Crowded Link Train on April 6 (Seattle Subway – Twitter)

As ST3’s Motor Vehicle Excise Tax (MVET) drama continues, yesterday the House Transportation Committee passed HB 2201 by a bipartisan 20-5 vote. The compromise bill would require Sound Transit to use the newer 2006 vehicle depreciation schedule, and to offer credits and refunds to those who had already paid under the old one. In addition, the bill requires Sound Transit to find the money to do this without impacting project delivery. The bill states that if this new valuation method threatens project delivery, the agency has trim project elements in a specified order:

If, when implementing the program, the RTA is not able to deliver the plan as approved originally, the RTA must identify savings and cost reductions first, from parking facility projects; second, from commuter rail projects; third, from transit-bus related projects; and fourth, from light rail projects.

It’s hard to believe it’s only been six weeks since Sound Transit 3’s (ST3) Motor Vehicle Excise Taxes (MVET) took effect. Car tabs have always been a political minefield. People pay them up front in a lump sum, and those who drive but don’t take transit experience them as a punitive taking. On March 1, the voter-approved MVET went up by 266%, from 0.3% to 1.1%. Endless digital ink and legislative oxygen has been spilled decrying the MSRP-derived depreciation schedule that calculates the MVET. That formula tends to inflate car values over their realistic resale price for the first decade or so of a car’s life.

The resulting sticker shock has proven a golden opportunity for disingenuous legislative grandstanding. To hear Republican legislators tell it, this controversy proves that Sound Transit is an agency in need of sweeping accountability reforms after hoodwinking voters and stealing from them.

But this framing is like a hunter blaming the bear for stepping into a trap it set. The depreciation schedule was not a Sound Transit creation, but a legislative directive clearly contained in the 2015 transportation revenue package (SB 5987). From the Final Bill Report:

Motor Vehicle Excise Tax (MVET). An MVET is a tax paid on the value of a motor vehicle. For the purpose of determining any locally imposed MVET, the value of a vehicle other than a truck or trailer is 85 percent of the manufacturer’s base suggested retail price of the vehicle when first offered for sale as a new vehicle, excluding any optional equipment, applicable federal excise taxes, state and local sales or use taxes, transportation or shipping costs, or preparatory or delivery costs, multiplied by the applicable percentage listed in the depreciation schedules. [emphasis mine]

And from the bill itself:

Notwithstanding any other provision of this subsection or chapter 82.44 RCW, a motor vehicle excise tax imposed by a regional transit authority before or after the effective date of this section must comply with chapter 82.44 RCW as it existed on January 1, 1996, until December 31st of the year in which the regional transit authority repays bond debt to which a motor vehicle excise tax was pledged before the effective date of this section. Motor vehicle taxes collected by regional transit authorities after December 31st of the year in which a regional transit authority repays bond debt to which a motor vehicle excise tax was pledged before the effective date of this section must comply with chapter 82.44 RCW as it existed on the date the tax was approved by voters.

So the ST3 MVET was intended to have a business-as-usual formula, just at a higher rate, and this language passed the Republican-led Senate 37-7 and passed the Democratic-led House 54-44. If anything, it was the conservatism of the package’s framers that has caused the controversy, as all parties involved simply grandfathered in an existing structure rather than create a new one.

None of this is intended to say that voters haven’t experienced unpleasant surprise at their car tabs, or that certain low-income or high-income-cash-poor citizens haven’t found it burdensome. Talks to rework the formula, or to add low-income rebates, etc, are valid discussions. Whether you support a rate reformulation or not, this sort of legislative back and forth is normal and healthy.

But the political posturing about Sound Transit’s conduct throughout this process continues to be dishonest and misleading. The aspersions cast upon the agency neglect the layer cake of process and filters through which all of these proposals must pass before they see the ballot box, the tax bill, or groundbreaking. It is all a painstakingly conservative process by design, and Sound Transit has been following the rules to the letter. If legislators want to change the letter of the law, that’s their prerogative. But Sound Transit works with what they are given, and they cannot bill us a penny without our aggregate consent.

59 Replies to “House Committee Passes Bipartisan MVET Bill”

  1. So do I understand this correctly, is this the timeline:
    In order to get the power to hold a vote to tax themselves for transit, progressives agree to a sprawl heavy roads package with no public vote. Progressives win transit vote. Dems then come up with a compromise to give up that victory. Compromise is taken by other chamber and turned into a revenue cut of unknown proportions. Progressives celebrate because it could be worse.

    1. Who’s celebrating? To me this is a minor annoyance and a tempest in a teapot.

      If it’s true that House Democrats originated this MVET-reduction plan, then it sounds like eating your cake and having it too. The voters they’re responding to get their transit (as Democrats presumably they want that) without paying for it (the MVET reduction). Even if they don’t actually get to have the cake (because a reduction reduces the budget), it gives the appearance and a warm fuzzy feeling of having both. (Until they drive to the P&R and find out that the reduction came in the form of that parking space.)

      My relative who was initially angry about ST using the old scale which she thought was higher across the board, changed her mind when I showed her that while the new scale is lower for cars less than ten years old, it’s higher for cars older than 11 years. Her car is right around the 10-year mark.

      1. Don’t high five just yet, Mike. The “Majority Coalition” is likely to turn the order of cuts on it’s head and THEN we’ll see how tough the Dems in the House are…..

  2. This is appalling. We need Seattle legislators to stand up and insist that if the MVET is changed, any lost money is replaced on a 1:1 basis. HB 2201 fails to do so. Even with the rules in HB 2201 about what ST cuts in the event of shortfalls, Seattle’s rail projects remain vulnerable to a suburban board. Every single Seattle legislator needs to insist that ST3 be kept whole if the MVET is changed.

    1. The Legislature would have to impose a corresponding statewide tax to make up the revenues. Ha ha, good luck with that.

      This is a manageable revenue reduction that isn’t likely to imperil the voter-approved projects. Certainly not anything critical. It would greatly mitigate the risk of something much worse.

      1. Because $780m / $54b = 1.4% of the program. We’d better not be skating that close to the edge.

        Even if we are, the integrity of the system surely doesn’t hang on the last 1.4% of project expenditures.

      2. Except that the $780m and the $54b aren’t the same dollars. In fact the $54b isn’t even the same dollars but combination of different YOE dollars.

        This is a hit to early revenues when ST is saving up. By stealing this money ST will have to bond more money, earlier.

        So I ask again, how do you know a) what the actual hit will be and b) that it will be manageable?

      3. It’s not a manageable reduction. Nobody has actually asked Sound Transit to demonstrate what the effect would be. More importantly, if Dems cave on this, they’re going to be encouraging Republicans to do this more often.

      4. They’re on-time and on-budget in the sense that they are delivering against the baselined project costs and timelines.

        Sound Transit can’t control whether there is a recession, and that did drive delays against the original timeline indicated in the ballot measure.

        But once the project is developed, and a project timeline and cost ‘baselined’, Sound Transit can be held accountable to meeting the delivery schedule and budget because that is largely within the agency’s control. And they have done so.

    2. “Seattle’s rail projects remain vulnerable to a suburban board”

      Not as long as subarea equity holds.

  3. So…given the magnitude of the revenue reduction resulting from this schedule change, and given the fact that the legislation says that project delivery savings have to come first from eliminating parking projects, doesn’t this legislation effectively mean that the residential parking projects in ST3 will be effectively zeroed?

    Is that really what our car-oriented Republican friends are trying to achieve? Or is this tjust the next wave of anti-ST rage they hope to foment? “You voted for parking and now ST is eliminating it all! We need an accountable board!!”

    Bad to worse…..

    1. The parking-first reduction is delightful. I wonder who put that in and why the legislators allowed it to remain. I doubt it’s enough to eliminate the garages completely. And ST could possibly save money by delaying them since they’re “early deliverables”. “Sorry, can’t deliver them early. Legislature.” That would allow something else to come forward, namely light rail projects.

      There could theoretically be a problem with P&R overcrowding, since the P&Rs are sized to minimize hide-and-ride in the neighborhoods. Therefore any smaller P&R would lead to more hide-and-ride, angering the neighbors.

      1. You assume that this a) stays in the bill when it goes to the Senate b) is legal.

        Due to subarea equity, how do you just cut suburban projects (there are no N King parking garages in ST3).

        This is a completely one sided ‘compromise’. The Regressives get their transit cuts and progressives get to give Regressives their transit cuts.

      2. It will probably have to be done in each subarea separately. If North King doesn’t have any P&Rs then it falls to the other tiers. Since North King doesn’t have any Sounder or ST Express, it falls to RapidRide C, D, and G, 522 BRT (if any of it is North King), and light rail. So I suspect the RapidRide contributions would be eliminated, 522 BRT pushed out to later, and maybe a minor impact on Link. (Watch those 130th and Graham Stations.)

      3. So there’s a theoretical conflict between the language of the legislation (parking first, then commuter rail etc) and the language of the Sound Transit policy (subarea equity).

        If we were somehow in a position where revenues did come up short, wouldn’t the legislative language take precedence?

      4. I don’t see the conflict – the hit to future revenue would by definition be allocated to each of the subareas, and ST could do the same for the refunds.

        OTOH, Sound Transit liberally “borrows” between subareas throughout the years, correct? The subarea equity really comes down to the total money collected & spent over the course of ST3, whether or not it takes 20 or 40 years to deliver on ST3.

        And I’ll make the same point around the ‘panic’ around federal funding – the ST3 taxes will collect revenue until the bonds needed to cover the projects are paid off; there is no fixed date of taxes to sunset. Therefore, this is no different than an economic recession – it might push back project timelines because of financing constraints, but the overall project scope shouldn’t be impacted as ST simply collects taxes over a longer period.

        I think this could give ST political cover to defer parking projects until later, to enable cash flow to cover faster timelines for light rail. For example, the SE Redmond station can easily open without a parking garage, with that garage to be built 5~10 years later.

        An Urbanist could hope that in 10~15 years, the ST Board might decide, “gee, there are better ways to spend money on station access than fixed parking structures.” And if not, then they can build garages as promised & we’re in the same spot as before this whole kerfuffle.

        Anyone disagree?

      5. And just like the recession of 2008, ST can either extend the timeline or cut projects. It extended the timeline on projects that would finish before the ST’s 2023 end date, and cut off those that wouldn’t. North Link was extended from 2020 to 2021. East Link was extended from I think 2021 to 2023 (one year of that was because of the south Bellevue obstruction). South Link, which was originally going to go to 272nd in 2023, was truncated to 200th, then later when the economy got better and ST was sure it could afford it, it was re-extended to 240th.

        If ST follows the same pattern in ST3, then everything that can be done by 2041 will be done, and those that can’t will be cut off or rolled into ST4. The projects at the end should be most worried because they’re the lowest-priority projects: Tacoma 19th Ave and Kirkland-Issaquah.

        If there’s an ST4 vote in the late 2030s and those two projects get rolled into it, that’s twenty years from now and the next generation may have different ideas about those projects. Maybe they’ll want Bothell-Renton Link first?

      6. @Mike – right, but isn’t the difference that ST3 doesn’t have an end date? There is a projected end date, but that’s flexible. If I’m Issaquah, my worst case is it gets pushed out 5 more years, not canceled.

      7. They’re the same thing. It’s ST’s decision whether to extend the timeline or not. There’s at least some board sentiment that keeping faith with the voters means stopping in 25 years unless there’s a vote to continue. Since there’s various support for more projects, the most likely scenario is that the unfinished ones would be rolled into ST4, and they’d get top priority there.

  4. Thanks for finding the actual text mandating the use of the old outmoded MVET tax table, until 2028 or whenever. Obviously somebody drafted that specific language, and if any legislator noted it’s negative consequences, they aren’t saying. Was it Sound Transit itself that proposed this language to the Legislature? Do they merit the criticism they are receiving? Or was it overly-ambitious bill-drafters in Olympia that chose this route? Inquiring minds want to know.

    1. It’s because the bill drafters did not want to imperil the bonds sold for ST1 under the old formula. That’s why the mandat sunsets in the 2020’s.

  5. Absolutely ridiculous. ‘In addition, the bill requires Sound Transit to find the money to do this without impacting project delivery’ – how exactly can they make up $6 BILLION dollars. You can’t just legislate stuff like this…disgusted.

    1. It comes out of parking first, then commuter rail, then bus projects, and lastly LR. Basically LR gets protected, buses get axed, and probably some commuter rial projects get delayed too.

      This is amazingly anti-suburban P&R. Very entertaining….

      1. Agreed! This is surprisingly urbanist. Deleting or deferring multiple parking garages from the ST3 plan should easily cover the bulk of the lost revenue, no?

        For example, ST can launch 522 & 405 BRT completely without any new parking, and promise the relevant cities “hey guys, we’ll build parking once we can, but you know, MVET”

    2. It’s not $6 billion. This bill would outlay just $780 million in rebates.

      The larger number assumed defeasement of bonds which would have triggered the end of the 0.3% Sound Move MVET and other impacts to Sound Transit financing costs.

      1. Rossi: ““Sound Transit’s never fulfilled a promise they’ve made so far, so why should they start now?”

        If that’s true (and it only is in the “UDistrict-SeaTac should have been finished by 2005” universe), then shouldn’t Dino be concerned about the lack of adequate transit in the region, and shouldn’t he be doing something to create more of it faster?

  6. I will write my legislators to oppose this bill. For cars 10 years old or newer, the rate goes down. For cars 11-15 years old, the rate goes UP. For cars 16 or more years old, the rate stays the same. I can’t in good conscience support a bill that raises taxes on the poor people more likely to own older cars.

  7. Wait, hold on guys – the text specifically says that cost savings much first come from parking. So if the result of this bill is ST builds everything as planned, minus a few thousand parking spaces … isn’t that a good thing?

    ST could build the Central Issaquah station with zero new parking, and say, “sorry guys, blame MVET.” Given the people that use parking garages are the same people that pay MVET taxes, seems like a good outcome to me?

    1. Unfortunately, there isn’t any parking in North King–the Seattle subarea. If subarea equity holds, we would need our reductions from one of the lower tiers. We don’t have much in the way of commuter rail, either.

      1. 522 BRT includes parking in North King, but it’s small.

        And for “we,” I live & commute in East King, where there is ample parking included in ST3.

    1. It means irresponsible people who even though make a lot of money, spend more than they should on housing, food, and cars, leaving them with practically nothing left over for savings or other expenses. You can live paycheck to paycheck on any income.

    2. People with a lot of debt, high mortgage, alimony payments, etc.

      Or if he meant “asset-rich-cash-poor”, then it might mean people who have a house but can’t sell it without having to find another place to live (which would put them in a worse economic situation, or require moving to Yakima or Lacey).

  8. It’s important to note that while Democrats in Olympia are trying to cut billions from ST, Republicans in DC are also proposing more billions in cuts to ST2! and ST3 federal funding.

  9. the bill report you quoted is actually using the 2006 methodolgy (85% of msrp). the prior depreciation schedule did not discount the msrp.

  10. Why is everybody so ecstatic about parking being first on the chopping block? That this bill even exists is proof that just because it’s legislated, doesn’t mean it happens.

    The legislature granted ST funding authority to put in front of the voters. Voters said yes. A vocal minority protested the many-levels-authorized “terrible funding scheme,” and now it’s as if the original votes never happened.

    It looks to me as if all it takes is a vocal minority waving pitchforks at taxes and hurt to their cars and the legislature backpedals.

    1. The parking issue is a completely unexpected irony. Normally the legislature votes for highways and against transit. The last transportation bill funded billions of dollars of highways without a public vote, and only grudgingly allowed ST3 with a public vote. During the debate some legislators threatened to cap ST3’s tax rate lower than ST requested, at a completely arbitrary level, as if the projects wouldn’t benefit people at all, only the rate mattered. It’s unclear whether the legislators expected that provision to pass, or it was just a way to “get tough” on ST and vote for the transportation package without political repurcussions.

      The revolt against the MVET is presumed to be the majority, because 98% of voters have cars and predumably a majority of them don’t want to pay high MVET. The same thing happened with the HOV lanes, when they were opened to GP cars evenings. There was a similar movement to remove the tolls from 405, although it failed.

      So this legislature — which refuses to fund transit beyond a small number of mostly rural/exurban coverage grants, and is normally enthusiastic about highways and parking, and believes that the “highway purpose” restriction on gas-tax spending excludes trains — nevertheless cited parking as the first thing to be cut from ST3. That’s the opposite of what it normally does, and it raises the question why? Does even the legislature realize that garages have a high cost per space, and deliver less bang for the buck than actual trains/buses? Is it recognizing that ST can’t politically say no to the garage advocates (because they’re the majority of suburban voters) unless an external force compels them to, and the legislature is being that external force? That would be extrelmely enlightened of the legislature, and probably more enlightened than can be realistically expected. Probably some urbanist inserted the provision, and the rest of the legislature may or may not tolerate it enough to leave it in the final.

      Your main point is correct, that the legislature is yanking something away it previously gave, and it would be a significant impediment to achieving the level of transit a metropolis of 3.4 million people needs, and which is standard outside the US. Zach said it best as he often does, “The political posturing about Sound Transit’s conduct throughout this process continues to be dishonest and misleading.”

  11. Anyone know where to find info on how the House voted on this. Would love to give my reps an earful.

      1. And once there, you need to click on the majority report for a list of those in favor and minority report for those against.

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