- Wyoming's property tax structure has been in place since before statehood.

This year, in the Wyoming legislature, however, there was a bill to essentially do away with it almost entirely.

The sponsor, Representative Steve Harshman, saw the bill go down to defeat, but he's pledged to keep trying.

I'm Steve Peck of Wyoming PBS.

Join us for Capital Outlook.

This program is supported in part by a grant from the BNSF Railway Foundation dedicated to improving the general welfare and quality of life in communities throughout the BNSF railway service area.

Proud to support Wyoming, PBS and by the members of Wyoming PBS.

Thank you for your support.

We're here today with State Representative Steve Harshman, House District 37 of Casper.

Thanks for your time today with us, sir.

I want to talk to you about a bill that was described as a blockbuster that you introduced during the session, the budget session that is about two thirds of the way through now.

Property tax been a big issue for a couple of sessions now at least.

It's the biggest non-budget issue going on during the session.

The budget is what you have to get done.

These other things are what you try to get done if there's time and support and so forth.

From your point of view, refresh us on what's different now about property taxes, say, compared to four or five years ago?

- Well, I think Covid and then the influx of out-of-staters, because our constitution, property tax is the only tax that was in our original constitution.

And I think it was 1937 when the constitution was changed And I think it was 1937 when the constitution was changed for a sales tax, and then in the 70s for severance tax.

But this influx of out-of-staters, so the constitution requires full value, and we do this with homes through market value.

Or if there's not many sales, it'll be a replacement cost or minus depreciation.

- In this case, there were sales that weren't there.

- Sales, 100%.

And so, and we all heard of these stories, somebody in your neighborhood paying cash for more than you ever dreamed your house is worth.

And then that just keeps raising the value up for all of us.

And then our taxes follow that.

You know, in Wyoming with property tax, we cap the number of mills.

They're capped in the constitution and in statutes, and these are all local taxes.

All these dollars stay in your county.

These don't flow to the state, but the locals can't just raise property tax on you.

We don't allow that.

And then we also have capped the assessment rate.

So your house, for example, is capped at what's called 9.5%, and that's called the assessment value or assessment ratio.

So if you have $100,000 house, you get taxed on $9,500 of it, not the full $100,000 value.

But back to our property taxes, they've followed this value.

And people are like, jeez, I've lived here my whole life.

I'm retired, or you know, and now I've got this big Christmas check in December I got to write.

And I heard from a lot of people, jeez, I used to kind of be able to try to save and pay it in one check.

Now I'm trying to break it in two.

Now I'm looking at a second mortgage.

- Borrowing to pay your taxes.

- Borrowing to pay your taxes.

Doing a reverse mortgage.

Goodness.

So we've been working on this thing for a couple of years.

I think we argue and argue over the ideas to it, but there's a couple of ways to do this.

Number one is cap the valuation increase, and a lot of states do this.

As I said, we capped the number of mills and that assessed value at 9.5%, but we don't cap the value.

Yeah, and you got to be careful with that, because part of taxation is fairness.

You don't want to be in the same house as your neighbor, and your tax bill is twice as much as his.

And so there's got to be an equity this.

But most states have gone with a cap around 4%, 5%.

So if your value went up 10% in a year, which two thirds of our counties had double digit, I think Lincoln county was 30%.

I mean, could you imagine?

So it would cap that value increase of 5%.

Then there's relief bills where we give exemptions, just $100,000 off the value of your home.

So if you have a $200,000 home, it's going to be a 50% tax cut.

If you have a million dollar home, it'd be a 10% tax cut.

So it applied to everybody.

So we have bills like that working its way.

- There were a lot of these, maybe a half dozen went through the interim process and were pre-filed and when the session began, and maybe that many more during the session emerged as well.

So a lot of people taking a swing at this.

of what it meant were there's some good ideas here, a lot of people thinking about it, a big problem, but also no clear, obvious, comprehensive solution for everybody?

- Yeah.

- Yeah.

- [Steve] So here's where you came in.

what was your big idea?

- Well, you know, I tell you, I probably, in the last year I've probably replied to 4,000 emails from Wyoming Knights on property taxes.

I've talked to hundreds of people.

I'm born and raised here.

I know a lot of people and I've talked to a lot of people around the state.

And it was in early January.

And I was talking to a man in Torrington and talking philosophically about property tax.

Do you really own your property?

I have to write this check to the government.

And I know after four years of not writing that check, I will be evicted.

So there's this property rights issue I think is really important for all of us.

And then I think we were having this conversation and I talked about property tax, but I said, "Jeez, how would we, the only other way to replace it would be sales tax because we're never going to have an income tax.

We've got this permanent mineral trust fund kicking off 30% of our revenue."

And he said, "I would much rather pay a sales tax, really."

And then I sat for a minute, and I said, "You know, we had a little over a billion dollars in ad valorem property tax.

Now most of that's minerals, half of that's minerals."

But I said, "Let me kind of work the math on this."

But it might be three, four pennies, is what I was, kind of my Little League math thinking about it there.

And so I hung up the phone and then I was thinking, and I knew from years just kind of doing this work, that about 98% of Wyoming homes were valued at a million or less.

Only 2% were million dollar homes or more.

And at that time I think there were six counties didn't even have a million dollar home.

So instead of doing all residential property, I put in a question, really, to our staff at the legislative service office, the fiscal staff, how many pennies of sales tax to replace or pay for it.

- Let's just say, Wyoming's across the board sales tax right now is?

- State is 4%.

- 4%, that's where you began.

- 4%, that's where you began.

- That's right.

- How much?

- So that comes back to me just under two cent to pay for this.

And I was thinking, four cents or more.

And I go, "Seriously?"

And I said, "Is that still 98% of the homes?"

97%.

And I said, well, "Let's draft that bill."

And that's the first.

- Draft what bill?

I don't think we've said it.

- Draft this bill, House Bill 203.

And it's draft this bill.

And so that bill got started and I worked it from the first week of January, and I talked to several people about it and then kept working at getting the kinks out of it.

I went through 12 versions solving this problem, changing this, changing this, and then I felt it was in a pretty good spot to file it and got co-sponsors on board.

And in the meantime, I kept talking to everybody who called me or anybody who emailed me on property tax.

I said, what do you think of this idea?

Every one of them said, "Heck, yes, I'd much rather pay two penny sales tax."

- And the premise of the bill is property taxes for all the property under this million dollar value.

Gone.

- Gone.

- And the revenue replaced by this 2% increase in sale tax.

- Absolutely.

And even if you have a $2 million home, you get a 50% tax cut.

If you're in Teton county and the average is $3.94 million, you're going to get a 25% tax cut.

But the rest of us in Wyoming, you're going to see them disappear.

and of course, a lot of the lobbyists representing different stuff, those people have respect for all of them, don't get me wrong, but we were in different dugouts on this one, and it was similar to medical malpractice.

I mean, the place was loaded and they were coming out firing on me.

So I worked really hard to get the votes to get it close.

- A lot of these bills we mentioned earlier that, other than yours, they all seem to be, in a way, sort of, of a certain type.

You're going to adjust here and tweak here and trim and tighten.

Come at it from this angle, from this angle.

Your bill, it doesn't do any of that.

- Well, in my mind, it's simple.

I mean, we want to have this exemption for 97% of our homes, but how are you going to pay for it?

Yeah, are we going to take it out of the rainy day fund and run that down to zero in a few years?

And then we got another problem.

And creating problems.

So it's a way to pay for a simple exempt.

Now, you'd still have assessments, and you'd still all that.

I mean, everything would be reimbursed just like it is through property tax.

And the other part of that, you know, my parents' first home, I think, was like $5,000 in Wyoming.

I think mine was 50-some-thousand We're all going to have million dollar homes, 100 years from now or 50 years from now.

So this exemption had a 2% growth in it, and LSO fiscal, and the departments in the state felt that was a safe number.

That sales tax would outpace that and be able to pay for it, because that's what we do in Wyoming.

We pay our bills.

That's the first thing we do, we wanted to pay for.

So, because these are all local deals, I'm not interested in cutting your ambulance service, or your firefighters, or your weed and pest, or your roads, or your school districts.

That's not the point.

So then what happens?

The tactics come, well, let's delay it.

Let's study it.

Oh, let's study it.

We don't understand it.

Oh, it's so complicated.

It's two pennies to pay for this exemption.

That's all it is.

Everything else stays the same.

So delay it, I think, confuse the issue.

Gosh, what will we do?

How will this work with special districts?

Nothing changes.

And then I just think, I don't know, just kind of let doubt creep in.

Jeez, will this work?

And I think change is hard for all of us.

But I think really, we already have a sales tax system in place.

That's easy.

That's two clicks on a computer.

- It would have been easier to do that, for example, than some of these property tax, which are very complicated.

And you have state staff saying, "Wait a minute, maybe you think this is easy for me to do, but we're going to have to rethink everything in order to implement some of it."

- Absolutely, 100%.

Well, first of all, it would have been the largest tax cut in Wyoming history.

I mean, on average, economic analysis, state division, analyzed the bill.

Average Wyoming family making $62,000 a year is going to maybe pay $400 out of the right pocket, but they're going to put $2,000 or more in the left pocket in property tax.

It's going to lower home payments for first time home buyers.

For affordable housing, our escrow payment is insurance and taxes.

So it'd lower your house payment by $200, $300 or more dollars.

And then I think for the elderly who paid this thing off, I don't have to write my Christmas rent check to the county treasurer, every year.

I maybe buy Christmas presents for the grandkids.

And I just think, again, largest tax cut in history.

And then the other beautiful part of this, about 13% of it's paid by out-of-staters.

Visitors to, 3 million plus visitors to our state.

And we would still have a sales tax rate that is kind of in the middle of the pack.

We certainly wouldn't be the highest.

But imagine living in a state with no income tax and virtually no residential property tax.

And I just think it would boom the economy.

I think people have more disposable income, and I think give people the chance to get into a home.

These kids who are just starting out, it's tough.

- Well, you've been a revenue guy for a long time in the legislature.

You're a 20-year man basically, as well.

So you're not an inexperienced rookie lawmaker coming up with some wild, harebrained idea.

Coming from you, let's face it, it had some gravity to it right off the bat.

it had some gravity to it right off the bat.

Yeah, absolutely.

This wasn't a deal.

I'm always looking for ways if we're going to do something, I want to make sure we solve a problem and not create a problem.

Part of these things go out there and they cause more problems than they solve.

And so that's the idea.

And I think it's a good idea.

And I think this idea of a consumption tax, it would give Wyoming Knights a choice when and where to pay the tax.

That's a big part of this, too.

Do you think the interim process would be good for it, But as far as an interim topic, I think I'll certainly ask for that to be included.

Management council will pick those.

But our time, and here's the thing, the biggest lie the devil ever told us is we got a lot of time.

You got next year, next time.

And I think we let an opportunity slip by, and it's really unfortunate for Wyoming's people, but I'm going to keep working this thing and if we can get it, but we're all running for reelection, might have half the house turnover.

Sometimes you'll have a whole new group, drinking through a fire hose, trying to figure this out.

- [Steve] Pretty much what happened just a couple of years ago.

- It does, every two years.

So this whole 67th legislature is about over.

We just got seven days together and it's all done.

And then you're getting ready for the next group that'll take over the 68th legislature, be new leadership, new chairman, new committees.

So there'll be a lot of disruption.

And then you kind of figure that out in that first session.

Then you come into that next session and you have to have a two thirds vote to introduce a bill.

It's impossible.

Not impossible, but it's tough.

But we're going to keep working.

- Some 200 of those tried to get introduced.

I don't know how many did, but it was a third of them about.

- Yeah, and that's a subject for a whole nother interview, yeah.

(chuckles) - We talked a little bit about with leadership there at the beginning.

There's talk now of possibly a special session.

That comes up often.

Maybe we're going to need a special session so that the two House and Senate budget bills, which I think this morning were a billion dollars apart, could be made into a budget that has to be passed.

Special sessions end up being fairly rare.

What's your view as an experienced lawmaker on where that stands and whether we can get it done in the next week?

- You know, I would first say the dollar amount seems large, but I think some of those positions can be compromised and cleaned up, I guess.

And I negotiated on a lot of budget committees.

My first years of speaker parity put me on it, which as a freshman was really unique.

I think we're closer than a lot of people think.

I'm hopeful.

I'm always hopeful.

I'm not on that conference committee.

And if it doesn't happen, we will have to come into special session either right after this session or in June or at some time before the fiscal year of July 1.

- Now, I'm recalling that last year in the general session, which is allotted 40 days.

It didn't use the whole 40 days, right?

- Right.

- So that makes it a little easier to do a special, to extend or to have a special session now.

- Well, you're correct.

Those three days could be added on to this 20 day session, but a special session then do not count in those.

And either we can call ourselves in through a vote of both houses or the governor and can call us into a special session, you're right.

- One more question.

Maybe we'll edit the tape and put it back earlier in the show, but.

But when I heard about the property tax repeal in exchange for a sales tax increase, I thought, I wonder if this went before the voters, how it would do.

My feeling was it would be a landslide.

- Yeah.

- I think voters would love this idea, and maybe that's what an interim period could begin to make clear to other lawmakers.

Do you think?

- I agree.

In fact, I was trying to run down the referendum.

I mean, it's just too late in the process for me to amend a bill to get it on the ballot.

I agree with you 100%.

Everybody you talk to, they go, "Well, heck, yeah.

I'd much rather pay two pennies than pay this property tax."

And I think one criticism obviously is renters.

But the landlords I talk to, that rent homes, they say, "Well, number one, the rent certainly is not going to go up because that's why I'm raising it, because of the increase in property taxes."

Apartment rentals, those are commercial, they're taxed differently, and those are generally, their value moves at a slower pace than residential housing.

But I think there's some room to talk about some kind of renter refund on some of that stuff.

I'm absolutely open to that, but, yeah, it'll be a good topic to discuss.

- [Steve] Matthew, I have a feeling we're about 20 minutes.

- [Matthew] Yeah, little over.

- [Steve] Little over, okay.

I'll, thank you for being here.

- Oh, yeah, thank you.

It's an honor to be here.

- Representative Harshman, I appreciate you elaborating and explaining your thinking behind this bill.

It changed the discussion, didn't it, on the property tax issue and the legislature this year?

- Well, you know, and I'll just say, I grew up Midwest Wyoming, native of Natrona County.

The first day I was ever in the state capitol is the day I first got sworn in.

Yeah, I mean, it wasn't like.

So it's been a tremendous honor to represent the people in Natrona county and Casper.

So honored to serve.

And so, you know, with that we're just going to keep working on this thing.

And I think a lot of times these things, the old saying is it takes three times for a good bill to pass, and we'll just keep plugging.

- My father was a legislator, as you know, and he told a story about, you've got a sledgehammer and you've got to break that rock, and you hit it 99 times, and nothing.

The hundredth time, that's the time that it splits.

So what you're saying is you can keep trying.

- Keep trying, I think.

And I had the honor to serve with your dad when I was a freshman.

He was Chairman of Senate Transportation and I was a Freshman on House Transportation.

He was really a statesman.

So it was an honor.

- [Steve] It was, well, thank you.

- Yeah.

- I appreciate your time.

Good luck in the remaining few days of the session, and thanks for being with us on Capital Outlook.

I really appreciate you having me.

Thank you.

- Continuing now on Capital Outlook, not long ago on Wyoming Chronicle, we interviewed John Turner, whose legislation in the 1970s created the Wyoming Department of Environmental Quality.

In a portion of that interview that wasn't aired originally, he talks about earlier days in the Wyoming legislature, now more than 50 years ago.

Incidentally, the third person on camera in this segment is the Director of the Wyoming DEQ, Todd Parfitt.

He was prominent in that original Wyoming Chronicle program, but he's not featured in this section.

Here's John Turner.

- You were a young legislator, elected when you were 28 years old?

- 27, I think.

- 27 when you were elected.

- I was elected in 1970.

A young whippersnapper, wildlife student.

- DEQ, and the Environmental Quality Act that accompanied it, those were initiatives from the legislature, and you were pivotal in that as a very young man, a Republican, launching or helping to launch and drive this environmental based legislation, had to have been a very interesting process.

- Well, thinking back, I guess I ran for the Wyoming legislature because of an interest in natural resource policy for Wyoming.

And so in the late 60s, early 70s, communities, Wyoming people, all of us, were looking at a major energy boom.

Back then, as today, Wyoming people are pretty protective of their airsheds, their water corridors, the condition of natural landscapes, wildlife habitats.

So at the time, we had a very rudimentary legislation on open pit mining.

My gosh, it was a small part of the Wyoming statutes.

I think you just had to post a bond and go mine.

And a lot of us figured that was inadequate.

How do we prepare for these large mining activities that are projected?

So, in those days, we didn't have staff, we didn't have the Internet.

I can remember going to library, getting Kentucky, Ohio, Illinois, Pennsylvania statutes, taking them to my log cabinet at the ranch, going through them.

What would work for Wyoming in the way of head walls and hydrology and separating topsoil from undercover stuff?

And how are we going to prepare for Wyoming?

And so I drafted myself a pretty comprehensive land reclamation bill.

Malcolm Wallop from Big Horn became a state senator, and then, of course, very distinguished, effective United States Senator on behalf of Wyoming Senate.

So he had also introduced a bill on open pit mining.

My bill had a council.

We're going to have Wyoming citizens help drive this because, quite frankly, we didn't know if we could even reclaim Wyoming open lands.

We're talking about parts of Wyoming, thin top soils, very little moisture, high wind, short growing season, even range ecologists, the industry.

We're going to give it our best shot.

But we thought to have Wyoming citizens help steer that regulation.

Look at the science, listen to communities around Wyoming.

So I had a council to house this regulatory, new regulatory system.

A wonderful legislator, an oil and gas man from Casper, just very distinguished, by the name of Warren Morton, came to me, and he said, "John, I like the idea of a council as an entity to do open pit."

He said, "I think we can do more with that.

I think it can be a platform, a watering hole for a lot of other environmental challenges."

He said, "Do you mind if I borrow your intern?"

I had a voluntary young law student.

In those days, the legislature didn't have staff.

"Can I borrow Hank Phibbs?

And we're going to work on over that.

We're going to pace and cut."

That was the origin of the Environmental Quality Council and the department.

And then I had the opportunity to serve for another 20 years.

And so we created an infrastructure that we could do air quality, we could do groundwater, we could do leaking underground storage tanks.

We did solid waste management.

I sponsored that one.

- This was just at the dawn of when Powder River Basin coal mining was about to begin and transforming, really, the energy industry of the entire nation, in a way, the concentration, the volume, the new production methods, the new mining methods, the new transportation methods of coal that had never been seen anywhere in the country before.

This is the kind of thing that was being anticipated and led, part of what led you and your fellow legislators to think, we've got to be prepared for this.

- Well, that question prompts me to think back to the quality of legislators we had.

School teachers, lawyers, railroad people, ranchers, people that really wanted to do what was right for Wyoming.

And I think of the Tom Strucks and the Rex Arnies, and the Rodger McDaniels, and I omitted too many.

But people that really cared about Wyoming's future, it wasn't about them.

Very bipartisan.

We might disagree on things, but we tried not to be disagreeable.

You respected one another.

You listened.

You had to listen, because we came from diverse opinions and backgrounds.

But if you listened to what our mutual interests might be and where we could mold a path forward, those were interesting days.

And I think during that time, Wyoming was blessed with some pretty hardworking, effective legislators that put in place some things that have served Wyoming well and in some ways been the envy of other states.