Although the State Supreme Court ruled against plaintiffs in a case protesting ST3’s motor vehicle excise tax (MVET), a new lawsuit filed on March 20 in Pierce County Superior Court takes aim at the vehicle depreciation schedule used to calculate the MVETs for both Sound Move and ST3.
The argument: That both MVETs use an outdated 1996 vehicle calculation mistakenly inserted into a 2010 technical amendment bill rather than using the existing depreciation schedule at the time – a 2006 schedule – and that the erroneous bill language was later carried forward to be included in a 2015 state law authorizing Sound Transit to collect the ST3 MVET.
If the court rules in the plaintiffs’ favor, one issue to be addressed in the decision is whether the ST3 MVET itself is then also invalidated, as well.
“I won’t kid you – they’re (issues) not simple,” plaintiff attorney Joel Ard said.
The new lawsuit stems from a further complicating discovery made by Washington Policy Center Transportation Director Mariya Frost just a day before a September Supreme Court hearing, which revealed that Sound Transit was in fact not using the 1996 schedule at issue in the first lawsuit, but was instead using a schedule from 1999.
However, the confusion is the result of what Ard says was a mistake in the 2010 technical correction bill enacted following the passage of Referendum 49 in 1998.
The added bill language reads as follows(bold emphasis added:
Any motor vehicle excise tax previously imposed under the provisions of RCW 81.104.160(1) shall be repealed, terminated, and expire on December 5, 2002, except for a motor vehicle excise tax for which revenues have been contractually pledged to repay a bonded debt issued before December 5, 2002, as determined by Pierce County et al. v. State, 159 Wn.2d 16, 148 P.3d 1002 (2006). In the case of bonds that were previously issued, the motor vehicle excise tax must comply with chapter 82.44 RCW as it existed on January 1, 1996.
According to Ard, that change inadvertently altered the total MVET amount collected from newer vehicles, which runs afoul of numerous state and constitutional issues. “You can’t slip substantial changes into a bill and call it a technical amendment bill. Somebody made a completely understandable error…and nobody caught it for a long time. Now it’s out in the open.”
In 1998, Sound Move’s .3 percent MVET also went into effect, while another vehicle depreciation schedule was adopted by the legislature in 2006 to apply to any future local MVETs, and it is that 2006 schedule the plaintiffs are saying should be used to calculate taxes.
Yet the same section of the 2010 bill referencing the outdated 1996 depreciation schedule was eventually incorporated into the 2015 state law (page 70) in which legislators authorized Sound Transit to collect a .8 percent MVET if approved by voters as part of its ST3 transportation package.
The lawsuit states that “its (Sound Transit) behavior has engendered so much confusion that no one—not even (Sound Transit) lawyers—could identify the supposed source of their valuation authority.”
While the lawsuit does not concern the legality of Sound Move’s MVET, the court could theoretically toss out the entire ST3 MVET because of how its authorization is tied to an outdated schedule.
Ard said he’s not convinced that’s the case, “but it will be interesting to see what Sound Transit says.” The lawsuit states that “at least a portion” of the ST3 MVET “was collected without constitutionally adequate statutory authorization.”
In the prior lawsuit involving ST3, Sound Transit argued that neither it nor the legislature “rely on the 2010 amendment as authorization for the current calculation of the ST3 MVET.”
The new lawsuit seeks both reimbursement for drivers who paid the tax and that Sound Transit cease collecting MVET revenue based on that schedule in the future.
Sound Transit will now have an opportunity to file a response.