Wyoming Property-Sales Tax Swap Barely Passes After Drama-Filled House Debate

Who would’ve thought President George Washington, former Gov. Stanley Hathaway, women’s suffrage and American patriotism could all have roles in the escalating debate over Wyoming property tax relief?

Some state legislators who support House Bill 203 believe so, bringing up these historical examples during an emotional, nearly 90-minute debate Friday on Republican Rep. Steve Harshman’s plan that would immediately remove property taxes for 97% of Wyoming residents and replace the lost revenue with a 2% jump in the state sales tax.

After that debate, HB 203 passed its first reading in the House by a razor-thin 31-29 margin. The bill has truly split the room, with Democrats, Wyoming Caucus Republicans and social-conservative Wyoming Freedom Caucus Republicans all voting for and against it.

American History And ‘Anguish’

Many of those arguing in support of the bill leaned on patriotic themes and historical references to convince their colleagues.

Some of those who spoke against the bill like Reps. Reuben Tarver, R-Gillette, Ken Pendergraft, R-Sheridan, and Liz Storer, D-Jackson, said it’s being rolled out too fast.

Tarver said businesses in northern Wyoming could be negatively impacted by the sales tax increase as customers could become more likely to travel across the border to buy products in Montana where there is no sales tax.

Harshman, R-Casper, the lead sponsor of the bill, wound his way all back to the American Revolution and Wyoming’s founding. He argued that those who say the proposal should be studied more over the upcoming interim session before implementing a measure that would cut property tax revenue by $459 million by the time it's fully running aren't as courageous as Washington.

“He didn’t stick his toe in the Delaware (River) and say, ‘It’s too cold, I’m going to study it,’” Harshman said.

Rep. Cyrus Western, R-Big Horn, was possibly even more colorful in his advocacy for the bill, which would make Wyoming the only state with almost no residential property taxes for most property owners. Although he admitted the bill isn’t perfect, he urged legislators to consider what it symbolizes.

“When I look up into the Wyoming night sky, I see no indication that a higher force will come and save us from ourselves,” he said. “The thought of a Wyoming future that is handcuffed, unable to bring about our best selves and achieve what we are fully capable of, is one that overwhelms my soul with anguish.”

Dropping The Bomb

After Harshman brought up Wyoming suffrage, Rep. Rachel Rodriguez-Williams, R-Cody, who later voted in support of the bill, decided she had heard enough hyperbole.

“Mr. Chairman, we’re debating a bill, not receiving a history lesson on the State Capitol,” she said.

After Harshman was finished, Rep. Barry Crago, R-Buffalo, asked if anyone else wanted to give a history lesson, to which the body offered a definitive “no.”

The phrase “nuclear bomb” also was used to describe the bill in both positive and negative terms.

Rep. Lloyd Larsen, R-Lander, drew a comparison to food when describing his growing appreciation for the bill.

“It’s kind of an acquired taste, and pretty soon it tastes pretty darn good,” he said.

But after more than an hour of candid discussion, the body language around the House floor grew visibly weary, with many slumped shoulders and furrowed brows. It was likely the result of a long-winded discussion capping off an already long second week of the budget session.

After an initial hand count vote resulted in a 29-29 tie, a second vote was taken by roll call. After all the votes were tallied for a second time, Reps. Landon Brown, R-Cheyenne, and JT Larson, R-Rock Springs, changed their “nay” votes to “aye.”

Mineral Concerns

One of the biggest points of opposition to the bill is the sheer size of its impact and the many questions that remain unanswered about how well it will work. A major issue is how it will affect people in Wyoming who aren’t homeowners. These people won’t get the benefit of having to not pay a property tax, but would have to pay more sales tax on everything they buy.

Rep. Clark Stith, R-Rock Springs, expressed concern that the tax refund offered to mineral companies through HB 203 won’t come back around because local taxes will be raised higher than current levels.

Along with the property tax cut, a tax refund program using leftover money for anyone who pays both severance taxes and sales or use taxes in Wyoming also will be offered.

“Because there’s not enough money to go around, this refund to the minerals industry won’t happen,” he said.

Mountain View Republican Rep. Jon Conrad, who works in the trona industry, expressed concerns that it will cause cash-flow problems for energy companies while waiting for their refund checks.

Stith also said the bill could allow special districts to raise their mill levy tax rates on taxpayers without repercussion because it would no longer be their taxpayers paying for them.

“It’s something called the principle of using other people’s money,” he said. “What keeps a lid on taxes is the landowners have to pay it themselves.”

Harshman described this as a straw man argument since most special districts are already taxing the maximum available rate.

“I really appreciate you bringing that strawman, I hope you lit on fire and he’s burning right here,” he said.

An amendment was successfully added to the bill on Friday clarifying that oil and gas pipeline companies operating in Wyoming can qualify for the refund.

Advances — Barely

That HB 203 struggled to find a majority of support at this early stage isn’t a positive sign for its chances of passing into law. The legislation still must get through two more readings in the House before it can move on to the Senate for consideration.

Rep. Mike Yin, D-Jackson, said he plans to bring an amendment on second reading that would add a three-year sunset date for the legislation. An amendment brought by Rep. Dave Zwonitzer, R-Cheyenne, setting back the start for the bill to 2025, failed.

Leo Wolfson can be reached at leo@cowboystatedaily.com.