SB 6582 Update

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SB 6582, the transit revenue bill, would provide solutions for both large and small transit systems all over the state that have been hit by the recession. It is the only way out of draconian cuts for Metro and Community Transit, which have maxed out their revenue authority.

Having made it all the way through both houses and the conference committee, it did not make it to the floor on March 8th and will now hope for resurrection in the special session. Martin Munguia writes that Governor ” Gregoire has indicated that this is one of the issues she would like to see revisited in the special session, so there’s still a chance.”

I’ve heard speculation that the bill was yanked due to the new provision that reserved the entire MVET for transit, which may have been a staff error. Regardless of the explanation, the Senate passed the original bill by only one vote, so advocates can take nothing for granted. See how your Senator voted, and let them know if you agree or disagree.

Note also some much smaller appropriations to transit that did become law, including money for CT to plan a second Swift line.

About Martin H. Duke

Martin joined the blog in Fall 2007 and became Editor-in-Chief in 2009. He is originally from suburban DC, but has lived in the Greater Seattle area since 1997. He resides with his family in Columbia City and works as a software engineer in Lower Queen Anne.




Comments

  1. When fully implemented, this could nearly double taxes paid to transit within the Puget Sound region, yet I don’t see much in the press on this. (Where’s Mike when you need him?)
    A typical family, spending $25,000/yr pays $450 in transit sales taxes. A family buying a car worth $30,000, or a two car family with a couple of older cars could pay up to $300 more per year for tabs, plus existing taxes and new tolls – it all starts to add up.
    For transit riders this is great news. Everyone else? Not so much.

    • It’s misleading and incorrect to refer to “transit riders” and “drivers” (or even worse, “transit riders” and “families”) as if they were distinct and non-overlapping groups.

      There are people who ride transit, and people who drive, and people who walk. Most people in Seattle fall into all three groups. And even people who never ride transit benefit from the mobility options that it provides. It means that they don’t need to chauffeur their kids everywhere. It means that their grandparents can live independently for much longer. It means that the family next door has a stable income, because they can use transit to get to jobs that don’t pay enough for car ownership to be affordable.

      Every tax has winners and losers. If you’re going to criticize taxes on the basis of their impact on people with less money, why not focus on the sales taxes which give Washington State the most regressive tax structure in the country, rather than on a MVET which is highly progressive?

      And honestly, your example isn’t that compelling. A family spends $25,000 a year, but they’re going to buy a car for $30,000? That’s a risky financial decision in the first place. If the only losers under this system are people who spend over half of their take-home income on a vehicle, I think we’re doing just fine.

    • MIke, according to the Bureau of Labor Statistics in 2010 the average American family (making $62,481,) only spends $10,088 that is subject to sales tax. A family that has $25,000 to spend on commodites subject to sales tax would hardly be typical. According to your math the typical family is only paying about $180 a year in transit sales taxes.
      That same family would probably not be driving a $30,000 car. I’ll be generous and cap their car at $10,000, with an extra $100 in MVET. With the licensing fee capped at $100 we’re at a typical American family paying $380 in the transportation taxes you brought up.

      • I don’t have the breakdown of current sales taxes, and am heading out of town, but here’s what a quick search of the 2010 census and Nat’l Transit Database yeilds.
        ST recieves $148 per person in local taxes.
        MT receives $194 per person in local taxes.
        The total collected is $342. Avg Household size is 2.47 so the typical family in the Puget Sound is paying $855 in local transit taxes, much of which is sales tax.
        My estimate for the new excise is a WAG, so I’ll give you that one.
        Anyway you slice it, the new taxes, piled on top of tolls (coming to a roadway near you), is a big hit for the average wage earner around here.

      • Matt the Engineer says:

        Our taxes are too low. You get what you pay for, and we’re cheap as hell.

        I’d prefer an income tax, but MVET sure beats a regressive sales tax.

      • Ben Schiendelman says:

        MIke, so this would change the total from $855 to about $1055, with two average cars. In no way is this a doubling.

      • “ST recieves $148 per person in local taxes.
        MT receives $194 per person in local taxes.”

        Anyone who uses averages when discussing the poor or working class is trying to sell you some bullshit

        What’s the median family pay?

      • OK, I’ll bite.
        And the answer is?

      • Nathanael says:

        Look it up yourself, MIke. It’s painful to compute, you need really good census data. But *anyone* talking about the “average person” has the responsibility to compute the median numbers.

      • Chris Stefan says:

        The other thing to consider when looking at ST and MT taxes is outside of some Federal money there is no other significant source of revenue for funding transit capital projects or operating costs. Most other transit agencies get at least some additional funding from state and local governments.

        There are a couple people locally who like to rant about the high regressive transit taxes going to Metro and ST. One in particular likes to compare both to Tri-Met in Portland. He or she seems to think the current funding structure is some conspiracy on the part of Metro and ST. This person completely ignores the fact the legislature granted sales-tax authority as the primary funding mechanism for transit. Since Oregon has an income tax it is fairly easy for them to use a payroll tax as a transit funding source. Politically such a tax would be DOA in Washington. Furthermore this person seems to ignore the money from the general fund going to Tri-met. This person also claims ST isn’t using Federal grants as effectively as Tri-Met, ignoring the entirely different Federal funding climate MAX was built under as opposed to the one LINK is being built under.

  2. Mickymse says:

    While it’s always difficult to appear to be raising taxes, folks should not forget that we used to have a MVET rate that cost Seattle drivers a couple hundred dollars a year for their license fees, which went to transit and roads and ferries.

    Eyman’s I-695 to kill this is what started our long, inevitable decline in funding around the region and also made the reduced revenues much more volatile.

    Seattleites did not support the initiative at the time because many voters were well-educated about what the tax funded around here. Unfortunately, voters elsewhere in the state wanted lower taxes in any way possible. That trend has inevitably continued also.

    • Lack Thereof says:

      I love all the doomsday “the licence fees are too high” stuff. Do you remember 1999? They’ve been much, much higher before.

    • Chris Stefan says:

      One of the issues that almost ensured passage of I-695 was the entirely ridiculous depreciation schedules being used by the state to calculate the MVET. The schedules had little to do with either the IRS depreciation schedules or blue book value. The legislature would periodically discuss a fix but never seemed to get around to it.

  3. There are some really loose numbers being thrown around here about how much taxing Metro and Sound Transit do.

    I’d say the average family around here pays about $500 per year in direct transit taxes.

    Here’s how I derived that. I began with Dan Satterberg’s recent estimate of sales tax impacts:

    “[With a] 0.3 percent tax, Satterberg said, the tax would cost a family of four about $60 a year.”

    http://seattletimes.nwsource.com/html/localnews/2011050967_salestax12m.html .

    Sound Transit and Metro together impose a 1.8% sales tax, so that’s six times the $60 per year, or $360. Sound Transit’s car tab tax has to be entered in. It has been coming in at about one-eighth of ST’s sales tax stream, so that’d put it at about $22.50 per vehicle each year. The average family of four has two vehicles, so that’s $45 per year. Metro also got a new property tax (in 2010) of about $40 per household per year. Add ‘em up and you get $455 for this year.

    Bear in mind that families in Portland, the Twin Cities, etc. pay $0 in direct taxes each year. The people in the Twin Cities got light rail for no new taxes. TriMet uses a far more modest tax that businesses pay.

    Metro, the transit governments in Pierce and Snohomish counties, and Sound Transit will confiscate something on the order of $1.5 billion in local tax revenue this year alone. All the peers do a great job of providing bus service, and expanding train systems, with far less annual local tax revenue:

    - TriMet (Portland) – $233 million;

    - DART (Dallas/Fort Worth) – $385 million;

    - San Diego Metropolitan Transit System – $100 million; and

    - RTID (Denver) – $241 million.

    There is no excuse for the high taxing level here; it’s many times higher than in the peer metro areas. Anyone think they can justify the high taxing levels here?

    One final note, a “MVET” is NOT progressive. Even though it increases based on the value of the vehicle, it still is a tax designed to hit the families with the least disposable wealth disproportionately heavily. Moreover, it targets individuals and families, not corporations. That’s a fact.

    • Ben Schiendelman says:

      Khalid, the places you’re talking about don’t have dense downtowns or geographic constraints. None of these cities have floating bridges either.

      • If you believe the relative densities of those two cities vs. Seattle are relevant to the very different tax burdens each impose on people then explain your position. The tax burdens here are a direct function of the bond sale contract security clauses. The same tax hit will continue for decades irrespective of the capital and operations costs.

        Similarly, your comment referencing the floating bridge is meaningless. TriMet’s latest extension involves building a new light rail and mixed-use bridge over a river. No regressive taxing is needed for it.

    • Martin H. Duke says:

      Most other systems rely more on direct state subsidy than local taxes.

      • Nathanael says:

        Yep. Most of the Twin Cities system is paid for at the state and federal level.

      • Exactly. That is why the heavy direct regressive taxing done here is abusive and unnecessary.

        Let me ask you, Martin . . . do you have any idea of how much tax revenue Sound Transit already has committed to confiscate through the mid-2030′s by virtue of the 2009 bond sales, and what the likely cost to taxpayers would be if all the planned ST2 bonds are sold?

        Those figures are a deeply-hidden secret at that government. Staff did not disclose to the board in 2009 at the time it rubberstamped the bond sale resolution how many tens of billions of dollars of tax those bonds would cost the public. You post lots of stuff “in favor of transit” but you seem oblivious to the public costs. It’d be great if you could estimate what this financing plan for ST2 could be expected to cost the public.

      • Martin H. Duke says:

        Your reply is a total nonsequitur. What federal and state sources are ST and Metro not using? Do you think many people here would oppose a progressive tax?

        You must know how much if you’re so mad about it, so save me the trouble. Since it’s hard to maintain perspective with dollars valued over long time periods, please also include the amount we’re spending on roads in the same time frame.

        I know exactly how much it’s costing: 0.9% of taxable purchases plus a small MVET. Any other figure is hopelessly muddled by mixing dollars from different years.

      • The effects of inflation are not as big or as confusing as you seem to believe.

        The cost of the ST2 capital projects will be about $13 billion, in YOE dollars. ST will obtain about $7 billion in bond sales revenue up through 2023 to apply to those costs. Right now ST is taking in about $600 million per year in tax revenue, and that amount will increase every year going forward as the population increases and because of inflation.

        How much tax revenue do you think Sound Transit should collect to cover the balance of the capital costs of ST2?

        How much tax revenue do you think Sound Transit should be taking in to subsidize operations costs, above and beyond what it might need for the capital expenses?

      • Martin H. Duke says:

        Thanks for the numbers; they’ve actually gone down since 2008.

        I actually would prefer that we pay a higher rate to ST, so that we can finish earlier and retire the bonds earlier. But the state won’t let us. And of course, the total tax take will be those costs plus interest, plus an operating subsidy likely to be much smaller than Metro’s.

      • There’s another very simple way to reduce cost, defer construction. You not only save on interest because you’ve paid out more in cash from savings with interest but you save large amounts of operational dollars. East Link for example isn’t even projected to have ridership numbers that would justify light rail until 2040. A couple of years wait would pay for the Bellevue tunnel. A ten year wait and ridership would still be pathetic but at least it would be paid for almost entirely with cash in hand. And of course the jackpot would be getting to 2030 and realizing that the buses are doing a better job for a fraction of the cost of putting light rail on a bridge they’ve just instituted early tolling on to pay for replacement of the sinking bridge.

      • Martin, is there something about my question you don’t understand?

        Here it is again. The cost of the ST2 capital projects will be about $13 billion, in YOE dollars. ST will obtain about $7 billion in bond sales revenue up through 2023 to apply to those costs. The rest of the $6 billion will need to be covered by tax revenue, fare revenue, and federal grants.

        Focusing on the first of those three sources, how much tax revenue do you think Sound Transit should use to cover that $6 billion balance?

        I understand there also are debt service costs, and an operations subsidy, and that some tax revenue will be available for those costs as well. Let’s just focus for a minute on the capital costs and how much tax revenue should be used to pay for those.

      • @ Bernie: That’s thinking outside the box! You suggest:

        A ten year wait and ridership would still be pathetic but at least it would be paid for almost entirely with cash in hand.

        Do you understand that one of the implications of that approach (less bond sales, and instead more “pay costs with tax revenue”) would greatly reduce the public costs because of how Sound Transit pledges to collect taxes at or near the maximum rates while any of the bonds are outstanding?

      • Martin H. Duke says:

        You’re right. I don’t understand. My preference is federal grants, then taxes, then fares.

      • Federal grants are the same thing as taxes.

      • Martin H. Duke says:

        Only in the most pedantic sense. Federal funding is sourced from borrowing at negative real rates, and ultimately backed by progressive or environmentally efficient taxes over a huge tax base. That’s vastly superior to local sales tax levied in a recession.

      • It all still comes from tax dollars. The Federal government can (so far) borrow at better rates than local bonding. But these are short term rates. If ST issued 3 years notes they’d get a great rate right now but that would be reckless. States and local government can’t just deficit spend which has turn that low interest rate into a giant quagmire. If you count payroll taxes on top of income taxes the federal fleecing isn’t really very progressive. And then there’s the issue of trading pork at the federal level which means funding lots of stupid projects to get some of our money back.

    • Khalid: Could you break that down to something I can understand – like how many lattes would that buy.

    • And what do those ‘peer systems’ get for their money? What % of trips are via transit compared to other modes?

      • What they get down in Portland is a substantial amount of useful transit. TriMet serves a three county area with a population of about the same size as Sound Transit’s population (~2.7 million people). TriMet now has 125,000 daily light rail boardings. It also runs an extensive bus system. The people there pay no direct taxes for those buses and trains.

        The overall “% of trips [] via transit” is small here, and everywhere else. Any difference between that percentage here and elsewhere could not come close to justifying the heavy regressive tax burden to which we alone as a community are subject.

    • Chris Stefan says:

      Khalid,
      You are comparing apples to automobiles, which is to say you are ignoring the very different funding structures used by transit agencies in different parts of the country.

      In Washington the only funding mechanism for transit provided by the legislature is local direct taxes. You are welcome to go down to Olympia and argue this should be replaced by funding from the general fund, gas taxes, or whatever you like. Good luck with that.

      The only fair way to compare agencies is to look at the total budget not just the portion coming from local direct taxes. Even then you are better off looking at things like cost per service hour. Yes Metro and ST are rather high on a $/service hour basis, but not to the extent you claim, especially once cost of living and fuel is factored in.

      Similarly for capital projects you really need to adjust for inflation as looking at the unadjusted dollars is going to make say San Diego’s system look very cheap compared to LINK. Also realize we didn’t have cheap unused ROW sitting around on a convenient alignment which many cities have been able to take advantage of for their light rail systems.

      • you are ignoring the very different funding structures used by transit agencies in different parts of the country.

        Heh. I’m not ignoring those difference, I’m commenting on them. The abusive taxing scheme for financing buses and trains here is an aberrant anomaly. It should be improved, not made worse by more taxes directed at people.

        Similarly for capital projects you really need to adjust for inflation as looking at the unadjusted dollars is going to make say San Diego’s system look very cheap compared to LINK.

        That makes no sense and it has nothing to do with the issue of how abusive to people the taxing scheme for transit is here. The costs of capital projects, even to the extent they inflate over time, have nothing to do with the tax costs to the public. The tax costs to the public are a direct function of the bond sale contract security terms. The public will bear those for decades whether or not inflation increases the costs of, say, building materials. Is there anything about that you don’t understand?

        I posed a question to Martin above, Chris. It’d be great if you took a shot at answering it as well, to show you have some idea of how abusive the bond sale contract security terms used here are.

        we didn’t have cheap unused ROW sitting around on a convenient alignment which many cities have been able to take advantage of for their light rail systems.

        The ROW acquisition costs do not impact the tax burdens; the tax burdens are a function of the tax collection pledges in the bond sales contracts.

  4. Lack Thereof says:

    You can thank me, and my merciless one e-mail of support, for Adam Kline’s vote.

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