Property tax relief brings unintended strain

Lawmakers search for solutions as counties absorb deep budget cuts

Wyoming’s recent property tax cuts have delivered meaningful relief to many homeowners, particularly seniors on fixed incomes. But as the changes take hold, counties and small towns across the state are beginning to feel the strain, raising concerns about long-term impacts on local services.

Rep. Dalton Banks, R-Cowley, who represents the central and north end of Big Horn County in the Wyoming State Legislature, said the property tax legislation was driven by growing pressure from residents struggling to keep up with rapidly rising valuations.

“Basically, the justification was that many of them are on a fixed income and don’t see increases,” Banks said. “Especially during COVID, we saw huge spikes in property taxes. I had people right here asking, ‘Will you please help somehow?’ This was something we crafted to help people like that stay in their homes.”

The first measure provided a tax exemption of up to 50 percent for homeowners aged 65 and older who had paid property taxes on their home for at least 25 years. A second, broader change followed in 2025, offering a 25 percent exemption on the first $1 million of assessed value for primary residences.

“That’s just residential,” Banks said.

Both exemptions require homeowners to apply annually, a process Banks said was driven by limitations within the Department of Revenue.

“The revenue department told us they don’t currently have a mechanism to make it automatic,” he said. “They needed a way for homeowners to submit their information so it could be entered into the system.”

While the relief has been welcomed by many property owners, the revenue loss has landed heavily on counties, which rely on property taxes to fund core services. In Big Horn County, the effects are already visible.

A recent local newspaper article stated, “Among the highest percentage cuts, elections took a 59% hit, emergency management was down 55% and local emergency planning down 30%. Two Big Horn County libraries were shuttered following a 20% cut to their budget. After cuts, $400,000 was still needed from the county general reserve fund to balance the 2025/26 budget.”

Those closures and reductions, Banks noted, directly affect residents, particularly in smaller communities where services are already limited.

Banks said the push for property tax relief came from residents who felt overwhelmed by rising costs, including some who reported dipping into money set aside for funeral expenses just to keep up with property tax bills. He said that level of strain convinced him the state could not continue on the same path without offering relief.

At the same time, Banks acknowledged the growing tension between tax relief and maintaining local services.

“It’s going to become significantly more detrimental to the county if we have to suffer any more cuts,” he said.

To address the imbalance, lawmakers are revisiting proposals to redistribute a larger share of statewide sales tax revenue back to local governments. Currently, Banks said, local governments receive 31 percent of the state’s sales tax revenue.

“What we tried to pass last year,” he said, “was to tweak those numbers to keep 35% back, and that would have brought in $38 million. Just that 4% would have brought in $38 million to stay for local governments.”

Banks said the proposal had broad support but failed to advance during the last session. He expects the issue to resurface when lawmakers reconvene.

“I think it is,” he said when asked whether the debate will intensify. “There’s a big appetite to do away with property taxes, and there aren’t enough of us small-district representatives saying, ‘Look what’s happening to our local governments.’”

Banks also expressed concern about proposals to eliminate property taxes entirely and replace them with higher sales taxes, particularly for border communities like those in Big Horn County.

“The problem I see is, especially where we live, a couple of issues,” Banks said. “Everybody will just go to Montana to spend their money, more than they do now.”

He added that renters could be disproportionately affected, noting, “So now they didn’t get a property tax break, but they could get a sales tax increase.”

That dynamic, Banks said, could hit lower-income residents hardest, while offering limited benefit to some homeowners who are already financially secure.

Banks said. “I think every once in a while it’s OK to say, ‘Hey, you need to look through your budget. You need to see where you’re wasting. And we don’t want waste.’ But if you’re having to take away someone’s medical insurance, that feels like you’re hurting too much.”

As the next legislative session approaches, Banks said counties and municipalities are hoping lawmakers can strike a balance between tax relief and stable funding for essential services.

“Hopefully we do have some good remedies,” he said.