A Senate bill providing modest tax relief for Puget Sound drivers paying the new ST3 motor vehicle excise tax (MVET) has cleared the Transportation Committee.
SSB 5955 received a “do pass” recommendation following an exchange among panel members critical of what they see as inadequate tax relief, while key ranking committee leaders framed it as striking a critical balance between two competing demands from the public.
Prior to the vote, Sen. Steve O’Ban (R-28) unsuccessfully proposed several amendments, one of which would have had the bill adopt a market-based value system for the MVET, calling the bill “meager relief” provided by a “legislative-concocted schedule.”
“I wish we could provide something that comes close to real tax relief for the car tab taxpayers,” he added. If approved, SBB 5955’s provisions would have then mirrored that found in SB 6303, a bill O’Ban sponsored this session. That legislation, which received a January 24 public hearing in Transportation, has not advanced. O’Ban also proposed SB 6164, allowing cities, counties and their voters to nullify ST3 taxes; that bill has yet to receive a public hearing.
Chair Steve Hobbs (D-44) called SSB 5955 a “work in progress,” adding that “this was not easy to put together.”
“A vote was taken and that democratic process, Sound Transit 3, was passed and people expect their projects to be on time,” he added. “So how do you balance both of those? Well, you try to craft something that provides some relief…but we have also provided in this bill a means to pay for those projects, again reaffirming the promise that was made to the voters that these projects remain on time and financed.”
Hobbs was one of 13 Democrats to cosponsor SSB 5955 when it was introduced last year by Majority Assistant Floor Leader Patty Kuderer (D-48). The bill was one of several proposed to address public backlash regarding the car tab tax hike following ST3’s approval by voters (55-45) in November 2016.
Similar to EHB 2201 approved by the House last month, the bill creates a credit for car tab payers by comparing Sound Transit’s current 1990s vehicle depreciation schedule when calculating the ST3 MVET tax to a 2006 schedule. It also provides retroactive credit for drivers who already have paid the tax, though how it is provided is left to Sound Transit and the Department of Licensing. The substitute bill also provides that if Sound Transit can’t meet its project deadlines, it must look at cost-saving possibilities, first from projects other than light rail and bus rapid transit.
Yet the revised bill also gives the transit authority the de facto option to pay a 3.25 percent sales and use tax offset fee related to ST3 projects that starting in 2019 would have gone into an account to support educational programs, in addition to low-income residents and foster children. This fee was required as part of the Connecting Washington package passed in 2015 that authorized Sound Transit to seek voter approval for ST3.
The move was criticized by Washington Policy Center Transportation Director Mariya Frost, who in a blog post wrote that “taking money away from promised educational programs for kids and giving it to Sound Transit for light rail is an inappropriate and dishonest use of taxpayer money. This provision is especially surprising as legislators constantly talk about there not being enough money for education, and that we cannot balance budgets on the backs of our most vulnerable citizens.”
Another added provision exempts all ST3 light rail projects from county permit requirements in unincorporated areas.
Transportation member and Senate Majority Leader Marko Liias (D-21) told colleagues that “today we have an opportunity to correct a mistake that we shouldn’t have made in 2015” with the use of the 1990s depreciation schedule. “I think that voters want two things. They want a fair valuation of their car, but they also want traffic and congestion relief in the form of light rail. The bill in front of us achieves both of those goals.”
However, a reduced car tab tax is just one of several issues with Sound Transit drawing scrutiny from lawmakers. Last year, a Republican-led committee held two investigative hearings into the regional transit authority’s conduct during the 2016 campaign following announcements by Sound Transit that two ST2 light rail projects were overbudget by $225 million and $500 million.
One of the Transportation members to vote against SSB 5955 was Sen. Tim Sheldon (D-36), who caucuses with the Senate Republicans. At the February 6 meeting, he told colleagues “the legislature as a whole has got to address Sound Transit. How many years have we let them get away with the things they do? People have lost confidence I think in Sound Transit, and this bill just does not do much at all. I think we have just got to suck it up and start acting like legislators and having some oversight of this regional body.”
Sen. Hans Zeiger (R-25) agreed. “This bill does not go far enough. I’ve heard from too many of my constituents who are beyond upset about the dramatic rise in the car tabs. People are outraged about this. They don’t feel like this is fair.”
Pressure has also mounted to reform the Sound Transit Board governance structure. Currently, the board members are nominated from among the three county councils (King, Snohomish and Pierce) by the county executive. Another of O’Ban’s bills, SB 6301 would set up 11 districts from which members would be elected directly by voters; it too received a January 24 public hearing, but no further action has been taken.