Car Tab Bill Could Slash Sound Transit Funding

Local transportation advocates fear projects — including light rail — may feel the financial squeeze.

Last Wednesday, the state House of Representatives passed a bill that mass transit advocates say will stymie the development of the region’s transit infrastructure. House Bill 2201 would require Sound Transit to change its formula for valuing cars for tax purposes, thereby reducing the car tab taxes that help finance regional transportation projects.

The Legislature’s move comes a year after lawmakers complained that Sound Transit uses an outdated valuation formula that sometimes inflates the value of cars. As a result, some vehicle owners were experiencing “sticker shock” due to tax hikes tied to Sound Transit 3, the agency’s massive $54 billion expansion package which regional voters approved by almost 20 points in 2016. Sound Transit estimated that the tax hike would raise rates by $110 per $10,000 in vehicle valuation, but reports emerged early in 2017 noting steep increases (such as a raise from $90 annually to more than $260).

The bill — which passed the House 60-37 — is sponsored entirely by House Democrats, but garnered many Republican votes. The bill now goes to the Senate Transportation Committee for consideration.

It was originally introduced during last year’s legislative session and passed the House, but never made it to the governor’s desk over disagreement on how much to reduce the rate. A spokesperson for Democratic Governor Jay Inslee said that his office hadn’t reviewed the bill yet.

Both Sound Transit staff and its proponents argue that the tax rate reduction will siphon off crucial tax revenue for voter-approved projects and increase the already long building timelines for light rail expansion. The line to Issaquah, for instance, was originally slated to be finished by 2041, while the lines to West Seattle and Everett were projected to be finished in 2030 and 2036 respectively.

Sound Transit spokesperson Geoff Patrick said that, if signed into law, the bill would cut $780 million over the next 11 years from the agency’s tax revenue. He added that if the state Senate doesn’t find a way to offset the revenue decrease from HB 2201, Sound Transit — which is also at risk of losing federal grant funding from the Trump administration — will definitely have to elongate project timelines.

“The only real alternative if money does not come in is slowing things down so that tax revenue can come in to build projects,” said Patrick. “That’s the risk.”

The biggest defense of Sound Transit came from a Republican — Rep. Jacquelin Maycumber of Republic — who voted against the bill. “Seattle is a world class city and it deserves a world class transit system, and that’s why the people spoke,” she said. “This bill, it goes against what the people requested and what the people voted for.”

Some of the Democratic representatives who voted for the bill acknowledged the financing issues posed by the tax rate reduction while speaking on the House floor prior to the vote.

“We’re going to make sure that the Sound Transit tabs are fair when it comes to car values. But we’re also going to make sure that we fund those projects because in the central Puget Sound area, those projects are critical,” said Rep. Judy Clibborn (D–Mercer Island).

“My district supported ST3 and my district voters and the citizens expect that light rail will reach Tacoma, just as people in Snohomish County expect that light rail will reach Everett,” said Rep. Jake Fey (D–Tacoma). “$780 million is a big gap.”

The tax formula, which was approved by the legislature in the 1990s, calculates value based on vehicle type and age, as opposed to market-value rates determined by sources such as Kelley Blue Book, resulting in some vehicles being overvalued.

Since 1996, voters in the Sound Transit taxing district — which includes the densely populated areas of King, Snohomish, and Pierce counties — have approved three major transportation funding packages, all of which were funded, in part, by taxes generated through the controversial valuation system. Sound Transit 3 was the latest of these.

During the debate leading up to the floor vote, proponents of the legislation bemoaned the tax burdens on car owners while railing against Sound Transit, characterizing it as an unaccountable and freewheeling public agency.

“It is past time to fix this issue and replace it with the most current and accurate valuation system that currently exists,” said Rep. Mike Pellicciotti (D–Federal Way), the primary bill sponsor. “The public expects us to pass this today, good government expects us to pass this today.”

“When my constituents get their car tab fees, it smacks them right in the face,” said Rep. Mark Hargrove (R–Covington). “We need to make much greater strides to give more relief to our constituents. I’ll support it, but it’s a shame that we didn’t go much further.”

“I think people are feeling that they were lied to by the process, whether that’s true or not,” said Rep. Morgan Irwin (R–Enumclaw). “I think we need to go after Sound Transit in other ways to make sure that we’re holding it accountable to the people that it’s supposed to represent, because folks out there don’t feel like it does.”

Rep. Christine Kilduff (D–University Place) said that the legislature needed to move fast to reduce the tax rate or risk facing the wrath of the voters in their districts. “There’s a ton of sticker shock out there,” she said. “If we don’t take action on this legislation, our constituents are going to be even angrier.”

Meanwhile, Sen. Steve O’Ban (R–University Place), a longtime critic of Sound Transit, is sponsoring a bill that would amend Sound Transit’s governance structure to make its board members directly elected and require that they not hold other positions in elected office. Currently, Sound Transit’s 16-member board is composed of elected officials from the various cities and counties in the agency’s taxing district.

Seattle-based transit advocates were livid after the vote. House Democrats, “just sold us out on #HB2201 earlier today,” read a Jan. 24 tweet from Seattle Subway, a pro-mass transit group.

Other activists, however, are more optimistic about Sound Transit’s financial future. Abigail Doerr, advocacy director at Transportation Choices Coalition — a pro-mass transit advocacy group that helped orchestrate the ST3 campaign in 2016 — said in a phone interview that she is very “encouraged” by her conversations with state senators who are sensitive to the funding gap and want to amend the legislation to find additional revenue (such as reducing the price that Sound Transit pays for right-of-way costs on land owned by the state Department of Transportation).

“We’ve been in conversations with [senators] and heard a strong commitment and desire and intention to address the revenue loss with offsets,” Doerr said.

This report was produced by the Olympia bureau of the Washington Newspaper Publishers Association.