The Fight For Sound Transit Tax Relief

The Fight For Sound Transit Tax Relief
HB 2148 would allow Sound Transit to create a tax rebate program for residents who make less than 80 percent of their county's median income. However, Senate Republicans are insisting on the provisions found in SB 5893 impacting the transit agency's vehicle depreciation schedule. Photo: Wiki Commons.

House Democrats have introduced new legislation attempting to address the growing public outcry over new Sound Transit 3 taxes. HB 2148 would allow the regional transit agency to create a tax rebate program for certain households in King County. Supporters at a Tuesday, April 18 public hearing of the House Transportation Committee argued it would alleviate the tax burden on less wealthy individuals. The bill complements separate legislation passed by the House last week that alters the way in which Sound Transit calculates a vehicle’s value as part of the motor vehicle excise tax (MVET). However, Senate Republicans say the only viable solution is via SB 5893, which was approved by the Senate on April 6.

Sound Transit Tax Rebate

HB 2148 would allow Sound Transit to create a 40 percent MVET and property tax rebate for households that make less than 80 percent of their county’s median income. However, the bill’s restrictions on county populations size would currently limit the rebate to individuals in King County, which has a current median income of $68,065. The bill is sponsored by State Rep. Kristine Reeves (D-30). Cosponsors include House Transportation Chair Judy Clibborn (D-41), Majority Floor Leader Rep. Gael Tarleton (D-36), and Deputy Majority Whip Rep. Jessyn Farrell (D-46). The companion bill is SB 5906, introduced by Democratic Whip Sen. Rebecca Saldaña (D-37). It passed out of the Senate Transportation Committee on March 29 and referred to Rules Committee for a second hearing.

Reeves told the committee that she introduced HB 2148 despite voting for ST3 to address concerns raised by constituents “who didn’t vote for this measure because they knew they couldn’t afford it.” She also represents parts of Pierce County, which voted against ST3.

Unlike similar legislation, Sound Transit has chosen to remain neutral on the bill. However, Chief Finance Officer Brian McCartan told the committee that if everyone who qualified for the program participated, it would have a fiscal impact on ST3 of $900 million between now and 2041. According to committee staff, the bill’s initial fiscal impact through 2028 would be $60 million, with a $180 million total fiscal impact due to bond financing.

Same Problem, Differing Solutions

Despite agreement on the need to lower the ST3 tax burden, Republican and Democrat lawmakers have struggled to see eye to eye on the best approach. HB 2201 passed by the House would have the agency use a vehicle depreciation schedule created by the legislature in 2006.  However, Republicans in both chambers have argued the bill is too limited in scope. This sentiment was reflected in several amendments proposed for the 2017-19 House Transportation Budget that would have reduced the MVET and allowed cities and counties to nullify ST3 taxes, an idea also proposed by Senate Republicans. None of the amendments were adopted.

In a statement, Transportation Committee member State Rep. Ed Orcutt (R-20) called the outcome “disappointing.”

“The majority party believes they offered a solution,” he added, “but by their inaction on key components of ST3 they failed to solve a problem that is impacting over one million families in the Puget Sound area.”

Senate Republicans have rallied behind SB 5893, which would have Sound Transit rely on Kelly Blue Book or the National Automobile Dealers Association to determine a vehicle’s worth. The bill has been referred to the House Transportation Committee but no public hearing is scheduled.

Placating Taxpayer Revolt

Prime sponsor of the bill is State Sen. Steve O’Ban (R-28). He told Lens prior to the Tuesday public hearing that his bill is the only one that sufficiently addresses public outrage over ST3 taxes. Other proposals such as HB 2201 may offer some help, but it will still lead to greater public anger by next session, he added.

“I’m more interested in comprehensive tax relief,” he said.

Lawmakers considering HB 2148 might also be wary due to the financial loss incurred by the city of Seattle through its $20 rebate program for their $80 car tab fee. According to committee staff, the city’s program has a low participation rate, and the administrative costs are many times higher than the actual rebate provided, with $100-120 spent per rebate provided.

Sound Transit officials have warned that changing the vehicle valuation as proposed by SB 5893 could have a total impact of $12 billion through 2041. ST3’s total budget is estimated at $54 billion.

However, O’Ban said it shouldn’t be too hard for the agency to handle if it can afford to add $225 million in costs to the East Link’s I-90 segment.

The agency might also dip into their projects’ contingency funds to make up the loss. Those funds often make up 30 percent of the total project budget.

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