The media are full of stories of people mad about car tabs. Even though voters just approved them, and ST is applying them in accordance with existing law, there is no shortage of people that never wanted to pay higher taxes for transit in the first place. Olympia is anxious to respond, partly because their electorate is considerably more conservative. Also, a future revenue reduction is offset against “spending”, rather than any particular project or bus route that people care about.

In response to legislative staff inquiries, Sound Transit staff have finally produced an initial estimate of the impact. Unfortunately, it’s too vague to make the connection to real projects that would successfully counter the rhetoric. Nevertheless, we get a sense of the scale of the problem.

There are a lot of bills out there, so the memo covers a few different possibilities.

The most extreme case is “defeasance”, which is the technical term for, in effect, replacing the existing stock of bonds with a new set of bonds tied to the alternate, 2006 car valuation system.* This would immediately eliminate the 0.3% MVET from Sound Transit 1, because the legislation related to I-776 would apply once the bonds are gone. Borrowing costs would likely rise. ST assesses the overall revenue reduction as more than $6 billion.

As longtime readers know, in a long project it’s hard to know how much $6 billion is without knowing what year suffers those costs. The memo isn’t particularly clear on that point. But it’s about 11% of the entire $54 billion project budget. To get a sense of the limits, the whole segment from Ballard to Chinatown is $4.4 billion in 2014 dollars. In dollars from the opening year of 2035, that’s $6.6 billion assuming 2% inflation. So $6 billion is Ballard-Chinatown money, roughly speaking.

A more moderate legal outcome would require using the 2006 valuation system on all future bonds. The memo expects higher borrowing costs without being specific at all.

Finally, a 40% rebate for low-income households would not impair the bonds at all. ST has asked Seattle for the financial models from the city’s rebate and does not have more details at this time. But the memo seems particularly optimistic about this option.

Except for the draconian defeasance scenario, we still don’t have good impact estimates. Ultimately, though, Sound Transit has significant project risk buffers, and cutting ST’s revenue increases risk rather than immediately canceling projects. Of course, if there’s a time in the next 25 years where that added risk threatens project delivery, the same people who were so eager to hack at the taxes will be the first to condemn Sound Transit’s “mismanagement.” They certainly won’t take responsibility for their own recklessness.

* I was tempted to call the 2006 Kelley Blue Book system the “lower valuation” system, but as the memo points out “Owners of vehicles that are less than 11 years old would receive lower bills under the 2006 depreciation schedule while owners of vehicles older than 11 years old would receive higher bills.” Yes, Olympia’s strike for the common man would make the MVET less progressive.

47 Replies to “ST Produces Initial Estimates of MVET Hit”

  1. Tim Eyman just came out of hibernation and is licking his chops. Luckily, with the Seattle mayor in 2017 and 2018 being your typical “every other year election”, he’d have to wait until 2019 for a potential off-year to peddle a potential anti-ST garbage initiative.

    As a side note, would the recent talk about finally implementing a state bank have any benefits regarding ST or would their implemented funding structure preclude borrowing from a future state bank?

    1. How old is Tim’s car?

      I don’t see why ST can’t use any new financing mechanism that becomes available.

      1. Because, Mike: All bonds issued for ST2 and Sound Move thus far have the original .3 MVET pledged as a source to pay off. Revising these contracts – refinancing those bonds — would trigger immediately repeal of the .3 mvet. That’s the tail that wags the $6 billion dog.

      2. This is about the bonds that haven’t been sold yet. If a state infrastructure bank opens, I don’t see why ST couldn’t take out a loan instead of selling bonds. Most of the ST3 bonds haven’t been sold yet because of ST’s self-imposed debt:asset ceiling, which is stricter than the state requirement. Those ST3 bonds will be sold in the 2020s and 2030s. But if a better loan is available at the time, why not take it instead.

        Regarding existing bonds, if their terms allow repaying them early, then ST could take out a loan at a lower rate and pay the bonds off. That could be a strategy if ST decides to raise all the ST3 bonds now but then an infrastructure bank opens later, it could take out a loan and pay off the bonds it front-loaded.

    2. Tim Eyman doesn’t hibernate. He is always trying to sell an initiative, and he doesn’t particularly care what kind of year it is — presidential, midterm, or local. (Every year is an election year and every election matters. There are no “off” years, there are only “ON” years).

      And in fact, Eyman had Sound Transit in his sights last year, before ST3 passed and before the media started doing these “sticker shock” stories.

      Eyman actually tried twice to qualify initiatives to the ballot that would mess with Sound Transit’s funding. First, he tried to qualify I-1421 (launched in February of 2016). When that failed (because he could not get his wealthy benefactors to finance it) he tried again with an initiative to the Legislature (I-869) — but that stalled out and never got off the ground either.

      Eyman’s donors weren’t interested in an anti-Sound Transit initiative last year; there’s no evidence we see that they are any more interested in doing one now, and in fact, Eyman is currently promoting an initiative that would cut property taxes by 25%.

      1. Wealthy benefactors often mean business leaders, and businesses increasingly can’t ignore the need for reliable mass transit that’s immune to congestion, car/truck accidents, and black ice. They realize Sound Transit is the only game in town because it has gotten the most widespread support from the state, local governments, businesses, and the public. Trying to generate that amount of support for something else instead is futile and would take a decade. The Paine Field detour and Everett terminus exist because businesses want it: they were the ones who got the governments to put it into the plan, so they’re not going to sign Eyman anti-ST initiatives and contradict themselves. The main exception is Kemper Freeman, who has long opposed trains, especially trains close to his properties, and still thinks we can just keep widening the highways and putting on more buses (with what tax money?) enough to solve this congestion thing.

      2. @Mike: Don’t forget the head scratcher detour of the Ballard line through Interbay, that nobody asked for. I think three of the stops have been named already: Amazon, Gates Foundation and Expedia.

      3. It’s not a detour, it’s ST’s original alignment from the 1990s. ST chose it because it was the least expensive option because there’s right of way in the 15th Avenue expressway or in the rail yard west of it. All this conspiracy theory about moving the line for Expedia is just that, a conspiracy theory. It was always the default alignment and ST wanted a sufficient justification to consider any other and it didn’t find one, because again, cheapness, especially when North King wanted to pack so much into ST3. The most Expedia is getting is a station, which may have been omitted or may have been further north or south if Expedia weren’t there. And before Expedia there was Amgen, and before that Immunex. Any of them or somebody else could occupy the office park and they’d have the same transit need.

        As for Amazon and Gates Foundation, what really happened is that the city and everybody underestimated how much transit SLU would need when it grew into a highrise neighborhood. One streetcar and two buses isn’t enough, as there are now even more buses going there (most notably the C) and they’re all from what I hear full. The original line would have gone from Westlake to Uptown and then 15th to Ballard. The only innovation is making a curve further east to bring in SLU. The precise location of Gates Station may be a sop to the Bill, but serving SLU in general is just common sense. The fact that it wasn’t in the 2006 LRP shows how badly ST and Seattle underestimated the transit need in SLU. If it weren’t Amazon and the Gates Foundation in those buildings, it would be some other companies, and they’d need high-capacity transit just as much.

      4. The problem is that the selected Ballard line literally serves a road, bordered by a large hill on one side and a rail yard on the other side. The ridership potential is very limited by the limited amount of density that can be built. Sure the line will serve Expedia and Gates Foundation, which will give it some ridership during rush hour, but we all know, and people overwhelmingly voted, for the tunneled option would have been much more beneficial, with a higher ridership, although almost $750 million more. This would have served LQA, Upper QA (but probably not likely), Fremont and finally Ballard. All areas with a lot of current and additional potential for density.

        Interbay could be served with RapidRide D, beefed up to true BRT.

      5. It serves Ballard. The primary purpose of the line is to get Link into northwest Seattle. Not to serve Queen Anne or Fremont. Fremont is a ten-minute bus ride from downtown or the U-District, while Ballard takes twenty-five or thirty minutes to get to anywhere else in the region, and those half-hours add up when you do them several times a week.

        I wanted the Queen Anne tunnel; I wrote an article about it. But every indication was that ST would go with the cheapest option, and it did so. That “everybody knows” attitude (that it should have been Queen Anne. that nobody asked for Interbay.) bothers me because everybody does not know, there were legitimate arguments on both sides, and ST is the entity we vested to make the decision and it has done so so let’s respect it. As I always say, there are two ways to complain after an unfortunate decision: (A) lamenting about a lost ideal, and (B) continually berating somebody. I lament the lost ideal of a Queen Anne tunnel and I think it was a not great decision. But I don’t like to see endless berating, beating a dead horse, continually trying to shame an agency because they didn’t do what “everybody thought” was right (even though that “everybody thought” is an exaggeration), and won’t just let responsible entities make the decisions they’re vested to do. Sorry about the rant.

        So there were legitimate arguments on both sides. On the pro-Interbay side there’s cost, speed of construction, less contingency risk (all because of a shorter tunnel), and the belief that Interbay can grow into an urban village and won’t generate as strong opposition to upzoning because there are no single-family houses right there. And only after that do you get to the Expedia factor.

      6. The point of a light rail line is to serve two endpoints and places in between. The current light rail line is going to effectively be an express train from Ballard to LQA, except for, again, peak hours. Living in Ballard, I have no problem with this, but it seems like we are missing a vast opportunity to serve population centers that will provide all day ridership.

  2. My vote on what to remove from Link to offset costs: light rail to Paine Field. Build the line straight to Everett Station along I-5, and run a frequent peak-only bus connector along the previously planned Link corridor through Paine Field. It’s not going to save $6.6 billion, but in 2041 dollars, maybe close?

    1. That only would patch Snohomish County’s budget hole. The way ST is set up with enforced sub-area equity, cuts would have to be made in each subarea equivalent to the taxing shortfall in that area. So in reality, it’s going to be something along the lines of Snohomish and Pierce counties each cutting 1 bil, while King County, which collects the biggest slice of revenue, has to cut 4 bil. (numbers pulled out of my ass and not based in reality)

    2. I disagree. Build the damn thing as advertised. Tesla owners can suck it up and pay their share of the taxes. The voters have already spoken.

      1. I agree, but if they end up getting their way and take a bite out of the ST3 budget, that’s what I’d do. Not that would be happy if they successfully used the state legislature to override the vote of the people on a local-ish measure, which was approved by both popular vote (54%) and majority of counties (2 out of 3. Not relevant to passage of the measure, but a good point to make for people who say that this is “taxation without representation,” which I’ve actually heard). I didn’t consider subarea equity though. Maybe the city of Seattle (independently of Sound Transit, which can’t run a Seattle-only measure) can pass a “Save Our Rail” measure for the purpose of providing Sound Transit additional funds earmarked for offsetting impacts to Seattle light rail projects (Ballard, WS).

    3. Alex,

      What projects would have to be cut if Sound Transit were to lose MVET revenues?

      Sound Transit’s financial policies clearly outline the options that the Board would consider when facing a revenue shortfall to build out a voter-approved program. In the event revenues in one of the agency’s five subareas fell below projected expenditures by more than 5%:

      • Use the subarea’s uncommitted funds and/or bond capacity
      • Scale back the subarea plan or projects
      • Extend time period to complete the subarea plan
      • Seek additional legislative authorization and voter approval for additional revenue

      In 2008 as a result of revenue loss from the recession, the Sound Transit Board undertook a complete review of the agency’s capital program and prioritized projects based on subarea revenues and which projects best advanced local residents’ interests [emphasis added]. Some projects were deferred. Some were permanently cancelled. — ST MVET Q&A FINAL.docx

      IOW, “you can’t take it all out of Snohomish County’s hide.”

      But nor will Seattle have to take the brunt of the loss by cancelling Ballard-IDS. The pain will be suffered proportionately by sub-area based on the mix of expensive and in-expensive cars.

      The East King sub-area will certainly take the greatest percentage hit in that scenario. Expect Kirkland (barely)-Issaquah certainly to be cut back to Eastgate. Next will likely be North King; there are a lot of Mercedes and BMW’s in Magnolia, Madrona, Laurelhurst, Lakeshore, and Lake City. (What it is about expensive cars living there in the MiddleOfTheAlphabet????) So, yes, Ballard-IDS will take a hit; one hopes that the tunnel can be completed to Smith Cove in order to serve the only area that will be able to absorb further new employment in the Seattle CBD after 2030.

      Snohomish has a lot of nice cars in the southern part of the sub-area and hence smiling, but north of Lynnwood the folks will be feeling the Paine. The net result might be not much change; the jury is out on the Eye-For-An-Eye Man’s personal results.

      About the same is true of South King; there might not be much difference. Pierce might get MORE money from the MVET, except in Sumner and Puyallup.

      So here we see the distilled essence of Rich Guy Republican Economics®: I got mine, screw you!

      1. Jim makes a good point below. In the past ten years cars have gotten considerably more expensive because of the costs of environmental mandates (mostly the Fleet MPG increases). So the higher percentages assessed on older cars are levied against a lower initial cost.

        So I’m clearly wrong about South King, Snohomish and especially Pierce: everyone will suffer an overall decrease, though it will be relatively greater for East King and North King.

    4. That’s a bit unfair to us. I-5 rail is actually a lot worse, since it doesn’t even intersect with the Swift Blue Line on Highway 99 and has even less development potential that the loopy Paine Field route.

      Maybe we should scrap all those twists and turns on Federal Way Link first and have it stay on Highway 99.

      1. It was, but it had better ridership as I recall. I always thought a better alignment would have been to run link on the swift corridor, and allow snoho to repurpose swift resource elsewhere. After all, proponents of BRT say that those resource can be “easily” redeployed elsewhere.

      2. The 99 alignment was four minutes longer than I-5, and ST said the number of people gained on Aurora was less than the number of people lost in Lynnwood by those four minutes. Believe it or not.

      3. During a presentation in Shoreline, the first thing I noticed in the Cost/Benefit calculations was the horizon year.

        Only 20 years out.

        This ignores the fact that the Hwy 99/Interurban alignment has superior TOD potential.

        Since Shoreline had just finished ‘improving’ Aurora Ave to a 7-8 lane beautifully landscaped boulevard, complete with linear sculpture garden on the Interurban ROW, they were fine with any alignment as long as it didn’t harm that project.

        Code word – we value auto traffic.

        Sound Transit wasn’t looking for another court battle.

        You should check out the artistic beauty, most visible from the stretch between Fred Meyer and Doug’s Cadillac.

        I think the slug is quite apropos.

      4. “This ignores the fact that the Hwy 99/Interurban alignment has superior TOD potential.”

        ST can only include zoned capacity that currently exists or is close to approval. Otherwise it would be ineligible for federal grants. Seattle has dragged its feet on upzoning, and this is one of the consequences of it.

    5. I don’t think any alignments will be impacted. ST will look to slow builds instead to meet financial capacity constraints, but since the taxes are permanent it’s not like ST will not have enough money to build a particular project – the money will be there, it’s just a question on when.

      A better proposal – keep the alignments & timelines as is, but delay certain segments to 2040+ to fit into the new revenue streams. For example, build the downtown tunnel on time, but only open it to Smith Cove, and build Smith Cove to Ballard a few years later (still funded by ST3).

      This is really not different than if a recession happened and ST suddenly has a lower revenue stream. We wouldn’t suddenly switch to building cheap light rail lines on the same timeline, but maintain our existing commitments and push out timelines as needed.

      1. ST truncated South Link. It was originally going to go to 272nd, but with the recession ST truncated it at 200th, then later re-extended it to 240th when the economy got better. Noreth Link and East Link were delayed from 2020 to 2021. (Part of East Link’s problem was Bellevue’s intransigence which extended the EIS process.) But the common factor is that ST wouldn’t extend ST2 beyond its 2023 end date. North Link and East link could fit within it; South Link couldn’t.

        The tax authority is permanent but it’s ST’s decision whether to extend the timeline or to defer projects and features. ST is at least somewhat committed to cutting it off at 2041, however much gets built. Anything that doesn’t make it would be rolled into the next vote, as happened when Federal Way was rolled into ST3. It’s way too early to tell which way ST would go if there’s a major revenue shortfall (and the shortfall hasn’t happened yet). It may do some delaying and some deferring.

        It could possibly reconsider cheaper alternatives. Smith Cove is possible although I doubt likely. West Seattle is more interesting. ST could simply delay the stub line until DSTT2 opens. That could save some money, although maybe not, both because of the spending bottleneck it would create and inflation. ST could cancel the West Seattle line and look at BRT again, but only if the West Seattle politicians and activists change their mind. Deleting either Ballard or West Seattle would lead to a DSTT2 with only one line and tons of unused capacity.

  3. Your footnote is really important. The faux-populism of this ridiculous demand to switch to Kelley is not just an effort to kneecap ST by forcing them to cancel or delay projects, it’s an effort to make the state with the most regressive taxation scheme even more regressive, raising taxes on people with old cars and giving a big break to people who can afford expensive, late-model cars.

    1. This is a very important talking point that I fear is going to be massively overlooked.

      The average road-going lifespan of a private automobile in the US is a bit over 20 years and the average age of a registered vehicle is around 12 years.

      A valuation change that hurts everyone with a car 11 years or older, while helping everyone with one 10 years or younger would hit the bottom 50% of car owners with alarming precision.

      Full disclosure: I own a 2004 Chevrolet Cavalier, shared with my wife, with a blue book value around $2100. Under the current depreciation curve, the DOL considers its value to be around $1700.

    2. Not sure I understand the footnote… Based upon how I’m reading the 2006 RCW, part 3 expressly points to using .85% of MSRP as the starting point for valuation except in cases where MSRP cannot be ascertained. That value is then multiplied by the 2006 scheduled % as per the value of the vehicle. Then the actual MVET is the scheduled value X .3% for preST3 + .scheduled value X 8% for ST3.

      A base 2005 Ford focus (original MSRP $14075) pays $31.5834 (old method) or $19.142 (new method).
      A base 2006 Ford focus (original MSRP $13750) pays $33.4263 (old method) or $21.27 (new method).

      So an 11 year old vehicle be $1.84 more taxed than a 12 year old vehicle using the old schedules, or $2.13 more using the new schedules. This does not seem to be poorly situated for those that own vehicles >11 years old, they pay less than the previous year in either schedule, and certainly less taxes overall with the new schedule. Moreover, since the average age of vehicles on the road is only 11.4 years it seems reasonable. Finally, one huge benefit to those that own vehicles past this 11 year mark is the 2006 schedule starts dropping precipitously to ZERO at 16 years. The current inflated schedule keeps all 16 or > values at 10% until they become collector vehicles at 30 years.

      Now, if I missed a calculation somewhere, lets discuss.

      1. I was simply taking Sound Transit at their word. So either you’re mistaken, they’re mistaken, or your Ford Focus is an outlier for some reason. I’m not well-positioned to determine which of those three explanation is the correct one.

      2. I think you are using the wrong 2006 schedule. For cars I think it should be the one in subparagraph 3 of RCW 82.44.035 which bottoms out (at 16 years) at 10% of 85 percent of MSRP. The two curves cross over in year 11, and after that the new schedule results in (significantly) higher valuations for years 12, 13, 14 and 15. while providing significantly lower valuations early in the car’s lifetime.

    3. It may be both true and faux populism. I think everybody is responding to their tax bill and wanting it to go down, both rich people with expensive new cars and poor people with beaters. My neighbor a year or two ago, a middle-income tech worker, complained about the accumulative cost of multiple vehicles (a car, motorcycle, and moped?), only some of which worked. I’ve heard similar complaints from poor people about their one car, and middle-income people who have a second car (an old truck they use occasionally for moving things).

      So I think everybody is complaining about their own personal tax bill, both rich and poor. If it’s true that the new formula will raise the tax on old cars, the people with the old cars may not realize that. That’s how they can be true populists even if other people may be faux populists. And even with the rich people, how many of them know that they’re lowering their own taxes on the backs of the poor?

      I don’t understand car-tab formulas since I’ve never had a car, so I have no position on whether the new formula would raise the bill for old cars. But regardless of whether it does or not, the perception of car owners is a different thing, and people are advocating policies based on their perceptions, not on some external “fact”. If the fact contradicts their perceptions, then the first thing to do is gently tell them their perceptions are wrong. That may or may not be successful. But wrong perceptions are not the same thing as a conspiracy to cut taxes on the rich by sticking it to the poor.

  4. In response to last weeks Transit Now email, I received this email from Joe Fain:

    Dear Derek,

    Thank you for contacting me about Sound Transit.

    As someone who commutes regularly using ST Sounder and light rail, I understand many of the benefits that it can provide. As the legislature debates issues around Sound Transit I will keep in mind the many people it currently serves and those it will serve in the future.

    I must, however, also keep in mind those who are paying a potentially inflated motor vehicle excise tax due to an outdated automobile appraisal system. The public must have faith that they were not misled, even if unintentionally, during the campaign last fall. Currently, that trust has been frayed and must be rebuilt.

    I appreciate you contacting me on this important issue. Please feel free to contact me on this or any other issue in the future.

    In response, I asked for a little clarification:

    Dear Joe,

    Your response is appreciated. I however respectfully disagree with one of the central points in your email; the assertion that the public had been misled regarding the taxes that would be assessed following approval of ST3.

    In the run up to the election, the scope of the proposed projects were well documented, as was the cost and methodology used to pay for the project. On the part of both The Seattle Times and Sound Transit, the vehicle excise tax percentage was provided, with Seattle Times making a clear reference to the depreciation schedule to be used. Additionally, if a voter wondered what their ST3 tax increase may be, they could go to online calculators provided by either entity. Both Sound Transit and the Seattle Times calculators provided tax estimates with little daylight between them.

    And why were they able to report the same taxing information? It was not because of an arbitrary decision that Sound Transit made, and a typically adversarial Seattle Times decided to go along with. It was because both the tax as a percentage of vehicle value, and the associated depreciation schedule were provided in the authorizing legislation that allowed Sound Transit to present ST3 to the voters.

    Despite what appears in the news, or in your email response below, there is little ground on which to base the claim that the public was misled. So my question in return; how exactly do you reconcile these two divergent accountings of last falls ST3 campaign?


    Sound Transit Constituent,

    If i receive a response, I’ll be curious to see how the circle is squared. The point about the Kelley Blue Book valuation is an interesting aside.

  5. When I moved to Olympia three years ago, I could leave on Intercity Transit at 6:10 AM, be in Tacoma by 7:20, onto Sounder at 8:00 and into King Street at 9. Now, I-5 is a barely moving and sometimes suddenly stopping parking lot by 6.

    And nothing whatever reliable out of Tacoma Dome, where I used to park, if I had to be in Seattle past rush hour, and night service to Olympia too connection-critical to miss. Now, whenever they get clear of Fife, only question for 590 service is where it gets stuck next. 574 to Sea-Tac to LINK used to be better. Past tense.

    Sounder? Freight and construction delays, understandable. But all I understand about this morning’s “mechanical issue” is one more brand new blue and white thing that won’t let me keep an appointment before noon. Color of next car for 60 mile per direction back-road drive to Angle Lake- depends on craigslist.

    “Car tabs” cost less change than I’ve got in the carpet. But reason I can’t get steamed about anything Boeing-related in Everett in year 2040 is that next thirty months could convert the next thirty years’ ST- program to getting one single unblockable transit lane each direction on all three corridors. Bus, train, wagon, or hull.

    Three years’ worth of answers? Sounder to Olympia on track already built for AMTRAK. Paving and grooved-railing the line for joint use, tempting. Fastest boats we can get from Finland. But most likely is the Governor having the Guard paint diamonds, checkpoint ramps, and ‘copter violators to the car shredder.

    Probably happen first time four trucks overturn anyplace in the region, instead of just one. Hope somebody’s got at least one better idea.

    Mark Dublin

    1. What do you think about the Tacoma Dome extension, and a probable travel time to Westlake of 70-80 minutes compared to 50-60 minutes on Sounder and ST express. Does the slower Link train bother you at all, or are you just glad for anything reliable? We’ve heard so many complaints that Link is too slow and commuters will insist the ST Express buses remain and won’t ride Link, that there must be a lot of people in Pierce who believe that. So it seems like one advocate’s word against another’s, and I’m not sure what we can do about that unless there’s a poll to show what the majority of Piercians really believe. Also, how much should we weigh the position of Olympians who don’t pay ST taxes?

  6. Despite my personal feelings that the valuation needs to be updated, I think at this point the financial costs of updating it outweigh the costs. My understanding is that the primary issue is that if the valuation schedule is modified, ST would need to re-issue all bonds at much higher interest rates. The actual loss of revenue is significant, but not as bad as the bond issue.

    That being said, I really have to wonder how anyone came up with the current valuation schedule. It’s roughly a straight line depreciation from MSRP to 10 years old. Whereas in reality, almost all cars depreciate quickly the first few years and then much more slowly. One possibility is that they wanted to front load taxes to make it more progressive. I’m curious if the total taxes paid over the life of a car will be similar for both the current valuation schedule and for one based on KBB. If it is, it makes sense. If not, then I think the current valuation scheme is extremely difficult to defend.

    1. The other potential issue with comparing straight line depreciation/devaluation to KBB data is that while you can predict the straight line depreciation the KBB values are observational. The publishers of KBB go out and look at actual sales and publish that data.

      So lets say the car has a defect, like an engine block that has a propensity for cracking. (Like you know a 1995 Toyota Camry, things I’ve learned from experience.) The KBB data will reflect that because the market of buyers will eventually learn that and price it in, whereas the straight line method won’t address that. A potential scenario for this would be if gasoline prices went significantly up ($4/gal or more) then more fuel efficient vehicles would be more valuable and vice versa for less fuel efficient vehicles.

    2. I would imagine the tax was enacted using that method for the sake of expediency. It would be a much simpler task for the Department of Licensing to implement a tax were the taxable value was linear and predictable. That would eliminate the need for a constant source checking and update of the value of every car and related iteration on the tax roll. This would have been a much bigger deal in 1996 when the depreciation schedule was implemented than in today’s computer driven era of easily exchanged and updated data.

      For me, I think the focus on the depreciation schedule is misplaced. Taxable value does not necessarily need to equal market value. So long as taxable value is consistently applied, and the methodology is transparent, arguments for favoritism are nullified.

  7. There is historical precedent for vehicle license fee tax increases being very unpopular. California recalled their governor in 2003 over merely reinstating their fee (lowered a few years before as a result of a prior state budget surplus that evaporated).

    “A hot button issue that seemed to galvanize the public was the vehicle license fee increase Davis implemented under provisions of legislation passed by his predecessor which originally reduced the fees. On June 20, 2003 the Davis administration reinstituted the full vehicle license fee,.. The increase tripled the vehicle license fee for the average car owner, and began appearing in renewal notices …”

    ST needs to be proactive about having a Plan B or it could be a huge political problem.

  8. Does defeasance mean the state can replace the bonds in bondholders’ hands without the bondholders’ consent? How is this possible? It sounds like changing the terms after the bonds were sold. If the state could defease the bonds, why didn’t it do it back when I-776 first came up? Then there wouldn’t be any grandfathered tax for grandfathered bonds.

    Second, if the replacement bonds have a higher interest rate, does that mean the existing bondholders will get a free windfall? Or where does the extra interest money go?

    1. It’s basically refinancing Sound Transit’s debt at a higher interest rate in this case. Nothing happens to the bonds already issued though. That really is financially stupid and doesn’t make sense. But the underfunded pensions will love it.

  9. This situation is a total clusterfuck. Transit advocates were slow to see the threat coming, dismissed it once it did materialize, and now are going to lose on this issue – some form of MVET valuation change is going to pass.

    Personally I think the move should be to demand that the legislature keep ST3 whole – if they cut back MVET revenues, they should have to replace those on a 1:1 basis. We should also demand the legislature backfill any lost federal grants for ST2 projects. And we should not ever contemplate or consider any cuts to the ST3 project list. If anything, the list was too short, as the Pierce County crisis shows.

    In short: go on offense. Now.

  10. I’ve seen several articles that place the blame for using the older depreciation schedule on Sound Transit. For example, the latest iteration is here:

    Where your find this:

    Drivers have noticed their car tab fees spike dramatically when ST3 took effect. Sound Transit opted to use an outdated method to calculate car tabs associated with the ballot measure — a method that considerably overstates the value of vehicles. It allows Sound Transit to take in more money. It has also led to some voter’s remorse.

    If I think back, the couple of times I’ve seen the ST blame placing were probably on, although I wouldn’t put it past the Seattle Times editorial section to run with this claim.

    So my question is, where are they getting this from? As stated in this blog post, it’s clear that Sound Transit could only work with the funding structure the legislature authorized. Is there an even somewhat kind interpretation of the rule making in which mynw’s interpretation is true? If not, why is something that purports to be a news article running with this?

  11. Sounder southline ontime (ontime maybe twice a year) performance is rubbish. Wouldnt be so bad if ST teamed up with PT to schedule PT routes via Sounder stations timed with the trains and accommodate train delays of up-to 10 to 15 minutes. 1/3 to nearly 1/2 of my up-to 1.5hr commute is the last two miles from the train station to bus stop nearest my house.

    Improve the end-to-end commute times and connivence with the goal of getting people to leave their cars at home 5 days a week, and I’ll happily pay 3x car tabs.

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