Eighteen years ago, anti-tax activist Tim Eyman decimated funding for public transit with his first $30 car tab initiative, which eliminated the motor vehicle excise tax (MVET).
His latest initiative, I-947, once again proposes to replace the current MVET with a flat $30 car tab fee. The initiative is estimated to cost Sound Transit between $6.9 billion and $8.1 billion. By Permanent Defense’s count, this is Eyman’s sixth attempt to kill funding for transit.
Currently, car owners pay several different fees depending on where they live when renewing vehicle tabs. The Department of Licensing provides a calculator to estimate vehicle tab fees.
- Everyone in the state pays a standard fee of $38.75 plus a weight fee which helps fund highway maintenance and construction projects, the Washington State Patrol and the Washington State Ferries.
- Local jurisdictions have the option of charging car owners an additional fee by forming a transportation benefit district. These districts are allowed to collect up to $20 a year without voter approval, or up to $100 if approved by voters. Approximately 50 cities have established transportation benefit districts around the state. Seattle collects an $80 fee to expand bus services and distribute bus passes to middle and high school students through the Youth ORCA program.
- Car owners living in the Sound Transit taxing district pay an additional fee. With the approval of the ST3 package, the MVET rate increased from 0.3% to 1.1% of the assessed value of the car.
If I-947 passes it would roll back the standard fee to $30 and eliminate all MVET. It would end weight fees imposed by the state government, transportation benefit districts fees and all car tab taxes helping to fund Sound Transit, according to the initiative’s website. Under the initiative, car owners would pay a $30 annual fee. Weight fees and TBDs could be restored by voter approval.
The initiative would also eliminate a 0.3% tax on retail car sales that funds the state’s multimodal account. This account provides grants for regional mobility, rural mobility, special needs, and vanpools.
Although I-947 eliminates the only MVET in the state, it also requires any future MVET to use the Kelley Blue Book value to compute the tax. As Rep. Joe Fitzgibbon explained on STB, this technique cannot be bonded against and effectively rules it out as a funding tool for major capital projects.
Sound Transit estimates I-947 would reduce MVET collection by roughly $6.9 billion through 2041 for ST3 projects and $1.2 billion through 2028 for Sound Move projects. This projection does not include taxpayer costs for additional borrowing which could be used to offset the loss.
The initiative requires regional transit bonds financed with the MVET to be retired, defeased or refinanced if the covenants allow. It is not immediately clear if this would apply to Sound Transit’s bonds.
I-947 does still allow Sound Transit to use sales, employer, rental car, or property tax to help fund projects.
If I-947 passes, the initiative wouldn’t directly impact King County Metro’s funding, as the agency no longer receives any money from vehicle licensing fees. However, Metro would lose the money Seattle gives it from its Transportation Benefit District. TBD fees would also be erased and cities would be required to seek voter approval before imposing any fee in the future.
Voting Like it’s 1999
A previous $30 car tab fee push by Eyman in 1999, approved by 56 percent of voters, eliminated the MVET, taking with it about a third of King County Metro’s funding. Although the 1999 initiative was later deemed unconstitutional by the State Supreme Court, the legislature did not reinstate the MVET. Instead, it gave local transit agencies additional sales tax authority.
Today, sales tax accounts for 56% of Metro’s budget. Fares are a distant second, accounting for only 16%. Justin D. Leighton, Executive Director of the Washington State Transit Association, estimated most transit agencies are now 70% funded by sales taxes.
“The 1999 measure made (transit agencies) so dependent on this one source, eggs all in one basket,” he said. “When you are 70 percent dependent on consumers consuming, that’s not good during recessions.”
With Metro’s increased reliance on sales tax, the ups and downs of the region’s economy have had a huge impact on bus service. As the great recession eroded the sales tax revenue, Metro was eventually forced to make service cuts.
“Metro and our customers currently benefit from a strong regional economy that has enabled us to grow and invest in transit service to meet increasing demand,” wrote Scott Gutierrez, a spokesperson for Metro, in an email. “However, Metro will continue to be challenged as we plan for the future and meeting the mobility needs of 1 million more residents expected here over the next 20 years. Part of our challenge is ensuring we can provide sustainable transit service in the long term when our primary revenue source fluctuates and depends heavily on economic conditions.”
Eyman needs to collect 259,622 signatures from voters by December 29 for this initiative to go to the State Legislature. Legislators would then have a choice: vote on the measure; let voters decide directly; or approve an alternative, sending both measures to voters in 2018. Eyman also filed three other initiatives, all titled, “Sound Transit Lied – Revote on Sound Transit Taxes.” Just last year, Eyman again put forth a similar initiative but failed to gather enough signatures to place the measure on the ballot. According to the Seattle Times, state Attorney General Bob Ferguson is currently suing Eyman for $2.1 million, alleging he profited off past initiative campaigns.
“What this initiative is about is about allowing the voters to have a do-over,” Eyman said while unveiling the initiative outside King Street Station. “Now that you know how much the car tabs are going to cost, do you think that is fair?”
This “do-over” now includes the entire state rather than just the Sound Transit taxing district which includes King, Pierce and Snohomish counties.
“That doesn’t seem right,” Leighton said, “that Eastern Washington voters will decide if Sound Transit should have this authority or not.”