Property tax cuts will cost thousands

Residents can now prepare for a cut on their property taxes, while local services and entities prepare for a cut to their budgets.

After months of discussion regarding what changes could affect property taxes this year, and how those changes could affect local funding, Green River and Sweetwater County now have a better idea what to expect. One of the main bills affecting property tax, Senate File 0069, was passed by the legislature and signed by Governor Mark Gordon with a 25% cut to property taxes. This change will mean lower property tax bills for homeowners, as well as thousands of dollars worth of revenue loss for the county, cities, school districts, and special districts.

The Wyoming Legislature discussed multiple bills that would impact property taxes, but SF0069 was the biggest change, and one of the most debated. Originally proposing a 50% cut, the bill passed both the Senate and the House before being moved to a Joint Conference Committee. When it left the committee and moved to Governor Gordon's desk, the bill's proposed cut had moved down to 25%. The Governor signed the bill into law, saying that it "provides tax relief without transferring the burden to our core energy industry," and adding that "the practical impacts of this legislation will need to be navigated by our cities, counties, special districts and citizens."

The impacts of the cut will be felt by the entities that receive revenue from property taxes, which are all local.

"None of this goes to the state," Sweetwater County Assessor Dave Divis reiterated. "This all goes to local services. So when we start cutting this revenue, we're going to have to start cutting some services."

The cuts will be noticeable, particularly since the majority of entities facing them have no other way to make up that money.

"There's no backfill on that in any way, shape or form," Divis said, explaining the final version of the bill doesn't provide a way for the revenue loss to be covered from other sources. "All the local entities are going to do without."

Divis pointed out that since this bill only affects residential properties, those that will be hit hardest are the cities and towns that don't have industrial or mineral value.

Using property values from last year, since this year's values aren't set yet, Assessor Divis calculated the estimated revenue loss that different entities will face. The City of Green River will lose approximately $190,000, while the City of Rock Springs will lose over $355,000. The county itself will lose about $935,000 from its 12 mills, which is used to fund county offices, the sheriff's office, the Sweetwater Events Complex, the Sweetwater County Library System, Southwest Counseling, the museums, the senior centers, the YWCA, and other local programs.

Other entities that are impacted by cuts to property taxes are the local special districts, such as fire districts, water and sewer districts, and others. This includes Castle Rock Hospital District, which will lose approximately $75,000.

Divis explained that this cut to Castle Rock could mean the difference of whether or not the hospital district can offer new special services, or give cost of living raises to their employees, or work with part-time nursing students, all without dipping into their reserves.

"It is going to make a difference," Divis said. "They may have to really look at their budget and decide where they can legitimately come up with $75,000 that they just aren't going to get."

The school districts and local education will also feel the impact of revenue loss from the cut. Sweetwater County School District No. 2 will lose over $1 million, while School District No. 1 will lose $2.4 million. Western Wyoming Community College will also be down approximately $429,000.

One point that was brought up during discussions about property tax cuts was the fact that Wyoming is required by law to fund education. This means that, theoretically, school districts shouldn't feel as big of a hit. However, the money used to help fund education across the state also comes from taxes. Divis explained that the school districts have historically been backfilled by the Foundation Fund, which is paid into by the districts out of the mills, or portions of taxes, they receive. For example, Sweetwater County School District No. 2 has 44 mills going to education, but 12 of those mills go to the Foundation Fund. Usually the wealthier counties, including mineral counties like Sweetwater, pay more into the fund.

"It all gets put in a pot, and then that money is distributed back to the school districts," Divis explained. "Really it's the haves helping out the have nots."

The question now is how long the Foundation Fund can stay funded, especially if districts are receiving less in tax revenue.

"As we start applying these exemptions, at what point does that Foundation Fund not gain in size but it starts losing its balance?" Divis asked.

The Assessor pointed out that there was discussion among legislators during this year's session about this issue, with some raising the concern that the fund could hit a trigger point where it can no longer be backfilled, and some legislators believing Wyoming could be only a few years away from that point.

"It's not going to happen today and it's not going to happen tomorrow, but if we get on this path and we get to the point where we hit that trigger, then somebody in the legislature's got to make a tough decision," Divis said.

For now, school districts are among the entities impacted by SF0069. The way the bill works is it exempts 25% up to the first one million dollars of a residential structure and land, Divis explained. This year, all all single-family residential structures and residential land will receive the exemption automatically. This choice was made largely for the sake of saving time. Next year, however, those wishing to receive the exemption will have to go through some sort of application process in order to confirm that properties are owner-occupied.

"Statewide, there'll be about 170,000 applications for local assessors to process," Divis noted. "It's a big lift, and the assessors will get it done."

Other bills affecting property tax were also debated in this year's legislative session, with some passing and some not making it through. Some of the bills that passed and will have a small impact or reduction for the city, according to Green River City Administrator Reed Clevenger, are SF48 (Business Property Exemption), SF49 (Tangible personal Property – Index and Depreciation) and SF81 (Tax Exemption – Property Owned by the State), although the last is expected to be negligible, according to Clevenger.

"As far as other property tax bills, they got caught up in the process," Clevenger said. "We believe that there were so many bills with varying impacts and provisions that a full understanding of impacts was difficult for legislators to understand."

The Senate and House also seemed to have different positions on whether or not bills should be backfilled, according to Clevenger, which he believes led to some of the bills dying.

"Another concern were the few programs from last session that passed and getting a better understanding of those impacts of which haven't fully been realized yet," Clevenger added. "There was a desire to get a picture of revenue reductions from these past bills and what was passed to date this time around."

Several programs and exemptions for property taxes are already in place, according to Assessor Divis. There is the Long Term Homeowners Exemption passed last year, which provides for a 50% cut to those who are at least 65 years old, live in their homes for at least eight months of the year, and have been paying property taxes in Wyoming for at least 25 years. The Veterans Exemption was doubled this year, going from $3,000 to $6,000. There is also a 4% cap on property tax increases that, as of this year, applies to both residential structures and land. And the Property Tax Refund Program was funded again this year. This program provides refund based on income, but isn't just for those with low incomes, Divis pointed out, as the median household income in Sweetwater County to qualify allows you to make up to $111,650.

The deadline to apply for the Long Term Homeowners Exemption and the Veterans Exemption is the fourth Monday in May, which this year is May 26. The deadline to apply for the Property Tax Refund Program is June 2. The 25% exemption will be applied automatically by the Assessor's Office this year, and the 4% cap also applies automatically.

"So there's really a lot of relief that's going on," Divis said.