactions, these are the thoughtful solutions we should be pursuing. Let’s hope the Legislature makes the right choice and gives real help to those who actually need it.

(Khale J. Lenhart is a partner at the law firm Hirst Applegate in Cheyenne, where he has practiced since 2011. He is a former chairman of the Laramie County Republican Party.)