‘We have exceeded our bounds’: Case questions constitutionality of long-term homeowners property tax exemption

(Cheyenne, WY) – Wyoming Sen. Cale Case, R-Lander, questioned the constitutionality of Wyoming’s new property tax exemption for long-term homeowners during a legislative committee meeting last week. 

“I’m of the opinion that the bill we passed last year was not constitutional by our state constitution,” he said during a Senate Revenue Committee meeting Jan. 15. “I do hope it’s litigated. It needs to be litigated. Because we have exceeded our bounds.”

Mockler letter

A July 2024 letter from Wyoming State Board of Equalization Board Member E. Jayne Mockler to Wyoming Gov. Mark Gordon provides a “pathway” for that potential constitutional challenge, Case said.

In the letter, Mockler pointed to the “constitutional requirement that properties in general be taxed at their full market value” and that “all taxation shall be equal and uniform within each class” (Wyoming Constitution, Article 15, Section 11).

“Uniform taxation is no longer possible (under) the exemptions and refunds passed by the 2024 Legislature,” Mockler said, explaining her decision to vote against certifying 2024 values last year. “The Constitution does not empower the Legislature to ‘work around’ the full market value and assessment rate within one class of property to provide preferential relief to any taxpayer group.”

The Constitution does allow the Legislature to enact some property exemptions, Mockler noted, but that authority is “quite narrow,” as it’s limited to “the property of the United States, the state, counties, cities, towns, school districts and municipal corporations, when used primarily for a governmental purpose, and public libraries, lots with the buildings thereon used exclusively for religious worship, church parsonages, church schools and public cemeteries … and such other property as the legislature may by general law provide” (Wyoming Constitution, Article 15, Section 12).

The word “such” in that phrase indicates “that only properties that are similar in nature to the properties on the list can be exempted from taxation,” Mockler said.

“Thus, the Legislature has no authority to render meaningless the ‘full valuation’ requirement through a massive exemption applied to select properties, when the Constitution intended that exemptions apply narrowly, and for limited purposes,” she said. “Absent constitutional reform, I am convinced the changes enacted during the last legislative session, and many still to be considered, jeopardize Wyoming’s equitable and uniform system for valuing, assessing, and taxing property.”

Further, Mockler said, “these ‘work arounds’ undermine the Constitution’s intent to provide a predictable funding source for local government, schools, the state’s charitable institutions, and payment of any state debt.”

Wyoming County Commissioners Association Executive Director Jeremiah Rieman spoke about the “increasing and unknown fiscal impact” of the long-term homeowners property tax exemption when he testified in front of the Senate Revenue Committee last week. 

The 2024 bill authorizing the exemption indicated the change would decrease residential property taxes by about $10.7 million in tax year 2025, Rieman said, but “based on the number of applications that have been submitted, the Department (of Revenue) has indicated that that impact could perhaps be as large as twice as large and could go up potentially based on applications that come in over the next few months.” 

“Local government revenues (and) the services that we can provide from those revenues are being impacted, and to a degree we don’t know about quite yet, because we don’t have a firm grasp of the fiscal impact of this legislation,” he said, suggesting that, if the long-term homeowners exemption is extended past 2027, lawmakers “might consider some sort of backfill, particularly for those jurisdictions that might be hit the hardest.”

Rieman also suggested lawmakers consider incorporating a “financial hardship” condition around eligibility for the long-term homeowner’s exemption in order to reduce the impact on local governments – and “because not everybody needs this.”

For example, he said, “I have a commissioner (who) qualifies for the long-term homeowner’s exemption, but she’ll share the story of the single father across the street from her … who is doing his darndest to make it day-to-day and doesn’t qualify for the property tax refund program.”

“She (says), ‘Why doesn’t he get that benefit? Why do I just get it because I was here paying for 25 years? He’s the one that needs it more,’” Rieman said. 

Similarly, Rieman said he and his wife are “on the verge of having paid property taxes in this state for 25 years,” but because they are younger than 65, they don’t qualify for the exemption.

Case said the property tax exemption for long-term homeowners could be subject to an “equal protection argument” (Wyoming Constitution, Article 1, Section 3) because it “creates these differences between homeowners in different situations,” and Rieman agreed that the “fair and equitable portion of the Constitution” could be applied to “my own personal situation of being a taxpayer but not getting fair and equitable treatment in the exemption side of it.”

“Another part of our Constitution allows for necessary support of the poor,” Case said, referring to Article 16, Section 6. “But I don’t think that there’s any evidence that a person (who is at least) 65, who has lived in the house and probably has it paid for, is poor and comes under that part of the constitution. There’s no finding.”

Revisions

The Senate Revenue Committee voted 3-2 last week to approve Senate File 67, which would remove the sunset date for the long-term homeowners exemption and allow property owners to qualify for the relief as long as they live in their homes for at least six months out of the year – as opposed to the original eight months.

Case was one of the two senators who voted “no” to the bill.

“The original law was unconstitutional, (so) this law that modifies it remains unconstitutional in my mind, and I can’t in good faith vote for it,” he said.

SF 67 will now be considered on the Senate Floor, where Wyoming Sen. Troy McKeown, R-Gillette, said lawmakers could “work on a couple of amendments if we’re really concerned about the constitutionality” of the long-term homeowner’s property tax exemption.