Bill Proposes Massive Overhaul To Base Property Taxes On Home Price, Not Valuation

Wyoming Department of Revenue Director Brenda Henson has little confidence her agency could manage a proposed massive overhaul to how the state determines property taxes, basing it on the purchase price of a home instead of assessed valuation.

She also doesn’t believe it would provide any tax relief and isn’t fair.

“This bill is about changing the basis of tax for selected properties,” she said. “It is not tax relief, and it should not be considered tax relief.”

Henson was speaking on House Bill 282, legislation that would base property taxes off the acquisition value of a home, similar to how automobile registration renewals are determined. The Senate Revenue Committee considered the bill Friday, but did not take a vote on it.

The idea of basing property taxes off acquisition value has been considered at the Legislature every year since 2022, but seems to have gained the most momentum in this year’s session thanks to the Wyoming Freedom Caucus majority in the House, which passed HB 282 on a 35-25 vote Feb. 6.

Those who support the measure argue that it would bring a more fair and predictable structure to Wyoming’s tax system. Opponents say its unconstitutional and would be extremely difficult to manage. 

Principle Not Practicality

California is the only state in the country to base home property taxes off acquisition value. The Idaho Legislature considered a similar proposal in 2023, but rejected it when concerns arose about how it would be implemented. 

Concerns about the Wyoming bill’s constitutionality and a lack of clear road to implement the new assessment method took center stage Friday.

Henson said it will be a nightmare for her department to implement and leaves more questions than answers about how assessors would be able to get the necessary information to correctly assess one’s property.

But those like state Sen. Troy McKeown, R-Gillette, who supports the bill said the current tax structure is already unconstitutional and that it needs reforming.

Some committee members like Sen. Bob Ide, R-Casper, have criticized property taxes as inherently “immoral.” Others see the current property tax structure, driven by year-by-year assessments of a home, as amounting to unrealized capital gains. 

“We’re looking for a system to protect the taxpayers,” he said. “I applaud the good representative for bringing this. We got to look at someone not getting taxed out of their house.”

Former state legislator Mark Jennings went further and accused those who oppose the bill of being “liberal politicians and bureaucrats.” 

“This is about the people and everything that you’ve heard up here has been from the bureaucracy,” Jennings said of the opposition.

How It Would Work

In 2023, the Legislature initiated a study on acquisition value-based taxation. When the study didn’t return the glowing report that supporters of the tax change were looking for, they quickly dismissed its legitimacy.

“It’s been identified for them what they need to do and they just haven’t,” Henson told Cowboy State Daily

Rep. Tony Locke, R-Casper, the sponsor of HB 282, believes that acquisition value represents the true fair market value of a home.

“The way I connect fair market value back to acquisition value, a true arm’s length transaction is acquisition value,” Locke said.

If the bill passes into law, it would not go into effect until 2026.

Homes bought prior to 2020 would be assessed based on their fair market value on Jan. 1, 2019. Any homes bought after 2019 would be brought back to the baseline fair market value the year it was purchased, with a 2% yearly tax escalator applied moving forward, which would also be applied to all homes. 

The biggest challenge for assessors in implementing the bill would be determining the acquisition value of homes. Wyoming is a non-disclosure state for home sales, but a few elements of the bill attempt to counteract this. 

Henson pointed out that by virtue of reporting the purchase price of one’s home for taxation purposes, Wyoming would no longer be a non-disclosure state.

Locke also said that acquisition value would almost always be used as base value, except if a preponderance of evidence existed showing the purchase price was not in the range of fair market value. What exactly would be considered acquisition value hasn’t been laid out in the bill.

Another potential flaw Henson pointed out with the bill is the fact that if someone does a renovation on a home, but it doesn’t increase the square footage, it won’t be factored into the value of a home. She believes this will create large disparities between true home values in the long term.

Constitutional Questions

The state Constitution asserts that all taxes in Wyoming must be assessed uniformly and fairly.

Wyoming Board of Equalization Chair Martin Hardsocg mentioned the 1995 Wyoming Supeme Court case between Jan Charles Gray, father of Secretary of State Chuck Gray, and the Wyoming State Board of Equalization. The focus of Gray’s argument in this case was that actual sales price should be used to determine fair market value for taxation. 

The court disagreed and determined that property must be uniformly valued in Wyoming, so reliance on an actual sales price in lieu of appraisal methods may lead to discrimination. 

Hardsocg firmly believes HB 282 is unconstitutional and said it gives preferential treatment to people who are long time homeowners over new homeowners. 

“As a taxpayer, would you prefer a system where all property is appraised using accurate property characteristics, updated construction costs, depreciation and appreciation applied using industry-accepted appraisal methodology, or would you prefer an assessment schedule?” he questioned.

McKeown remained unconvinced.

“We like the Constitution when we like it, but we don’t like it when we don’t like it,” he said. “If I assign a larger value to something I own that I haven’t sold, and I realize the gain on that, that’s unrealized.”

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