The Legislature’s Joint Revenue Committee narrowly rejected legislation on Monday that would have implemented an acquisition value-based property tax system in Wyoming to counter soaring home values.
It was the committee’s final meeting ahead of the 2024 budget session and a conclusion to an off-season mostly defined by the debate over how to address rising property taxes. Since homes in Wyoming are taxed according to value, surging home values have prompted higher property taxes for many residents. That’s been especially hard for residents on a fixed income, such as retirees or those living with a disability.
Some legislators sought to change that equation via a transition to the acquisition value-based tax system, which is used exclusively in California. Instead of relying on value, that system taxes homes according to what the owner paid to purchase the property.
The Wyoming Republican Party encouraged its members to attend Monday’s meeting, while the hard-line Freedom Caucus lauded the legislation.
However, a state-funded study released in September found that moving to an acquisition value-based system could dry up revenue and violate the Wyoming Constitution. In response, the committee drafted two bills in October: one to amend the constitution, the other to change the property tax system — not just residential — to acquisition value.
Concerns persisted on Monday, including the proposed system’s fiscal impact. A Legislative Service Office memo estimated a revenue loss of $153 million in the first tax year of implementation.
The Wyoming County Assessors Association “did not have a chance to meet and fully vet the draft” to implement the system, Teton County Assessor Melissa Shinkle told the committee. “However, our legislative committee of assessors did meet and found several things that would potentially make this bill very difficult, if not impossible, to administer.”
The committee voted 7-7 to adopt the implementation bill, and without a majority, it failed. Subsequently, the bill to amend the constitution was tabled.
Concerns, study and reception
Converse County Assessor Dixie Huxtable told the committee a major concern was the ambiguity surrounding how her office would assess a newly built home on a recently purchased plot of undeveloped land.
“They don’t buy the house. They bought the land or they got the land given to them and there’s a house on it [now]. Is the intent of this legislation that it would never be taxed until it sold?” Huxtable asked. “I’ll do it whichever way you all put into law, but I need that side rail. I need that clarification.”
Huxtable also pointed to Wyoming’s status as a non-disclosure state, meaning the sales price of real estate is disclosed to county assessors, but not to the public. The state-funded study flagged that particular issue as the “greatest challenge to implement an acquisition value based-system.”
“We anticipate a substantial amount of pushback from taxpayers on the requirement to disclose sale prices,” the study reported.
The study was the result of legislation passed earlier this year. Sponsored by Rep. Mark Jennings (R-Sheridan) and mostly other Freedom Caucus members, the bill allocated $50,000 for the study, which was awarded through a bidding process to TEAM Consulting, LLC, a Florida-based group of assessment and appraisal experts. The company was the only one to apply.
Ed Crapo and Robert Lee, two of TEAM’s members, presented the study to the committee last month, but not to an entirely warm welcome. Sen. Troy McKeown (R-Gillette) called the report “skewed” and Sen. Bob Ide (R-Casper) said it was “biased against doing acquisition value implementation.” Both lawmakers support an acquisition value-based system.
Freedom Caucus Chairman Rep. John Bear (R-Gillette) criticized the researchers for not seeking out the feedback of individual taxpayers. The bill did not instruct the researchers to do so, TEAM representatives pushed back, noting that everyone they spoke to for the report is technically a taxpayer, including individuals representing the Wyoming Taxpayers Association, the Wyoming Realtors Association and the Wyoming Board of Equalization.
“Everybody we interviewed was an individual taxpayer,” Crapo said. “We interviewed people that were standing in their homes, talking to us.”
Jennings, not a member of the committee, also spoke at the October meeting, where he publicly disclosed for the first time why he sponsored the bill to fund the study.
The worst-case scenario for the state funding a $50,000 study, Jennings said, “was to see how the opposition would fight the switch,” while he said his “best hope” was “we would avoid some of the pitfalls of Prop 13 in California.”
Proposition 13 was the 1978 amendment to California’s Constitution to implement an acquisition value-based property tax system.
At Monday’s meeting, Ide, a commercial real estate developer and landlord for the state, rallied for the two bills.
“We all recognize there is landmines out there. Change is messy. Status quo isn’t working right now,” Ide said. “The taxpayers are getting taken to the woodshed and the government agencies — schools, towns and counties — it appears they’re looking like they’re getting pretty fat right now.”
But it was too drastic of a change with too many unknowns for Sen. Stephan Pappas (R-Cheyenne).
“I’m not opposed to radical changes, but I am opposed to radical changes when we don’t know what we’re doing,” he said. “Frankly, I don’t think this committee or anyone in the state yet knows what we’re doing.”
While the committee won’t be sponsoring the legislation, an individual lawmaker may draft something similar to introduce as a private bill during the upcoming session. However, committee bills are historically much more likely to succeed than those sponsored by an individual lawmaker.
The 2024 budget session kicks off Feb. 12.