Lawmakers Weigh Proposals To Nullify New Sound Transit Taxes

Lawmakers Weigh Proposals To Nullify New Sound Transit Taxes
State lawmakers have introduced two bills that would allow cities, counties, or the voters in those jurisdictions to nullify some or all of ST3's new taxes. Another bill takes aim at the formula used by Sound Transit to calculate a vehicle's value for taxation purposes. Photo: soundtransit3.org.

Pushback is mounting as Puget Sound drivers renew their license plate tabs against the added tax burden to pay for the Sound Transit 3 package approved by voters last November. That momentum has inspired state lawmakers in those districts to introduce legislation allowing voters, as well as city and county councils, to nullify these new taxes. Another bill would amend the motor vehicle excise tax (MVET) schedule used by Sound Transit when determining a vehicle’s value, which critics say inflates its true worth.

At a Monday, March 6 work session of the Senate Transportation Committee, bill sponsors argued that the legislation would enable greater local control over their tax burden and incentive better financial decision-making by the Sound Transit Board. However, some committee members warned that altering the MVET schedule could negatively affect the agency’s bond obligations tied to that tax.

Determining A Vehicle’s True Worth

Sound Transit’s evaluation system was previously used before Washington voters repealed the existing vehicle tax and imposed a $30 tab fee via Initiative 695 in 1999. The initiative was ultimately overturned by the State Supreme Court.

Chair Sen. Curtis King (R-14) told Lens that “we have to come up with a way” to determine a vehicle tab tax rate “that’s fair and reasonable. And when you look at this, it is why we voted out the MVET whenever we did it before, because you had valuation of vehicles that were just totally out of line to the reality of what the car was really worth. And if that’s (nullifying the tax) the only way we can get a response, then I think those are things you have to look at.”

Prior to the public hearing, committee members questioned Sound Transit officials over their formula used to calculate the new MVET tax. It uses a car’s manufactured-suggested retail price for a vehicle compared to Kelly Blue Book. Officials explained that they were contractually obligated to maintain the vehicle depreciation schedule under state law.

Constitutionality Of Tax Law Questioned

State Senators Steve O’Ban (R-28) and Dino Rossi (R-45) have written to State Attorney General Gob Ferguson questioning the constitutionality of the state law allowing Sound Transit to use its current vehicle depreciation schedule. In the March 2 letter, they claim the law violated Article 2, Section 37 of the State Constitution.

SB 5817 would swap out the suggested retail price and replace it with the car’s value according to Kelly Blue Book or the National Automobile Dealers Association, whichever value is lowest. The bill is sponsored by Rossi and cosponsored by O’Ban, as well as State Sens. Majority Caucus Chair Randi Becker (R-2), Majority Whip Barbara Bailey (R-10) and Phil Fortunato (R-31).

Mariya Frost said March 6 to committee members that Sound Transit’s tax scheduling “allows them to profit from the overvaluation of vehicles, which is grossly unfair to taxpayers.” She is the Director of the Coles Center for Transportation at the Washington Policy Center.

Approval of the ST3 ballot measure increased the Sound Transit sales tax by 0.5 percent to 1.4 percent, increased the MVET tax by .8 percent, from .3 to 1.1 percent, and created a property tax of $0.25 per $1,000 of assessed value (AV). However, Sound Transit is still authorized to seek voter approval for several other taxes.

Increasing Local Control over Taxes

“This is the reason why we need to empower voters and city councils,” O’Ban told committee members. “Right now, those voters, those councils do not have the power to influence Sound Transit, given its structure and the way its board is approved.”

O’Ban is a member of the Transportation Committee and sponsor for SB 5854, which would allow cities and counties to repeal Sound Transit-imposed property taxes enacted since July 2015. Unlike the vehicle tab tax, the Sound Transit property tax has not yet been bonded. Cosponsors include Becker and Rossi, along with State Sens. Ann Rivers (R-18), Hans Zeiger (R-25), and Vice Chair Tim Sheldon (D-35).

SB 5851 would go further and allow those entities to repeal any of the Sound Transit taxes enacted after July 2015. That bill is sponsored by Rossi and cosponsored by Becker and State Sens. Mark Miloscia (R-30) and Majority Floor Leader Joe Fain (R-47).

Regional Divide Over Transportation Priorities

Exchanges between committee members over the bills reflected the contrasting reception ST3 received in those areas during the 2016 November election. O’Ban’s district includes Pierce County, which voted against ST3 by 55 percent. Assistant Ranking Minority Member Marko Liias represents parts of Snohomish County, which narrowly passed it 51-49 percent. He told Rossi that “there’s folks suggesting that this is just sour grapes, upset that the voters approved the Sound Transit plan, folks who don’t like light rail historically. Can you just respond to that criticism about…what’s motivating this?”

Rossi said that “what’s motivating this are the emails that are coming to my office.”

When Liias asked about the possible impacts on Sound Transit’s bond financing, O’Ban replied that “Sound Transit’s going to collect $54 billion? I’ll let them figure it out.”

Liias’ concerns were echoed by colleague and Democratic Whip Sen. Rebecca Saldaña. Her district include parts of Seattle and Renton in King County, where voters approved ST3 by 58 percent.

“Is it going to delay things even further?” she asked. “2030, 2031 seems like a lot of time already that we’re waiting, if we’re actually going back and trying to reopen and refinance these bonds. What does that (SB 5817) do in terms of how much we’re getting and how long we have to wait for these things to be built?”

O’Ban replied that “I come from a district and county that soundly rejected ST3, and just imagine the sense of unfairness that, not only did you reject it, you have to pay property tax, sale taxes, and tab taxes, but your tab tax is going to be based upon an unreal and previously rejected depreciative schedule. I’m thinking of Pierce County; I’m thinking of my district.”

Rossi told Saldaña that, “if you’re actually marking a calendar for a date for Sound Transit to actually complete projects, I really wouldn’t do that, because they’ve never been on budget and on time.”

“They will adjust their budgets, that’s how they make claims that they’re on budget, on time,” he added.

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