Governor proposes reactivation of Homestead Tax Exemption
Proposed for short-term property tax relief - Would cost State $29-56 million in revenue
by Governor Freudenthal’s office
August 28, 2008
(Cheyenne) - To help Wyoming homeowners who are struggling with the increasing costs of food, gasoline and home heating fuel, Gov. Dave Freudenthal has proposed the reactivation of the homestead property tax exemption as a means for short-term relief. Last year the Governor’s targeted proposal to offer tax relief to Wyoming seniors did not gain support in the Wyoming Legislature.
In a letter to Sen. Jim Anderson and Rep. Rodney "Pete" Anderson, chairmen of the Wyoming Legislature’s Joint Revenue Committee, Freudenthal said he aimed to submit a proposal this year that would offer between $184 and $291 in property tax relief for Wyoming homeowners.
"The Wyoming Legislature has not been particularly interested in property tax relief, but I am going to try again and have suggested that we consider a reactivation of the homestead exemption," he said. "I look forward to working with the committee on this along with other suggestions."
The homestead exemption was originally passed in 1979 as a tax exemption and then modified to a tax credit in 1980. "Both the Attorney General and LSO have suggested that given the 1988 constitutional amendment creating the tier system, it may be advisable to recast the credit as a true exemption and stay within the clear language of Article 15 § 12 of the Wyoming Constitution," Freudenthal said.
Based on data developed by the Department of Revenue, an exemption of $3,000 or $5,000 of assessed value for an owner occupied residence would cost the State $29 or $56 million respectively. This would produce an average of $184 or $291 in tax relief per owner occupied residence.
As a long-term solution, the Governor suggested that the Legislature might consider a proposal offered by Representative Simpson last session to create a separate constitutional tier for residences with a restriction on the amount of separation between the residential assessment ratio and assessment ratio for the "other property" class.
"This would allow future legislatures the opportunity to provide permanent relief for residential property taxpayers. Since we have both the 2009 and 2010 sessions to consider this option, we have time for discussion of the pros and cons of this suggestion," he said.
The text of the Governor’s letter follows.
August 21, 2008
Senator Jim Anderson, Chairman
Joint Revenue Committee
92 Running Dutchman Road
Glenrock, WY 82637
Rep. Rodney "Pete" Anderson, Chairman
Joint Revenue Committee
P O Box 930
Pine Bluffs, WY 82082
Gentlemen,
We have from time to time talked about various property tax relief measures. Generally, I talk, you politely listen and then the proposals die a rather unceremonious death upstairs. But hope tends to overcome experience, so I write again to offer another suggestion. Rather than argue about whether this is a legislative or gubernatorial proposal, perhaps we can arrive at something upon which we agree - and then give the credit to the citizens of Wyoming.
Last year, I prepared a targeted property tax relief proposal. One never knows for sure why it was rejected, but part of the argument seemed to be that it was not broad enough. We had narrowed the tax relief proposal in an effort to target the most severely impacted people and to keep the cost of "backfill" funding to local governments relatively modest.
Since we cannot submit a constitutional amendment to the voters until 2010, we have limited near term options available. The most viable option for broad-based residential property tax relief is what is popularly known as the Homestead Exemption.
As you know, it is not really an exemption but a property tax credit found in the existing statutes, at W.S. 39-13-109(d)(i). It was originally passed in 1979 as an exemption mechanism and then modified to a tax credit in 1980. Both the Attorney General and LSO (Dave Gruver) have suggested that given the 1988 constitutional amendment creating the tier system, it may be advisable to recast the credit as a true exemption and stay within the clear language of Article 15 § 12 of the Wyoming Constitution. Based on data developed by the Department of Revenue, we can exempt $3,000 or $5,000 of assessed value for an owner occupied residence for a cost to the State of $29 or $56 million respectively. This produces an average of $184 or $291 in tax relief per owner occupied residence. I have attached a copy of the charts previously submitted to you by the Department of Revenue documenting their calculations. A final decision depends on the revenue projections.
As a long-term solution, we may want to consider a proposal offered by Representative Simpson last session to create a separate constitutional tier for residences with a restriction on the amount of separation between the residential assessment ratio and assessment ratio for the "other property" class. This would allow future legislatures the opportunity to provide permanent relief for residential property taxpayers. Since we have both the 2009 and 2010 sessions to consider this option, we have time for discussion of the pros and cons of this suggestion.
I look forward to discussing these thoughts with you. As you are all keenly aware, Wyoming’s homeowners have voiced their concern and expect a response.
Best regards,
Dave Freudenthal
Governor
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