Governor Proposes Property Tax Cut

OFFICE OF GOVERNOR DAVE FREUDENTHAL
October 20, 2006

CHEYENNE, Wyo. - In light of significantly increased revenue projections that make about $708 million more available to the general fund and budget reserve account in the next legislative session than the $105 million that was estimated at the end of the last session, Gov. Dave Freudenthal is proposing a one-year property tax holiday, suspending the collection of 12 "education" mills currently imposed by the state.

Freudenthal had originally put forward the idea in August, but said Friday's report from the Consensus Revenue Estimating Group moves the tax reduction proposal to the front burner for the upcoming legislative session. Along with his push to make permanent the sales tax cut on food, the move would mean substantial tax relief for Wyoming residents and businesses.

"One of the consequences of the economic boom that Wyoming has been enjoying the last few years is that property values continue to climb all over the state," Freudenthal said. "That means property taxes also keep climbing, which is a strain on homeowners and small businesses. It's a strain that it looks like the state may be able to help alleviate."

The suspension of the 12 mills for a year would result in total savings to taxpayers of nearly $250 million. A homeowner whose house is valued at $100,000 would see a reduction of $114 per year in property taxes. Taxes on a $200,000 house would be reduced by $228 per year. A mill is a tenth of a cent and is typically how property taxes are measured.

Freudenthal proposed replacing the education revenue with general funds. According to the latest fiscal profile, the state will have approximately $812.5 million in available revenue in the 2007 legislative general session. That includes increases in mineral revenue projections, sales and use tax revenue projections and investment income revenue projections. Although natural gas prices are generally down, the increase in production in the state has more than made up for that drop.

Still, Freudenthal continued to sound the note of caution he has expressed in the budget hearings that began earlier this month with state agencies. Increases in personnel and other budget proposals that will require additional sustained spending in the long term, he said, will have a difficult time gaining his approval.

"We can support long-term savings and a rainy-day fund, highways, Hathaway scholarships, local governments and strong infrastructure and still provide welcome tax relief to our citizens - if we continue to hold the line on spending," Freudenthal said. "I am hoping the Legislature will join me in helping Wyoming's residents and businesses hold on to a little more of their hard-earned money."

The governor's budget recommendations, now being formulated, are due to the Legislature Dec. 1.