Possible new tax tier questionedWritten by Jennifer Womack
HJ3 would bring a ballot initiative before the voters allowing them to determine whether or not to create a fourth tax tier specifically for residential property. It’s part of a larger effort to bring property tax relief to some Wyomingites. As of Feb. 20 the bill had earned the necessary vote for introduction, met approval in the Senate Appropriations and Revenue committees and been placed on General File in the House.
“Under the current three tier system,” says Rocky Mountain Farmers Union’s Scott Zimmerman, “all other property real and personal, which includes residential, commercial and agricultural are in the third tier. By separating any into a new tier, it would allow for mischief.” For agriculture, he says an opportunity for significant tax increases does exist if another tier is created.
As it currently stands, agricultural property has a taxable value at the same rate as residential because of their existence in the same tier. If voters approved creation of a fourth tier, separate residential property would have a taxable value rate different than that charged on commercial and agricultural property.
“It makes agricultural and commercial property a low hanging branch,” says Wyoming Farm Bureau Executive Vice President Ken Hamilton. “They can raise taxes on those entities and keep it lower for residential.”
“One of the reasons we’ve tried to keep ourselves hooked to residential is there’s probably not a great rush to increase property taxes on residential,” says Wyoming Wool Growers Executive Vice President Bryce Reece. “As long as we’re tied to residential we have some protection.”
According to Wyoming Stock Growers Association Executive Vice President Jim Magagna, “That was a long, hard-fought battle to keep those together. Ag’s belief is that by being tied to residential that in order to raise taxes the legislature would have to deal with residents, the people who own homes and make up the vast majority.”
The agricultural lobbyists are quick to admit there are individuals in need of tax relief, but they find the legislative approaches more appealing than amending the Wyoming Constitution. If the issue does make it to the ballot it will be a tough sell for those who oppose the measure, as voters would essentially be asked to vote against the opportunity to see decreased property taxes.
“There are ways to go about getting tax relief to the people who need it,” says Zimmerman, “but I’m leery of opening the Constitution for the express purpose of getting them relief.” Existing programs, like the Homeowner’s Tax Credit being renewed via HB92, is one such option he notes. “They’re broadening the opportunity in that,” says Zimmerman, who also notes a veteran’s tax credit. “Until these changes are put into effect we don’t know if there are individuals who aren’t being helped.”
SF79 carried by Senator Charlie Scott (R-Casper) would leave the tier system alone, but cut the assessment rate across the board. As it stands, the legislation calls for a reduction from 9.5 percent to 7.5 percent on residential and agricultural property. Industrial property would be taxed at 10.5 percent. Wyoming’s Constitution doesn’t allow for more than a four percent margin between industrial and residential. The bill is on General File in the Senate.
“Both from an agricultural and a public policy standpoint,” says Hamilton of creating a new tier, “this isn’t good tax policy.” When the subject was reviewed in 1988 he says the Legislature was told about other states with around 20 tiers. “Any time you change tax policy where you set up the situation to have classes and sub-classes you’re starting toward the path of poor public policy in my opinion.”