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Both the House and Senate in Olympia have released details of their revenue plans.  As we’ve noted before, to the extent that these eliminate sales tax exemptions, they will also slightly increase revenue at local transit agencies, all of which rely on sales tax for a large chunk of their revenue.

The House proposal (thanks Publicola) contains, by my count, $458m in new sales tax revenue from repealed exemptions in the 2011-2013 biennium.  Our Metro revenue predict-o-tron tells us that that amounts to about $12.5m a year for King County Metro, or about 100,000 service hours.   That’s about a quarter of the budget hole Metro faces in that period.  For Community Transit, it’s about $2m, not enough to restart Sunday service, but enough to buy back about a third of the weekday cuts.

The Senate budget is presented in a way that makes it much harder to figure out what’s sales tax, but my count (see this) says that there’s about $180m for the state over two years, or $5m a year for Metro.  An email to Sen. Murray to clarify the numbers did not generate a response in time for this post.  Anyone who knows more about the taxes mentioned here is welcome to correct the record on this.

18 Replies to “State Revenue Proposals may Help Transit”

  1. I think it is also worth noting that there have been two recent pro-transit votes in the House. A GOP amendment to limit toll revenue spending for highway purposes on the 520 bridge was defeated in the transportation committee and handily defeated again on the house floor last night.

  2. Ah, it never occurred to me that repelling sales tax exemptions on the State level would also help sales tax dependent transit agencies on the local level. This is indeed an unexpected bonus for Metro and ST!

    Good news indeed — I’m all for it!

  3. The state should eliminate the sales tax exemption on gasoline. It’s consumed in the state, just like other things that are taxed. There’s no great rationale why gas should be exempt while everything else we consume is taxed. That would both help the state and provide some benefit to transit agencies.

      1. Keep pushing electeds on the possibility of a local sales tax on gasoline. It appears possible that the exemption applies only at the statewide level…

    1. The rationale, obviously, is that gasoline is a “necessity” like food. And that’s actually true in rural areas, although not in King County and certainly not in Seattle.

      1. They added a sales tax to bottled water. In some areas, you don’t have clean or good-tasting water. All our clothes have sales tax. Our phone service has sales tax (both landline and cellular).

        It doesn’t seem to be necessity so much as the political cost that is keeping an exemption for gas.

      2. Bottled water and refillable container water are quite different. Those without clean water have a better option than bottled water already.

      1. No I don’t support the exemption, and certainly not in the Puget Sound and Seattle. I think it’s an environmental and national security imperative to raise the price of gasoline.

        That said, I recognize that there will be unfortunate impacts on disadvantaged people in rural areas and would hope that some of the proceeds would be used to mitigate that.

  4. Couldn’t the legislature do this? is there any constitutional prohibition?

    I know it would be controversial, but it also would provide a big pot of revenue which Olympia is looking for. I wish the legislators would take on things like this.

    1. This comment was meant to be a reply Ben’s suggestion that removing the sales tax examption from gas would require a statewide campaign – I hit the wrong comment field.

  5. I was informed by a Seattle Times article that there is a sales tax exemption on new car purchases up to the value a used car trade-in. It doesn’t look like the House version closes this exemption but I couldn’t tell if the latest Senate version does. Another automobile subsidy if anyone was looking for one.

    1. I think the theory is that the purchaser of the used car will pay sales tax on the used car, and that what you are “consuming” and being taxed on is the difference in value of your new car and the used car you are trading in.

      It is still a form of subsidy on new car purchases, but if we assume the new car has better gas mileage and less pollution, maybe that is a good thing.

      I bet the auto dealers lobby for this treatment. I’d rather see the sales tax extended to gasoline.

      1. I see what you mean, but I’m trying to think of any other goods that follow that “sales-tax-on-the-difference” logic but can’t think of any. As for the pollution/efficiency thing, I thought about that, but that would mean I’d be more incentivized to trade in my 2 year old Prius instead of my $400 polluting beater for a new Prius.

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