JACKSON — A bill authorizing a statewide real estate transfer tax has been voted down weeks before the general session is slated to begin.
It joined a bill for a proposed 4% income tax on residents who make more than $250,000 a year in the pre-season legislative graveyard.
Teton County Rep. Andy Schwartz, a Democrat, presented the real estate bill to the Wyoming Legislature’s Joint Revenue Committee. He has long been an advocate for real estate transfer taxes at the county level, seeking to tax the expansive real estate industry in Jackson Hole to fund affordable housing development.
Schwartz was asked to present the statewide bill Thursday by committee leadership, he said. But he still wasn’t optimistic.
“To be very honest, my expectations for the statewide bill have never been very high,” Schwartz said. “It’s a statewide tax.”
It was voted down 7 to 6.
Residents — and legislators — in the Cowboy State are notoriously tax averse. Wyoming is one of seven states that do not impose any kind of income tax, and the state budget has ridden an economy largely supported by oil and gas revenue for decades. But the industry has been bucking slower as of late and, with the COVID-19 pandemic depressing demand for fossil fuels, the state’s budget is cratering.
Gov. Mark Gordon has signed off on $250 million in budget cuts since March and is proposing another $515 million in cuts. State legislators will also have to figure out how to manage a $300 million shortfall in funding for K-12 education.
The statewide real estate transfer tax and income tax were both proposed to backfill budget cuts. Schwartz estimated the real estate levy would have generated about $9 million a year alone in Teton County, which has the largest real estate market in the state.
That value has only climbed since the COVID-19 pandemic began.
Over $1.558 billion had been spent on real estate sales by the end of September, and another $622 million was under contract, according to the third-quarter Jackson Hole Report.
“When you combine the overall dollar volume in the first nine months of 2020 with the overall dollar volume currently under contract, 2020 will completely shatter all previously set ‘year-end’ dollar volume records. … and we still have three months to go,” wrote the report’s authors, Realtors David Viehman, Devon Viehman and Luke Smith.
The bill discussed Thursday would have seen a 0.5% tax levied on property sales exceeding $250,000 statewide. So if a home sold for $500,000 regardless of whether it was in Teton, Niobrara or Albany County, the seller would pay a $1,250 tax on that sale.
Taxes collected in individual counties would be split roughly 70-30 between the state and local governments, with the lion’s share going to the state.
Other bills Schwartz has proposed, like one he sponsored during the 2018 general session that was not considered for introduction, have been geared toward increasing revenue for local governments. The 2018 bill would have been graduated, starting at a 0.01% levy on property sales under $1 million, and going up to 2% for property sales over $5 million.
The funds generated by that tax, if approved by the Legislature and, later, voters in Teton County, would have been distributed locally with 45% going to the town and 55% to the county in Jackson Hole.
That setup was intended to offset the impacts of growth and rising real estate prices.
“Basically what I’m saying is we tax real estate to provide funding for workforce housing,” Schwartz said.
When he was last workshopping the bill in 2017, it was a hard sell to real estate agents.
But three who spoke Monday with the News&Guide took different positions. Two were generally in support of the bill, and one was against.
All said that the housing market in Teton County is tight for local workers.
“There’s nothing for ‘locals,’” said Devon Viehman, who is with Engel and Volkers. “Nothing is affordable.”
The average sales price for a single-family home in the first three quarters of 2020 was over $3.7 million. The median was $2.3 million. Sales of single-family homes priced under $1 million counted for only 14% of sales in that category.
But Viehman, who recently ran for Jackson Town Council, doesn’t support a real estate transfer tax.
“It’s hard to get behind something that’s going to make real estate more expensive in Teton County,” she said, even if it’s a seller-paid tax. “The seller passes that along. They’re going to pass it along to the buyer, the buyer’s going to pay it and you’re going to see what’s happening right now, which is the lower end gets pulled up as the higher end gets pulled up.”
Brett McPeak of the McPeak Group and Jackson Hole Sotheby’s International Realty and Matt Faupel of Jackson Hole Real Estate Associates received the idea more warmly.
“I’m certainly trying to be the kind of guy who’s going to be open to hopefully considering it, and weighing it against the other options we have, which are spend less or get it from a different source,” Faupel said. The state and local revenue picture — voters’ rejection of the seventh penny sales tax has the Town Council considering levying a property tax — factored into his decision.
McPeak likewise cited the dire revenue picture as a reason for the tax. He didn’t think it would have a serious impact on the local market and didn’t buy the argument that it would be passed onto buyers.
“We all live here in the hopes that we get to spend the next year, two years, 10 years, 15 years here,” he said. “I think people who are trying to get into the market are looking for that seat on the lifeboat, because this is where they want to spend their time. The real estate transfer tax doesn’t kick in until I decided to give up my seat on the lifeboat and move to Cleveland.”
Schwartz said he may revive some sort of real estate transfer tax in the general session, but that will depend on what other revenue bills come out of committee and when the general session happens. (See page 30A for a related story).
“If the revenue committee was actually bringing a number of other tax bills to the floor that I thought had better opportunity to create revenue for the state, I might choose not to bring it just not to have too many tax bills,” Schwartz said.
Asked whether he thought that would happen, he laughed. But he suggested it was possible.