Cut taxes, cut services

An initiative gathering signatures around Sweetwater County and Wyoming is designed to lower property taxes, but could also lower funding for local education and county services.

The "People's Initiative to Limit Property Tax in Wyoming through a Homeowner's Property Exemption" is a ballot initiative looking to cut property taxes in half by making 50% of the assessed value of a primary property exempt from property taxation.

However, there are concerns regarding the ways the initiative is being explained and its potential repercussions. Sweetwater County Assessor Dave Divis spoke about the initiative during the public comment section of the November 7 Board of County Commissioners meeting to inform both the board and the public about the initiative and to make sure people understand what they're doing if they choose to sign it.

"There's a lot of misinformation out there on this initiative," Divis said.

He explained that a woman gathering signatures for the initiative was saying that one of the reasons behind it was because the Wyoming legislature is holding onto reserves and the people know better than the legislature what to do with their money.

"She's implying that the revenue that comes from your property taxes goes to the state. It does not," Divis said. "What I want to make sure is clear is that two thirds of your property tax money on your property tax bills goes to schools, local schools. Twelve mills of that goes to the Foundation Fund. That money is taken by the Department of Education and redistributed from the wealthier counties to the poorer counties to help provide education. But that's the only part of that tax dollar that goes to the state in any form. Everything else goes to provide local services."

Divis explained that local school districts receive 25 mills from property taxes, and another portion goes to Western Wyoming Community College. The majority of the rest of the funds goes towards county services, from fixing roads through the Road and Bridge Department to providing public safety through the Sweetwater County Sheriff's Office.

"What people need to understand is they may be reducing the tax that they're paying on their primary residence but they're going to be forsaking services that are in place through local governments if that takes place," Commissioner Robb Slaughter added. "You're basically putting money in one pocket and taking it out of the other if that's the case. Or if that's not the case, at least reducing services in that situation."

"And I think that's the more likely response to this is services will be cut," Divis responded.

Considering the effect of the initiative on the state as a whole, Divis also pointed out that it would impact other counties even more drastically. Mineral counties like Sweetwater that can rely on mineral valuations for a portion of their revenue might be able to handle the loss of funds from the initiative for a while, Divis said. However, other counties that don't have mineral resources and smaller counties around the state would lose a large portion of their funding. Divis explained that some counties rely on property taxes for 50-60% of their total valuation.

"So take that out of their equation, and how do they function?" he asked.

Divis acknowledged that people around Wyoming are both mad about rising property tax rates and frustrated by the legislature holding onto reserves in the "rainy day" fund, but he again pointed out that these situations aren't necessarily connected in the way people think.

"I think the people signing the initiative are thinking their local property tax dollars are going to the state, and again, that's just not true," Divis said.

He also pointed out that the initiative was a "knee-jerk reaction" to the legislature not doing much to address property taxes, but said he thinks it was "pulled out of the air" by a few individuals and isn't a good solution.

"I don't think they thought it through well enough," Divis said. "It's a really poor tax policy."

Divis discussed several potential downfalls of the initiative, including the fact that it has a short residency requirement compared to other exemptions and that it's a "one size fits all" policy.

Divis explained that the initiative would allow people to receive an exemption if they've been in their home for one year. Contrasted with other exemptions that are in place, this is a relatively short time period. Divis pointed out that an exemption for veterans requires being a Wyoming resident for three years and the property tax refund program requires being a resident for five years.

"I think it's disproportionately helping those people who are coming in from out of state who are buying the high-dollar value homes, and I don't think that's the intent of what we're looking at," Commissioner Slaughter said.

Divis also explained that it's the people coming into the state paying "exorbitant" prices for property that are driving the value up in the first place.

The initiative also would favor the people who pay more for property since it's a "one size fits all" policy. For comparison, a $500,000 house would receive a $1,700 exemption, while a $200,000 would get about $680, according to Divis.

"So in that situation you're giving a bigger adjustment to someone in a much more valuable property who probably doesn't need the help," he said. "I would argue the person in the smaller house with the lower value probably needs more help than the person in the big house."

When it comes to finding better solutions to rising property taxes, Divis said the County Assessors Association has been involved in a tax cap project that would cap the increases in residential property values. While the number for the cap hasn't been determined yet, a recently proposed number was 5%. While Sweetwater County faced an 8.5% residential property tax increase from 22 to 23, this was the lowest increase in the state. Lincoln County, one of the more extreme examples, had increases of 14%, 35% and 28% in the last three years.

"What we're trying to do with this cap legislation is just limit that," Divis explained.

However, any changes like the cap project will be dependent on a constitutional amendment going through in the next general election to change the way residential properties are categorized.

While much of the discussion around legislative changes will continue into the future, Divis hoped to at least provide more clarity on the People's Initiative to Limit Property Tax and its potential effects.

"I'm not telling people what to do, but just know the ramifications," he said.