A renewed proposal to tax real estate sales in Teton County will be considered in the coming session of the Wyoming Legislature, but it seems bound to go before lawmakers without much hometown support from the experts.
Rep. Andy Schwartz, the Jackson Democrat who will propose the bill, said he’ll be in Cheyenne starting Friday to hammer out the bill and schedule it before the Wyoming House’s Revenue Committee. The session begins in February.
Schwartz said Monday that he thinks the bill — a graduated tax starting at 1 percent on real estate priced between $1 million and $2 million — is a legitimate way for Jackson and Teton County to pay some of the big bills he thinks are associated with growth in the area. That justification is even more important, Schwartz said, given the decline in state aid to local governments that has been seen in the past several years because of the downturn in the oil and coal businesses.
“A lot of people think the impacts of rising real estate costs are real, to the community and local governments,” he said, “and that this is a good mechanism to offset some of that.”
Ryan Block, president of the board of the Teton Board of Realtors, acknowledged that it’s “good to look for creative ways” to pay for public costs. But Block thinks the additional cost to buyers would be a blow to homeownership in the area, a factor he weights more heavily than any other.
Though the board hasn’t taken an official position, Block said, “in general I’d say the response would be that anything that would affect, that makes home ownership more expensive, the board would be opposed to.”
Schwartz said the bill he’s carrying to Cheyenne for the budget session isn’t much different from one pushed in the 1990s by Clarene Law, a longtime Republican representative from Jackson.
To make the bill palatable to other legislators, it would allow the local-voter-approved tax only in counties where real estate sales topped $660 million. That would effectively limit it to Teton County, which in 2016 saw sales of just more than $1 billion in 618 transactions.
After the 1 percent collection proposed for sales from $1 million to $2 million, the tax would rise to 1.5 percent for sales from $2 million to $5 million, and to 2 percent on sales above $5 million.
Based on 2016 statistics, Schwartz estimates that collections would start out being between $5 million and $6 million a year. Fifty-five percent would go to the county, 45 percent to the town of Jackson.
The income would be vital, Schwartz said, given declining state support: For the current year the county received just $345,000 from the state, about $1.5 million less than in fiscal 2016.
Schwartz hasn’t included any earmarking rules for the money. He compared it to the county’s optional 1 percent specific purpose excise tax, which is approved by voters and then requires a second voter OK to authorize each project. The same way of doing things is incorporated into his bill.
Schwartz said he has met with some real estate people in the area to talk about the proposal, though not exactly to campaign for it.
“I’m just trying to explain it,” he said. “I don’t expect everybody to agree with me on this, but if they’re not behind it I want it to be because they’re against what the bill actually says.”
So far, Schwartz said, Realtors he has spoken to are “not enthusiastic, but some are not opposed. ... I haven’t been shot at or run out of town.”
Block, who works at the Engels and Volker realty firm, said the plan still stumbles over the fact that it means higher prices for real estate, a vital local business and the core of the community in a tight housing market.
“Even if it’s just over a million dollars, that affects a lot of local families,” Block said. “That’s Melody Ranch, that’s Indian Trails, a lot of local neighborhoods.”
The big part played by vacation home sales is another negative, he said.
“The second-home owner is driven to Wyoming because of our tax benefits, because Wyoming is a beneficial place to be, tax-wise,” he said.
Matt Faupel, one of the owners of Jackson Hole Real Estate Associates, agreed with the view that additional costs would hurt. And, he said, even if the additional cost seems insignificant for many high-end buyers, many who would buy are full-time Jackson residents trying to make a home.
“When you look at those of us who are in the workforce, it’s a much bigger deal,” Faupel said.
Strictly from a business point of view, he said, it also hurts: “It makes something I’m selling cost more.”
Faupel said local elected officials would better serve their constituents by not casting about for taxes to pay various bills but instead taking a stand-back, overall view of needs and potential sources before going after one sector.
Andy Cornish, of the Cornish-Lammpa Group, was also mostly doubtful. The tax, he said, “just makes sales that much more expensive,” and on something that “is many peoples’ primary asset” and a vital part of their life plan, including retirement.
In that sense, Cornish said, the tax is assessed less on something that creates a need than on a simple transfer of wealth.
“It’s a tax not on ownership but on distribution, like the death tax,” he said.
Schwartz said that his bill isn’t complete, but he expects a final proposal to be written within a few weeks. If the bill were to become law the earliest it could reach the ballot here for authorization of the tax would be August 2018.