An unexpected wrench has been thrown into the cogs of Sound Transit’s legal defense of its new motor vehicle excise tax (MVET) as part of ST3.
Just as the State Supreme Court was scheduled on Sept. 10 to hear the lawsuit, it was discovered that the regional transit agency and the state Department of Licensing (DOL) have been using a different vehicle depreciation schedule than it previously claimed.
Instead of using the 1996 depreciation schedule, the state agency has used a 1999 schedule enacted by the legislature. On the heels of this revelation, State Attorney General Bob Ferguson pulled out of the case just hours before the hearing started.
“Today’s hearing confirms what taxpayers have felt for three years,” Washington Policy Center Transportation Director Mariya Frost said.
If Sound Transit, DOL and the attorney general’s office were confused about which depreciation schedule to use, the challenge was shared by some of the high court justices.
“When I got the briefs in, I tried to look it up and couldn’t find it in Westlaw,” said Justice Sheryl Gordon McCloud. “I couldn’t find it cross referenced. We had to go to repealed statute books to look through…and determine which portion…it was probably referring to – is that clear enough for Article 2 Section 37?”
The lawsuit concerns whether a provision in 2015 legislation approved by state lawmakers violates Article 2 Section 37 of the State Constitution’s “forth and full” requirement when amending state laws. Aside from that, one of the arguments made in Sound Transit’s brief to the high court was that the transit agency “has used the 1996 depreciation schedule since it began collecting the MVET in 1997, continues to use it today, and is legally required to use the 1996 schedule until the bonds to which the MVET are pledged are paid off in 2028.”
However, plaintiff attorney Joel Ard revealed in a Sept. 9 letter that the state no longer uses the 1996 schedule. At the same time, he told the court that “we don’t think that actually matters – the Constitution is violated by the drafting style of the 2015 act.”
During the oral argument made by Sound Transit attorney Desmond Brown, McCloud asked: “doesn’t that lend some credence to the argument that it’s kind of difficult from the sketchy statute to determine which depreciation schedule really applies?”
However, Brown argued it doesn’t matter “what year was put into the statute. You can’t determine or calculate your car to have tax unless you contact the Department of Licensing. The purpose of the statute is not to allow taxpayers to calculate their taxes. It is to delegate authority to the local jurisdiction to impose a tax.”
Frost told Lens that “people should be outraged at that claim. The reason that’s significant is for the last three years we have been told by the agency…that they were abundantly clear with the public. Yet today in court they admit people could not verify the taxes they were expected to pay, and it doesn’t matter that they couldn’t verify that they were expected to pay.”
During the hearing, Ard said that “when the government gets up here and says it doesn’t matter what schedule was being used, that’s quite a climb down from their briefs.”
Brown also argued that should the MVET be declared unconstitutional by the court, it would result in a $15-18 billion loss for Sound Transit in anticipated revenue. However, one justice noted that the statue’s legality isn’t based on “whether it was a dollar or the amount you indicate.”