With Transit Now and Sound Transit 2, both Metro and Sound Transit have capped out what sales tax they’re allowed to ask for – when we extend light rail again, we’re going to need a new source of income to pay for it. There are lots of options: A new MVET, tolls, part of the gas tax, a carbon tax, even a property tax. None of these are available unless authorized by the state legislature.

This won’t just be a matter of asking nicely. The Governor vetoed the option of a local vehicle license fee for transit. Chair and Vice-Chair of Senate Transportation, Senators Mary Margaret Haugen and Chris Marr, respectively, sent this letter (link removed due to a technical issue, email us if you want it) to the Governor requesting the veto. Essentially, the chairs would like local option taxes to be on the table for other “transportation modes” – like, say, highways.

The state has had little will to increase gas tax past the 2005 9.5c package, and with driving down, they’re left with a huge backlog of underfunded highway projects. They’re looking increasingly to local government to fill some of those gaps – local government that lost access to the MVET a decade ago.

This is a multi-decade trend. Transportation project funding has been shifting from primarily federal to primarily state, and now local – I can only speculate as to why, but the recent RTID package was another manifestation of the larger government failing to build the political will to fund projects, and passing the buck down to the local level. I think this letter, and the Governor’s action, is another sign that we’ll be asked to fund highways locally once again.

The problem, of course, is that at the local level and the state level, we seem to have different aims. Voters in the city want to build mass transit and increasingly a streetcar network, and want relief for overcrowded buses. Sidewalks are getting wider, excess parking is frowned upon, density in the city is slowly going up.

The state hasn’t caught up to this thinking. There is still a belief in Olympia that a wider highway will decrease congestion – there’s still a belief that congestion is something you can decrease! So several billion goes into infrastructure for cars, and virtually nothing goes into infrastructure for people.

So what do we want the next state budget to look like? What funding options do we want to build our next rail line in the city? And how do we get there? If enough of us start talking to our legislators, we can make it clear that our next transportation budget needs to look very different, but what is it that we want to say?

41 Replies to “Thoughts on Transit Funding”

  1. This is a multi-decade trend. Transportation project funding has been shifting from primarily federal to primarily state, and now local – I can only speculate as to why, but the recent RTID package was another manifestation of the larger government failing to build the political will to fund projects, and passing the buck down to the local level. I think this letter, and the Governor’s action, is another sign that we’ll be asked to fund highways locally once again.

    Ben –
    If we look back at the last 30 years or so, from the time of the election of R W Reagan in 1980 through the G W Bush election in 2004, we have seen the institutionalization of reducing the positive federal government’s role in US life. Newt Gingrich, Grover Norquist and their ilk have sought to prevent continued use of federal monies for any of the useful civilian missions the US government might have had since the New Deal and before. Thus the turning away from the mentally ill, the reduction in funding for parks, for education, for the arts, and yes, for health and public transport. Their ideology has sought to preserve the power of limited liability corporations and the military at the expense of almost everything else the US government used to do. Now we are seeing the states doing the same thing – “devolving” to local governments many of their programs which governors and/or legislators have chosen to fund no longer. With the 2008 Presidential election, there is hope for some changes at the national level; we in Washington sate will have to take steps locally to elect a new County Executive, a new governor in 2012 and to start to rid our state legislature of anti-progressives as early as 2010. I’d guess it’ll take most of a generation, sad to say, to get the federal and state governments turned around again. That said, your generation holds the keys to keeping the pressure on local, state and federal officials and representatives to continue making those incremental steps which will lead to a more sustainable, communitarian and egalitarian society.

  2. Ben, when do the Sound Move portions of the tax sunset? After bonds from construction (same with ST2) are retired we get some of that authority back, don’t we?

    1. The Sound Move sales tax authority will be reused to build ST2 projects. The MVET is lost when we pay off those bonds, ending around 2023.

  3. Transit is going to have to figure out how to collect more from transportation system users. Receiving nearly double in sales tax revenue over the cities within its boundaries it’s arguably rolling in dough.

    1. Given the order of magnitude higher highway spending, I don’t see how you can argue that. The 405 expansion work alone is the cost of ST2’s light rail.

      1. If I recall correctly the total cost of the 405 expansion is more than Sound Move and ST2 combined.

        Add in all the other major road projects in the ST district either built, under construction, or planned and you can pay for rather a lot of transit. Heck give transit even 10% of the money and it still is quite a lot.

      2. I think 405 was some $11 billion, not quite *that* much, but who knows, maybe it’s inflated over time!

        Personally, I’d love to see us stop expanding highways period, but few are there yet. :)

  4. Metro/sound transit needs to find ways to cut cost. There cost per boarding is much higher then the nation average.

    1. Whoa, there, be careful not to lump the agencies together. Metro and Sound Transit have fairly different costs per boarding.

      Metro has no say over the 40-40-20 rule that causes them most of their grief.

      But what does the national average say? Is that for buses alone? Where do you see that data, and what makes Metro’s operating costs higher? We have a very different urban landscape and different expectations for our service than the national average.

      1. I’ve read it. Their highest impact finding was the 40-40-20 rule for service allocation, which Metro can’t affect. That’s the county council.

        So when you say “Metro/Sound Transit”, I want to make clear that they are VERY different agencies – Sound Transit has different service allocation guidelines entirely, different views on access to data, etc. – and when you say the agencies need to find ways to cut costs, I want to make clear that the agency can’t change their service allocation policy very much without council action.

    2. Sound Transit is in an entirely different situation than Metro. ST has the fortune of seeing a new stream of funds just as tax revenues were declining. As long as the recession doesn’t deepen Sound Transit just needs to put off the start date of new service to make their books balance.

      Metro is an entirely different animal. While you could argue 40/40/20 is the same as sub-area equity it really isn’t and the effects are much different. In addition the long-term effects of I-695 removing the MVET funds transit agencies used to receive are coming home to roost. I’d add another problem for Metro is agency decisions are much more subject to political pressure than for other transit agencies with appointed/federated boards. While the county council is much more “responsive” to the voters that is a double edged sword as it leads to bad decisions like 40/40/20 or keeping the 42 due to the efforts of a small but vocal group.

      1. It involves Metro adding service. 40% of new service hours has to be added on the east side, 20% in Seattle, and 40% rural. The model doesn’t work anymore as Seattle needs more than 20%.

      2. I think you mean “South King County” not “rural”. South King actually has higher transit ridership and a higher transit share than East King. Most likely due to a lower median income. Besides Kent and Federal Way are hardly “rural”.

  5. I think the governor rightly vetoed the provision, but for the wrong reasons. First, using a vehicle tax to fund transit inevitably fuels resentment. Drivers feel like they’re paying for a resource they don’t use. Right or wrong, it will sour drivers towards transit in general. Second, funding transit through MVET produces a dangerous codependence. Local government then needs a certain number and value of vehicles on the road to sustain their transit operations. Were Seattle to become a pedestrian paradise where no one needs a car would be a disaster, there’d be no money to pay for the busses and trains! Car usage in this country is likely in terminal decline, using MVET only means we’ll be in a budget crisis again in a few years.

    Frankly, property taxes are probably the best option. AFAIK, property taxes in this state are collected in a revenue-stable manner. The flow of money is predictable and consistent. After all the budget pain this year, we can agree how much better our transportation situation would be if we didn’t have to beg for stop-gap funding from the state.

    1. I want to point out that MVET doesn’t tend to decrease, even as a place becomes less car-dependent. The percentage of people who drive decreases as the number of people increases, and the average vehicle value goes up as that happens.

      Remember, Sound Transit already uses MVET successfully.

      I agree that property taxes are likely a good option. In order to get them, we’ll have to change the laws regarding property tax increases – we’re limited to 1% growth per year, I believe?

      1. Ben,
        AFAIK the 1% per year growth is only for existing taxes, and higher increases are allowed as long as there is a public vote.
        New property taxes can be imposed within the authority granted by the Legislature. See the ferry districts, or the parks levy.

        I’m curious if King county could place an operating or capital levy on the ballot for transit like they can for parks, jails, courthouses, low income housing, E911 services, or Medic One.

        I’d like to see some sort of parking tax or employer tax used to fund transit. I believe Portland among others does this. Ideally there would be some way of taxing sprawl and auto-oriented development for mass transit funding. The idea would be to discourage exurban subdivisions and big box stores surrounded by parking and to use the bad behavior that does occur to fund better transit.

      2. Ah, I didn’t know new taxes were exempt! That’s good to hear.

        I suspect the county could put a transit levy on the ballot, but I’m not sure. Again, this is a matter of what the state government allows. The property tax for the ferry district is small.

        I also believe Sound Transit may collect a small employer tax.

      3. It isn’t so much exempt, but that any increase including new taxes requires a public vote. Now
        for the most part property tax levies tied to bond issues have always required the public vote, but this extends it to all property tax increases except for things where the legislature decides to exempt the issue from a public vote like the ferry district money. The 1% limit is actually a law passed by the legislature as the courts threw out Eyman’s poorly drafted initiative language as usual.

        I’m not exactly sure what kind of authority the county has for bond measures, what kinds of limits are in place, or if they could be used for transit related funding.

  6. Ben,

    the federal role must be included. the network of limited access highways was constructed with 80 to 90 percent federal funds. the federal gas tax has not been increased in decades. its buying power has disappeared. the highway trust fund is about to be zeroed out. as Krugman and Friedman suggest, we need a large increase in the federal gas tax — something like $2/gallon. the level in the US would still be much lower than in Europe and Japan. the revenue from a federal gas tax could fund highway and bridge maintenance, transit projects, sidewalks, and Katrina reconstruction. with a national tax, there would not be a boundary issue between state or local jurisdictions. the decline in the federal role is the main reason the state has been looking to the region to fund the expansion of the limited access highways. in addition to the benefits of the gas tax revenue stream, it would also help with issues: induce smarter land use, the purchase of higher mileage vehicles, less driving and shifts to other modes; all would help with global warming.

    there are other revenue possibilities. TriMet uses a payroll tax. There could be an odometer or gps tax on vehicles miles driven. how about a tax on all long-term parking spaces, both free and paid?

    ST buys their service from Metro, CT, and PT, so the cost issues are shared.

    The 40-40-20 allocation rule does not cause Metro most of its grief. it only is the first crude step in allocating new service. there are plenty of good service investments in all three subareas. its grief is being caused by a disappearing revenue stream due to the recession. before the recession, the problem was a lack of new revenue, not its allocation. during the recession, the problem is disappearing service subsidy, not the allocation of new revenue that does not exist.

    the longer the recession lasts, the more likely it will impact ST2 projects.

    1. There are lots of revenue possibilities – but which would the state government be most likely to allow? Which would win at the ballot box? And I agree that the federal component must be increased dramatically to enact the kind of change in transport mode we need in the coming decades.

      40-40-20 certainly causes Metro significant grief. I’d imagine you know a lot more about the East subarea than I do, but as I understand it, service productivity is dramatically higher in the North/West subarea. When 40-40-20 sends a coach down 156th with 8 passengers per revenue hour when it could be picking up 30 in Seattle, it’s a problem. Non-40-40-20 reallocation could likely earn Metro a reduction of several dollars per operating hour.

  7. The biggest resentment with the MVET was the allocation tables. The state has fixed that pretty much, they value your car based on Kelly blue book & Edmonds car prices.

    I-695 didn’t remove MVET taxes, it just says you have to ask to impose them. And as we have seen in the previous ST2 package, a fair allocation for a good cause will pass. The nice thing is that MVET is a somewhat progressive tax, in that if you are poor you buy cheaper cars, and pay less. For instance my 82 VW pays the minimum which I think is around $5. What should also be added is a base vehicle tax based on weight. Heavier trucks do more damage, should pay more. Next is a parking tax, and parking lot tax, so that if you drive, you pay for the privilege.

    Next I’d like, ok that’s too strong a word, but would prefer a bicycle sales tax to fund bicycle improvements. It’s easier to administer than a bicycle license tax.

    And yes, if the state constitution could be amended, I’d put a tax on gasoline and diesel to fund mass transit and the ferries. It’s a tough sell though.

    1. There wasn’t just I-695! There was I-776, and then legislative action to enshrine those ideas after the initiative was thrown out (if I remember right).

      We’d definitely need legislative action to even vote for an MVET.

      1. Right, like every Eyman initiative they did nothing but cost the State in election costs and legal battles. The legislature bowed to what was political pressure rather than trying to come up with and explain a fair system. MVET was in place for years and nobody really fought it until government got greedy. One of the changes was to RV’s. Some people used large and very expensive RV’s only a couple of times a year (which they paid a ton of sales tax on BTW). Because MVET is charged on value instead of use they scammed the system using temporary trip permits instead of licensing the RV. That wasn’t fair but neither was the option of paying thousands for tabs on a vehicle only used maybe a couple weeks out of the year. The valuations and percentages also got completely out of whack and that’s why there was such strong public sentiment to push back.

      2. The main reason most people hated the MVET was because the state used a crazy formula with no relation to the actual value of a vehicle to base the tax off of. If the values had been tied to Kelly Blue Book or the even IRS depreciation tables most people wouldn’t have been as annoyed with the MVET tax.

        The legislature had many opportunities to fix the MVET valuations (I remember people complaining back in the early 80’s) but chose not to do so until after I-695 and I-776.

        Unfortunately the MVET revenue was never replaced with another revenue source which has had predictable impacts on everything from the ferry system, to transit funding, to street and sidewalk improvements, to local government funding.

        We really need to have an honest discussion of taxes, the role of government, etc. in this state. However almost no elected officials seem willing to have that discussion which means the anti-tax and anti-government types along with the watch salesman from Mukelteo are setting the state fiscal policy.

  8. We’re struggling with similar issues in St. Louis. I think that hitching transit to sales tax revenue or gas tax revenue is a sure loser. When the economy takes a dive and revenues plummet, that’s when more people are using the system and more funds are necessary! Recently we got a one-time “emergency” appropriation from the state government to put back $12m of the $35m in service cuts that happened in March, but it’s a one-time stopgap measure and the future of transit in St. Louis – and many other smaller cities, I imagine – is very uncertain right now.

    I think transit systems always fight the same battles. We always hear that “out-state” legislators don’t want to spend a lot of money on urban transit systems because their constituents don’t see any direct benefit. I think the answer to that argument is twofold: One, the same could be said about urban-specific roadway spending; and two, most of the state’s tax base comes from the two urban areas, so it’s in everyone’s interest to keep the economic development/moving people to jobs going in the urban areas. It’s really a question about educating people, not just on the benefits of transit but the enormous hidden costs and subsidies behind roads.

    1. Are more people really using the system? That was a mistaken conception here even of course that when the two things that drove record ridership, a booming economy and high gas prices, reversed ridership would continue to increase. Transit use has fallen off from that peak. Although I believe it is still above year ago levels the trend is a decline. The question is do the service cuts match the routes that are losing ridership. For Metro and ST I think the answer is no. In the last ST board meeting there was a push to increase weekend service because of the promise to provide increased bus service by a certain date. There wasn’t enough lead time to order buses to serve peak demand so the push from rural area board members was to bring on the weekend service so they didn’t have to go back to the voters and explain they weren’t getting new service yet.

      1. Do note that fuel prices have come back up from their base again. I don’t think we’re going to continue to see a dip, oil is nearly at $70 again.

      2. One problem is many of the routes that have seen increased ridership over the past few years haven’t gotten much in the way of service increases. To the extent the ridership declines have been on those routes, they are still overcrowded and in need of service increases. One of the big examples would be the 2 between downtown and Queen Anne which is crowded all day long and well into the evening 7 days a week.

        The 66/67 (the route I ride the most) is a bit less crowded than it was a year ago but it still is a pretty high ridership route. Thankfully it doesn’t get nearly as crazy as some other routes. I’ve never had a coach pass me up because it was too full for instance.

      3. I can’t quote the exact numbers here, but I can tell you that ridership was regularly increasing in our city until the recent service cuts. Prior to the cuts, the ridership trend was definitely updwards.

        Let me be more clear about my point. My point is that, with any program that gets some public money, there is a finite amount of resources and how it gets shared out is subject to many, many considerations. I mentioned the urban vs. non-urban “argument”, but I don’t think that’s a true “argument” – you never hear an actual legislator making the distinction, because they understand that deciding what to fund or not to fund is not so simplistic. That distinction just muddies the issue. Funding is a complex balancing of needs & priorities.

        So the only point I wanted to make was whether tying transit funding to sales tax revenue is a good idea or not in light of the particular conundrum for transit, i.e. slow economy/high gas prices [less sales tax revenue] = more people relying on transit [more resources needed]. This is a question all transit agencies face in common, no matter where they are located. The problem is, I don’t know what would work better.

  9. Being a transit blog, many commenters here think that increasing ridership, or covering an operating shortfall, will improve transit. To a small extent they’re right.

    But the larger picture is the crash of the world oil economy. What emerges from the rubble isn’t going to look anything like what we have today. Back in the late 60s the military-industrial state that won WW II finally crashed, and when the dust settled entire cities, like Pittsburgh, had effectively disappeared.

    You want a cash cow? Look at the military budget- equal this year to what the rest of the world combined will spend on armies and war. Not ready to bell the cat? Prepare to live with the consequences.

    Now, it might be a good thing to twiddle endlessly with the 13 layers of government that you need to change to provide a few more cents for buses- but it won’t be a great thing. It may be a good thing- for all I know, it may be essential- to get to know your neighbors and representatives in public hearings and candidate forums, but it’s not how public transit gets built in countries like France and Germany.

    The last time I looked at a King County tax assessment, 22% was going to roads. That’s a heap of bucks, and we already have enough roads. And, unlike gas taxes or MVET, the property tax revenue stream increases when transit is successful.

    Seattle needs to fund some transit improvements in the city for city residents. Between the tax exemptions and levies, city residents pay hundreds of millions each year for the Port of Seattle. It would not be unrealistic to revamp that structure a little and build some transit with some of the money.

    1. I was just thinking it would have been nice if the transit functions of Metro had been merged with the Port of Seattle rather than King County. The port has a whole bunch of unused tax authority and really doesn’t need most of it if it was run like other large US port authorities (most make a profit off of maritime operations instead of just the airport).

  10. Ben,
    there is no new service subsidy to allocate! that is all that 40-40-20 is for. You mention 156th Avenue NE; Route 245 serves it and attracts standees in the peak periods and about 23 rides per platform hour; it is one of the fastest growing routes in the East. Route 169 between Renton and Kent attracts standees all day long. There are weak routes in the West subarea too (e.g. routes 45, 46).

    Mike B,
    South does not equal rural; it includes the suburban cities of Renton, Kent, Auburn, Federal Way, DesMoines, SeaTac, Burien, and Tukwila. rural areas include Vashon and area east of the urban growth line except for the urban islands such as Enumclaw, Duval, and North Bend. south King County cities include several downtown areas that developed before WWII and are walkable and where folks want to ride transit. ridership is growing fastest in that subarea.

    1. The problems with 40/40/20:
      1. It has resulted in a number of service hours going to unproductive routes in the East and South subareas which result in higher platform hour operating costs in those sub areas. This isn’t to say every new service hour in those sub areas is unproductive, but that enough service hours have been allocated that way to substantially drive up the costs.
      2. In the name of equity it requires all service hour cuts to be allocated to the sub areas in proportion to the existing service hour allocation. This means the West/North sub area will be forced to absorb 62% of any service hour cuts.
      3. When revenue recovers and the previously cut service hours replaced they have to be added back in accordance with 40-40-20. This means the total service hours in the East and South sub areas will have to nearly double before the West/North sub area will see service hours restored to 2008 levels.

    2. there is no new service subsidy to allocate! that is all that 40-40-20 is for. You mention 156th Avenue NE; Route 245 serves it and attracts standees in the peak periods

      I don’t see 156th during the day but I do see 148th. Peak traffic is of course standing room only. Mid-day however the buses are running empty. Part of the problem with 40/40/20 is it forces ridership runs just in the name of increased service hours. We don’t have the buses to increase peak capacity and, in my opinion far to little has been done with things like the van pool to use the money where the demand is. Of course with 148th and 156th north of 20th we have SR 520 which is only a 1/4 mile from either corridor and a max 3/8th of a mile between flyer stops.

      The proposed Bellevue “Rapid Ride” appears to be another case of wasted money just because it needs to be spent. I can understand the need for frequent connections from Crossroads to downtown Bellevue but there is nothing rapid about buses on NE 8th. Crossroads to Microsoft might warrant more service too but connecting Bellevue Transit Center to Overlake via Crossroads and calling it “Rapid Ride” is an oxymoron.

    3. eddiew,

      You’re familiar with the cuts coming to Metro. You know those cuts won’t use the same distribution method – 60% of those cuts will come from Seattle. Then, when sales tax revenue rebounds, only 20% of the returned hours will come back.

      In that scenario, and for the last decade, Metro has become less cost effective every time new hours are added. I know the numbers, I know that adding service hours in East King leads to less than average productivity. The mechanics of which routes get service are secondary – nearly all Seattle routes get better productivity metrics than nearly all Eastside routes.

  11. Representative Judy Clibburn (41st District, Mercer Island) said I could ask her in the next session of the Legislature whether those of us outside the Sound Transit taxing district could nevertheless opt into to paying the RTA portion of our annual MVET taxes.

    We are currently able to opt-out of paying an additional fee for the State parks, so when I met Representative Clibburn in April, I suggested that we be allowed to opt into paying the MVET RTA portion. Someone would actually have to ask the MVET payer if this is something they would like to do as opposed to something they don’t want to do as I understand is the case with the Parks tax.

    I’ll keep it in mind for the next session in Olympia in 2010.

    Tim

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