Sound Transit held a board workshop on Thursday to begin considering financing options for ST3, the draft update to its Long Range Plan (LRP), and the timeline to a potential ST3 vote in 2016. This article covers the funding aspect (slides here) and timeline because that’s where most of the new information was. The LRP will follow in a later post. The 3 1/2 hour workshop consisted of the ST board and staff who did all the talking, and some forty observers including people from Metro and your reporter.
ST’s current state-granted taxing authority is 0.9% sales tax, 0.8% rental car tax, 0.8% restricted MVET (Motor-Vehicle Excise Tax), and an employer tax ($2.
5000/ employee / month). Of these ST is currently maxed out on the sales tax and rental car tax. The MVET can only be used to pay existing bonds and expires in 2028. ST has never collected the employer tax so it’s an unused capacity. When ST2 construction ends in 2023 it will free up $1 billion, mostly in the Pierce and Snohomish subareas.
The staff presented three potential levels for ST3. The lowest level (“ST2a”) stays within the existing taxing authority and could complete planning and engineering of the “Spine” (meaning the Everett, Tacoma, and Redmond Link extensions) — but not construction. The middle level (“Incremental”) would require more taxing authority from the legislature and could construct one or two of the “best-performing” light rail segments (which ones were left unspecified). The highest level (“Large”) would be a similar size as ST1 and ST2 and require $15 billion in new taxes.
The board seems to be leaning toward the Large option. One board member cited deep public hunger in both Seattle and the suburbs for high-capacity transit (HCT). Another said a larger package would have a better chance of being approved by the legislature and by voters. A third said the board’s consensus seems to be for a “bold” legislative proposal, “more than we need”. The staff are assuming a Large proposal for planning, and the board can scale it back if it decides to go smaller. Mayor Murray emphasized the importance of clarifying their legislative ask and making sure any ST3 package goes big.
The presentation listed ten revenue sources used by other North American transit agencies: sales tax, rental car tax, payroll tax, MVET, car sales tax, car fuel tax, parking tax, utility bill levy, toll revenue, or property tax. Staff chose three of these for comparison and presented tax rates based on the use of one, two or all three sources. The three slides above show the results of this analysis. Of course these could be mixed and matched to balance the revenue among two or three sources.
Staff identified reliance on a single revenue source as potentially problematic because it would increase sales tax above 10% or hit constitutional property tax limits in King County. Property tax is also harder to bond against. Staff also noted that property tax is the least objectionable revenue source, as determined by rider surveys. Using this as guidance, Sound Transit staff will be developing a legislative agenda including adequate revenue capacity for any of these scenarios.
One board member suggested the staff consider additional funding sources such as LIDs (local improvement districts), the TIF model (taxing the added real-estate value of being near HCT), partnerships with companies benefiting from the service, and federal and state grants.
The potential timeline for a 2016 vote and subsequent ST3 construction is as follows:
* November 2014: The board considers amendments to the Long-Range Plan.
* December 2014: The board moves to accept the LRP update and to begin System Planning for ST3.
* January-April 2015: First legislative session.
* March 2015: Develop evaluation methodology and criteria for alternatives.
* May 2015: Choose expansion alternatives to analyze.
* June 2015-February 2016: Test and analyze the alternatives.
* January-March 2016: Second legislative session.
* March 2015: Identify a Draft System Plan.
* April-May 2016: The Puget Sound Regional Council (PSRC) issues a finding on whether ST3 conforms to growth-management policies and is cost effective. An Expert Review Panel (ERP) issues a finding on ST’s methodology, alternatives, testing, and evaluation.
* June 2016: The board moves to adopt the System Plan and ballot measure.
* November 2016: Public vote on ST3.
If the vote is yes then:
* 2016-2021: Project planning.
* 2021-2031: Construction.
That’s based on past experience with ST1 and ST2, which both required five years of project planning and a 15-year capital program. The specific pre-vote process is required by state guidelines for regional transit authorities, which
are stricter and more detailed in Washington than in other states.
Adam B. Parast also contributed to this report.