Senate Bill 5955, Sen. Patty Kuderer’s (D – Bellevue) car tab relief bill, has been added to the list of bills scheduled for action in the Senate Transportation Committee today. Today is also the last day for bills to get out of committee, unless they are necessary to the budgets. The committee meets this afternoon at 1:30 pm, and will act on as many as nine bills.
SB 5955 is similar to HB 2201, which passed the House for the second time back on January 24.
Sound Move (ST1, passed in 1996) contained a 0.3% motor vehicle excise tax (MVET), or “car tab”. ST3 added an additional 0.8% MVET. Both are specified by ST3’s enabling law to be under the 1996 methodology until the ST1 bonds are paid off. After that, the 0.3% MVET from Sound Move expires, and the ST MVET will switch to a methology chart the legislature passed in 2006.
SB 5955 would give MVET payers a credit based on how much more the 1996-method MVET is than if it were calculated using the 2006 method. However, those who would pay more under the 2006 method would still get to pay the lower 1996 calculation.
Sound Transit estimated the bill’s eventual impact to Sound Transit at $2.3 billion due to increased debt financing.
The bill requires Sound Transit to nevertheless attempt to deliver the full ST3 package, by saving money through cost efficiencies, savings, and practical design. If ST cannot deliver the full package, then new parking facilities would be cut first, then commuter rail investments, then bus service, then light rail projects.
Sen. Kuderer testified that car tabs disproportionately impact low- and middle-income taxpayers. However, the change in the formula would primarly benefit owners of newer, more expensive cars, which tend to be owned by wealthier drivers. Reducing transit funding hurts lower-income taxpayers more, as they are more likely to depend on transit.
Transportation Choices, the Northwest Progressive Institute, and the Seattle Chamber of Commerce all testified against the bill at its hearing on January 24.
The Department of Licensing asked that the bill not apply retroactively, as that would result in an additional $2 million per month monthly cost.
As of publication time, no proposed committee substitute bill was available online.
The only member of the Seattle delegation on the Senate Transportation Committee is Committee Vice Chair Rebecca Saldaña (D-Southeast Seattle).
If this passes, what’s our next step?
Mark Dublin
@Mark Dublin,
To start cutting and delaying. Not many other options.
Assuming the bill passes out of committee this afternoon, it then goes to the Rules Committee. The Rules Committee, or just the Speaker, could bottle up the bill there. If it passes out of Rules, it then goes to the Senate floor, where there hasn’t yet been a vote on this bill or HB 2201.
Some Republicans will vote No (e.g. Steve O’Ban), simply because they want to keep the issue alive for election purposes. It is conceivable that enough from each caucus will oppose this bill to shut it down, though I don’t think that is where the vote count stands right now.
Regardless, the best strategy is to contact your state senator, now. Or head over to the Capitol and talk with him. For those represented by Republican senators, your senator may actually be more swayable on this bill.
If you want to stop the bill this afternoon, contact Senate Transportation Committee members, especially the ones closest to where you live. Or in your case, Mark, get to the voting session and talk with them before session begins.
“Some Republicans will vote No (e.g. Steve O’Ban), simply because they want to keep the issue alive for election purposes.”
O’Ban, this past week, started raising a stink about freezing Narrows Bridge tolls and paying for the shortfall out of the general fund. He probably saw the writing on the wall about ST3 and decided to move on to something else to attempt to raise his reelection prestige.
Pray that our local economy keeps doing well and the sales tax portion of ST3 funding continues to benefit greatly from that (more money comes from sales tax than car tabs).
What the economy does this week is irrelevant. Over 30 years of ST3, the booms and the busts will average out.
@asdf2. ST has been collecting tax revenues for 21 years now and I believe they are still asserting that the recession of the late 00’s cost them some $4 billion in lost revenues.
“Although the “Great Recession” has ended, its impact on the agency continues as long range tax revenues
are currently estimated at $4.1 billion, or 26 percent, below the 15-year financial forecast included in the 2008 voter-approved plan. Due to this decline in forecast revenue, it is no longer possible to complete all ST2 programs by 2023, as was originally contemplated in the plan approved by voters.”
Source: Sound Transit Annual Financial Plan, June 2016
2008 was not an average bust, it was a financial crisis euphemistically called the Great Recession but really the Little Depression. As for the impacts to ST, it’s like if you’re saving up for a $200 trip and you put $100 a month in your savings account, but for two months you’re unemployed and don’t put in anything. Even if you got a bonus recently and was able to put in extra, it still doesn’t fully make up for the two months you missed. The 26% is surprisingly high, but 2008-2012 is a third of 2008-2018. And if it’s more than a quarter of revenue, it’s great that projects are postponed only 1-3 years/
Don’t forget that a year of East Link’s delay is because of the prolonged negotiations with Bellevue over the south Bellevue and downtown alignments and Kemper’s lawsuits,
When I called Sen. Saldana’s office last week they said she was very much against HB 2201, so presumably she opposes SB 5955 as well. Still wouldn’t hurt to give her office a call and let them know your thoughts.
Thanks for the info! (I didn’t know the bill was on the agenda until early this morning, so I haven’t polled the committee members yet.)
Other committee members who have ST projects that could be impacted by this bill include Maralyn Chase (Shoreline), Lisa Wellman (Bellevue), Manka Dhingra (Kirkland/Redmond), Marko Liias (Edmonds), John McCoy (Everett), and of course Chairman Steve Hobbs, who doesn’t represent any portion of the ST3 spine, but has thousands of constitutents who will use it. The rest of the Democrats on the caucus have no skin in the game, except for any constituents who care about it, and so will follow their lead, if they but lead. Indeed the ones not representing the ST District have every reason to want ST to succeed, and no constituents to receive car tab relief.
This household has already contacted our state senator, Marko Liias, and asked him to support this bill. It’s simply a matter of fairness (in using the 2006 depreciation schedule).
I’m sure you also asked them to make sure your property tax is based on what you could actually sell your house for, rather than the lagging valuation the county usually uses. Since it’s a matter of fairness, and all.
I hope you also asked for the following provision to be struck from the bill, in your righteous crusade for fairness:
“However, those who would pay more under the 2006 method would still get to pay the lower 1996 calculation.”
Those darned poors with their older cars taking advantage of their unfairly underpriced car values and all that.
@Steve. I’m assuming your comment above is in reply to my comment. I can’t speak for King or Pierce County, but in the area of Snohomish County where I own property our tax assessments are not lagging (other than the normal one year variance between assessment year and tax year). Additionally, there is a very clearly defined appeal process thru the local BOE for challenging any and all property tax assessments.
@Pat. Yes, that provision should be deleted imo. I drive a 15-year old vehicle myself and thus my RTA tax should go up accordingly if that’s what the 2006 schedule calls for.
Any idea what the revenue hit to ST would be if they switched entirely from the 1996 calculation to the 2006 one, without the “whichever is lower” provision? Of course, in addition to rebating people who overpaid, you’d need to send bills out to people who underpaid. I can’t imagine that’d be politically popular (but people would still somehow find a way to blame ST).
Any idea what the revenue hit to ST would be if they switched entirely from the 1996 calculation to the 2006 one, without the “whichever is lower” provision?
Very small, I’d think. There are a lot of cars that are more than 11 years old, but the valuations are very low, and the schedules are quite close. Nobody has a 2006 valuation that is very much lower than the 1996 schedule valuation. So the typical difference would be a few dollars. Even if the Leg felt like poking drivers in the eye some more, there wouldn’t be enough money to make it worthwhile.
>Very small, I’d think.
Oh, neat. So really, the only downside to switching the valuation schedules entirely is that the tax gets slightly less progressive? Overall revenue doesn’t change that much? That’s not terrible.
Maybe we should be lobbying Senate Republicans to make sure the “whichever is lower” provision is stripped from the bill. After all, if they’re as interested in fairness as they claim, they shouldn’t be explicitly allowing people to get away with underpaying. Unless of course they don’t actually give a damn about fairness and just want to castrate Sound Transit.
@Tlsgwm – I assure you your assessment is lagging. They always lag. I’ve heard people complain about this exactly once, which is when valuations were dropping from 2008-2010, so having a more current valuation would actually result in less tax. Usually, the opposite is true. The reason for only hearing the complaints then is that no one is actually concerned about ‘fairness’ – that’s a fig leaf. People just want to pay less.
@Pat – why should we lobby Senate Republicans to do this? They may not care about poorer folks driving older cars, but the rest of us should. The fact that they get to keep their (slightly) lower valuation is one slightly good thing in an otherwise terrible bill.
@Steve. Sorry but you are incorrect. The only lag is the normal lag from valuation year to tax year. Your “fig leaf” comment is simply your opinion, which is fine of course. I’m of the opinion that people just want their property taxes to be assessed fairly.
Steve: I was being facetious. You and I agree that the “fairness” argument is just a fig leaf. Pushing to remove the “whichever is lower” clause would expose that, because it’d obviously be politically unpopular and no one would actually want to do it.
It’s about oayingcwhat they consider a reasonable car-tab fee, which they consider to be less than $100. They wouldn’t care about the fairness of the schedule if it didn’t cause these “outrageous” bills. Saying they’re looking out for poor people who have to drive to work is like saying the estate tax is bad because it hits small family businesses: 95% of the beneficiaries have a lot more assets than that; the first $5 or 20 million is exempt anyway, and if the real motivation is to keep small businesses in the family there are more specific ways to do that. This is about getting something for nothing, or nothing for nothing, depending on how much they want ST3’s services. It’s like how csn people pass initiatives to both reduce class sizes and cap/cut the taxes that would pay for it? The answer is that it’s two different groups of people showing up to vote for different things (often at different times), but the net result is a “something for nothing” mandate which suits them fine. More honest are those who want “nothing for nothing”; I.e., they didn’t want ST3 anyway so they’re happy to have it nullified or reduced.
Sen. Pedersen (43rd LD) is also on record as opposing EHB2201 so is likely also opposing this one.
If Sound Transit is forced to cut costs and cut parking, does that mean we can move the 148th St Station back to 145th since we don’t have to accommodate a parking palace anymore?
Also, since this bill forces Sound Transit to cut costs but try its best to deliver the whole package, does that mean 130th St Station must be built while the rest of the line is being built, since that’s less expensive?
No, because that could be done now for the same reason and ST decided against it. Cutting costs means trimming projects in the above priority order, so if ST eliminates parking to save costs, that money won’t be available for 130th or any other project. The positive factor is that ST would have to delete all parking, BRT, and bus enhancements completely before touching rail, so 130th is relatively well protected. However, that may go by subarea, based on ST’s longstanding rules which the Legislature probably approves of. In that case, in North King there are only two garages, no commuter rail, and the only bus service is ST’s contributions to RapidRide C, D, and G (Madison). That means they’d be coming for rail quickly, and North King is stuffed with needs including Ballard, DSTT2, West Seattle, 130th, and Graham. And given ST’s priority history, 130th and Graham may be chopped first.
Speaking of ST’s “early deliverables”, I have heard neither hide nor hair of what Metro/SDOT plan to do with the contribution to the C and D.
@Mike Orr. That’s correct. The subarea equity policy makes the priority order (of any ST3 project cuts) contained in the legislative language quite a tricky matter. I think it also opens the door for legal challenges. I don’t think the legislative caveats are needed except for political purposes.
Wait a minute… Subarea equity only applies because of state law; this is also a state law. So could this be counted as a (limited) repeal of subarea equity?
Probably politically nonviable unless the legislature gives ST a whole lot more cover, but interesting.
Mike, isn’t 522 BRT at least in part North King? There are stops in Lake Forest Park Park, for sure, and at least two or three in Shoreline
Richard: maybe. I don’t know whether any of 522 BRT is assigned to North King. It depends on how North King would have prioritized a line to Lake Forest Park if East King didn’t want the extension. It’s the same issue as Sounder and ST Express in Seattle, or Judkins Park station (which North King wasn’t going to pay for until Bellevue begged it to take it on to free up money for the downtown Bellevue tunnel). Although 522 BRT has more extensive service in North King than these others so it may be different.
Re subarea equity: I don’t know whether it’s a state law or just ST’s policy. But the ST1/2/3 votes were predicated on it.
This approach would make the tax more regressive, but that’s what our electeds want (for political reasons).
My question is this — giving a rrebate would mean a net reduction of the tax amount vehicle owners pay each year. From the bondholders’ perspective that change would impair their security agreements with Sound Transit just as much as if the tax rate had been reduced. Isn’t that an obvious legal problem (that is, there would be a “contracts clause” violation, per the Supreme Court’s rulings in the prior car tab tax case relating to I-776)?
“The bill requires Sound Transit to nevertheless attempt to deliver the full ST3 package, by saving money through cost efficiencies, savings, and practical design.”
It’s one thing for ST to say, “We’re pausing for six months to streamline the budget; we think we can compensate for a cost overrun.” Or even for a transit-industry auditor to review ST’s budget and make recommendations. It’s another thing for the Legislature, which has no expertise to read or evaluate a rail-transit agency’s budget, to claim it “knows” there’s fluff in there and it even knows the amount: $2/3 billion. How can it know the amount without having an expert evaluate the budget?
Ummm, wishful thinking? I mean, who needs experts right?
The fiscal note for the bill does not reference Sound Transit’s estimate of a $2.3 billion revenue loss. That $8 million cost to the state is for DOL’s cost for a change order to its IT provider if the bill’s retroactivity isn’t removed. DOL is being loud and clear on several bills that it needs to not ask for change orders that result from poor timing in legislation.
Isn’t that “DOR”?
Department of Licensing
The fiscal note seems sound. The $8 million expenditure is from the following:
>>The system changes in this bill require 4 months to complete.
• The DRIVES project has a spend rate of about $2 million per month. Implementing system changes required by legislation while the project is being rolled out requires
DOL and its vendor to stop the project to create new business rules, design the solution, implement the solution (coding), test scenarios, make adjustments to accommodate the
change, test again and retrain users. Each month the modernization project is delayed could cost the state around $2 million, not including business impacts such as training.<<
Hence, the expenditure is due to the timing of the implementation should the bill be enacted.
The bill causes a $2.3 billion revenue loss or cost increase whether the Legislature recognizes it or not, so it’s the same thing. What matters to me is not what the Legislature thinks it’s doing but how it actually impacts transit services I care about, or in other words, its impact on the ground.
Half the fun of being a politician is getting to pretend you’re an expert in things you really have no clue about, i.e. the Dunning-Kruger effect.
It’s always a good idea to have a “fall-back” planned in case of many different kinds of unforeseen setbacks isn’t it?
Economic changes for the worse. Unforeseen technical problems- seems we had to reroute LINK under the Ship Canal. And how much did it cost to get Big Bertha dug out to fix damage from a single piece of pipe in her way? Tectonic imitations of human stupidity?
Might be best if there’s some flex in the order of motorized modes. For instance, what if we run into a situation where it would really benefit the whole project to temporarily carry passengers on buses along same general routes?
I don’t think present legislation had a lot of forethought. So very likely some legislators will get some constituent shift-of-demand as details emerge. If these last couple of decades haven’t taught anything else,there’s plenty of evidence that it doesn’t pay to “break and run” in the face of the ugly.
I mean the enemy.
Mark
And what’s the chance of Inslee’s veto on any bill that comes to his desk? Should the transit community begin advocating he indicate a veto on any bill that harms ST revenues without 100% replacement funding?
Any reason not to ask him for it?
MD
Can Sound Transit Challenge the bill in Court. They would only need to tie it up for 7 years before everything worked it self out and by then they would be arguing over refunding because the tax would change automatically. With appeals and extension it seem pretty easy to get 7 years out of the process and the legal cost would be far lower then cutting 2.3 billion.
Depending on what the final version of the bill that passes and gets signed into law, ST certainly does have that option to mount a legal challenge. They would most likely seek a preliminary injunction at the outset, something they may or may not be granted. (Though issuing refunds for taxes collected that are later disallowed is an easier argument to make than one centered on the loss of the tax revenues while the case is being litigated should the injunction not be granted. Should the agency ultimately prevail, those tax revenues in the latter case are most likely lost forever.)
Of course, Sound Transit hasn’t operated totally in good faith on this matter either (imho). The agency could have defeased the bonds in question, thereby making the 1996 schedule issue moot.
I’ve emailed my state senator, Reuven Carlyle, twice over the past month asking not to take money from ST3 but have not heard back. Anyone else having trouble? I live in Ballard – is this the right person to voice my concerns to?
This bill, or something like it, is going to pass. The R’s have succeeded in making this an issue. And with Democratic control of the Leg being so tenuous, the Dems aren’t going to risk statewide control just for a regional issue like ST. And nor should they.
The real question is what can be done to improve the situation going forward? Essentially, what is ST getting in exchange for this revenue cut?
My wish list? In exchange for the revenue cut the Dems should insist on modifying the monorail legislation to remove the moritorium on LR tech and allow the existing monorail funding legislation to be used to expand LR within Seattle city limits.
Doing such a thing wouldn’t benifit the burbs, but they are the ones screaming the most for relief and they will be happy anyhow.
But modifying the monorail legislation would benefit Seattle. It would allow us to go forward with significant additions to the current ST plan, and to refocus the overall ST system to be more urban. That is a good thing.
So, ya, I think we can’t stop this, but let’s get something in exchange.
I’ve read that the monorail authority can raise $1 billion, so not enough for another subway line. But it could finish the RapidRide lines and enhance all the other bus routes in Seattle. The problem is that money alone can’t create transit lanes or BAT lanes; that requires a city decision to replace parking lanes and GP lanes. But about that transit mall idea on Third Avenue; it could fund that.
My proposal would be to allow the construction af additional LR infrastructure and to specifically disallow using the monorail money for buses. I’d vote “no”on any proposal to use the monorail funding for nothing more than “more buses,”. Enough is enough.
And $1B would be more than enough to fund such improvements as building the Ballard ship canal tunnel and some reasonable add-ones to existing facilities. And I’d take a an extension of the Ballard line north to 85th and then east along Holman/105th towards Lake City any day over trying to build an all new line.
Anybody else think this is just the beginning of a years’ long campaign deliberately aimed a mass disruption of Sound Transit, all transit, and everything else public in the State of Washington?
MD
It’s mostly about car tabs and light rail. Those are acutely sore points to some people. Other transit will probably get the same neglect it’s been getting for years. I don’t think most legislators hate non-rail transit, they just don’t want to raise taxes for any reason.
Although a new phenomenon may be coming with the rising ridership, support, and defense of transit in Pugetopolis and Spokane. That may gradually weaken the power of the naysayers.