The roll call from last night’s vote to approve a reduction in ST3 car tabs

Last night, the Senate approved SB 5955, changing the valuation schedule for the ST3 MVET (Motor Vehicle Excise Tax). Up to two-thirds of the cost is remedied by reducing payments from Sound Transit to the Puget Sound Accountability Fund. The vote was 30 yeas, 14 nays, with 5 members excused. The bill now moves to the House of Representatives which has already approved similar reductions to the MVET, but without an offset for the lost Sound Transit revenues.

Sound Transit levied a 0.3% MVET in Sound Move in 1996. That levy used a schedule that overvalues newer cars relative to resale values. In 2006, the Legislature approved a new valuation schedule that aligns to resale prices. The 0.3% MVET, because of bond requirements, continued to use the older schedule. This levy expires in 2028.

In ST3, voters approved an additional 0.8% MVET. The enabling legislation specified that it should use the familiar older schedule until 2028, then snap to the more accurate 2006 schedule in 2029. At the time, few noticed how this works, but it became suddenly controversial in 2017 when owners of newer cars received their much higher car tab bills. Some felt overcharged because the effect of the higher rates was compounded by a schedule that “overvalued” their cars.

For car owners, the bill would credit car owners for the difference in valuations for the ST3 MVET. Effectively, they’d pay on whichever schedule shows the lower value. Owners of cars less than ten years old will see bills reduced, and owners of older vehicles are not affected. The bill includes refunds for past payments before September 2018.

The credits reduce Sound Transit revenues by $780 million through 2028. Offsetting this are up to $518 million in reduced payments to the Puget Sound Taxpayer Accountability Account. As the revenue reduction increases Sound Transit debt, there are additional debt servicing costs which could increase the total impact up to $2.3 billion by 2041 if not mitigated. However, reducing the revenue hit by 65% will proportionately reduce the associated debt servicing hit.

The Puget Sound Taxpayer Accountability Account is the outcome of a complex deal in 2015 where Sound Transit paid a sales and use tax offset fee to back-fill money taken from the general fund for the Connecting Washington highway package. An amendment from then-State Representative Jessyn Farrell ring-fenced the payments from Sound Transit so they went to local education. The County Councils in King, Pierce and Snohomish were expected to decide this year on how to distribute those funds for education starting in 2019. The accountability fund would contribute $318 million for King County, $111 million for Pierce County and $89 million for Snohomish County. King County was considering dedicating its portion to construction of early learning centers.

The bill ties the payments to the accountability fund to the delivery of ST3 projects. Essentially, Sound Transit is expected to make the planned payments to the Accountability Fund if they affirm by resolution that the payment of the fee won’t impact delivery of the ST3 program. As it will take many years for the many risks to the ST3 financial plan to play out, it is unlikely the Board could pass such a resolution soon.

Several amendments were attached to the bill. An earlier amendment that county permits do not apply to voter-approved RTA projects in unincorporated areas was removed, and replaced with language from from Senator Marko Liaas that requires permits be processed expeditiously.

Earlier versions of the bill identified a priority order for Sound Transit to reduce program scope as revenues fell short. While that becomes less relevant if revenues are mostly replaced from the accountability fund, Senator Guy Palumbo nevertheless added language to prohibit Sound Transit from eliminating light rail projects and bus rapid transit projects. Palumbo’s amendment should be viewed in the context of the debate over tolling on I-405. Palumbo argues Sound Transit should be required to operate Bus Rapid Transit on I-405 even if the Legislature ends the toll-managed lanes that BRT requires to operate reliably.

The bill now moves to the House of Representatives which previously approved a similar reform to MVET charges without any mitigation for the lost revenues. While both chambers have now approved  bills, with large majorities, to correct MVET valuations, the path to approved legislation remains complicated by the argument over whether to use the education funds for mitigation. The legislative session is scheduled to end on March 8.

29 Replies to “Senate approves SB 5955 MVET bill”

  1. Is removing parking from future park-and-rides enough to eat this cost?

    If not, then I’m curious if a feasible way to make up for the lost revenue is to remove the Boeing detour from the Link extension to Everett (which could almost be called a spur with the way it sticks out, and replace with a frequent bus bridge, like BART has to Oakland Airport. I see this as a win-win situation as Everett would become the only suburban terminus to have a reasonably straight Link path to downtown Seattle, and Boeing workers could get service on many stops instead of 1 or 2 points on a light rail line, possibly making up most of the transfer time in just walking time. It seems like a significant enough shift that it could have a reasonable impact on the budget.

    1. “Is removing parking from future park-and-rides enough to eat this cost?”

      No.
      https://seattletransitblog.com/2016/04/20/st3-parking-661m-at-80k-per-space/

      Also, it’s unrealistic to think that all parking will be removed.

      “I’m curious if a feasible way to make up for the lost revenue is to remove the Boeing detour from the Link extension to Everett”

      The “detour” goes to the largest employer in the state and drops people off right in front of the largest building in the world as well as connecting with the new commercial airport. Far more people will go there than commute from Everett to Seattle.

      The idea that the “detour” is bad is the worst zombie lie on this blog… There are no facts behind it at all, but it just won’t die.

      1. Agreed. Light rail to Everett is stupid, but at least ST chose a route that makes more sense than following the freeway. Basically a D- (or maybe F+).

      2. Not a zombie lie at all, at least not a lie. Sound Transit’s December 2015 Corridor Options report for Lynnwood to Everett light rail indicated the capital cost (in 2014 dollars) for the SW Everett Industrial routing as $4460-$4969 million, vs $2902-$3104 million for the I-5 routing. But the SW Everett Industrial routing projected daily ridership would be only slightly higher, 43,000-58,000 vs 42,000-56,000.

        That’s a lot of extra spending for a very small increase in ridership. It also adds 13 minutes to the total travel time, and $25 million to the annual O&M costs. No wonder we can’t let just let it go!

        I like AlexKven’s idea of something similar to an Oakland Airport Connector to serve Boeing. A spur rail line between an Everett Mall station and Boeing would be about the same length as the Oakland Airport connector train, which cost just under $500 million (I think in 2010 dollars). If the transfer is designed well, Boeing travel time should not be much higher.

        Also, with the nominal I-5 alignment the Everett Mall station should most likely be along the Interurban corridor and therefore about 1/4 mile away from I-5, so not totally a turkey as far as transit-friendly redevelopment potential.

  2. Glad to see that the Liias (my state senator) carve-out amendment was at least de-teethed before the bill’s passage.

  3. “However, reducing the revenue hit by 65% will proportionately reduce the associated debt servicing hit.”

    If it is proportional, then the cost to ST would be $772 million.

    However, that’s probably not true. There are probably fixed costs associated with refinancing tens of billions of dollars of debt, in which case the cost will be higher.

    In any case, some part of ST3 will go on the chopping block… Some parking for sure, but even if ALL parking were removed (definitely not going to happen) it would not cover this. I think madison BRT and eastside BRT will also be at risk. ST may be tempted to remove grade separation along interbay to ballard. They didn’t have that in their original plan after all.

    I personally think that delivering some projects later would be ok… people complain about the delivery time, but I think quality is more important long term.

    1. Totally agree. I’d much rather see the project schedule extended if it improves the quality of the end-result. People won’t remember in a generation that something was a couple of years late, but we’ll pay the price for multiple generations for design decisions which slow running, reduce reliability or limit usability.

      1. Certain people here will remember it was late and post about it, possibly for generations to come.

      2. Waiting one or two years is fine. But if it causes it to be delayed for thirty years like Forward Thrust, then you’re shooting yourself in the foot. Many of us have been waiting a long time. How long more must we wait?

  4. >>. . .Senator Guy Palumbo nevertheless added language to prohibit Sound Transit from eliminating light rail projects and bus rapid transit projects. Palumbo’s amendment should be viewed in the context of the debate over tolling on I-405. Palumbo argues Sound Transit should be required to operate Bus Rapid Transit on I-405 even if the Legislature ends the toll-managed lanes that BRT requires to operate reliably.<<

    So not only is the Leg. trying to strip (voter-approved) funding from ST, but also micro-manage it in the process. *Lovely.*

    1. it could lead to an unfunded mandate if the cost of the light rail and BRT projects exceed the slashed revenue. But assuming that ceiling isn’t reached, it sounds like ST would have to cut parking garages, Sounder improvements, contributions to RapidRide C, D, and G? (Madison) and PT 1, and finish it out with a round of ST Express cuts.

      By the way, what are the “early deliverable” contributions to RR C and D going to be? ST has never said, and only a year to the downtown bottleneck, and five years to 2024 when it’s supposed to be finished.

  5. The “fairness” argument is a fig leaf if they’re going to use the “whichever is lower” mechanism. Either use the “fair” 2006 valuation schedule in its entirety, or don’t pretend to give a damn about fairness. If your quest for fairness raises tabs on poor people, then so be it. Otherwise, you’re not trying to make anything fair, [inappropriate language].

  6. At least the money is coming from something that Sound Transit has little – I won’t say no – business being involved in. Last chance to roll back this trust fund before we have mission creep for Sound Transit into public education. My view is ST should be helping educate other transit agencies and provide internships and more… but not fund public education.

    So take solace in that please. I know it isn’t much…

  7. So basically the legislature wants to cut $518 million in education funding and $262 million in a Sound Transit project from a voter approved proposal because some owners of valuable, late model cars are unhappy with their car tabs. Oh, and the legislature was the one that came mandated the formula in the first place.

    I hope Inslee vetoes this turkey.

    1. I don’t want to see a veto. This sucks but I think we need to swallow this pill and hope that it stops the funding attacks. If this is vetoed, and the veto stands, I think we end up with some sort of state wide initiative that could threaten a lot more.

      Beyond that, we are seeing a lot of people upset about taxes in this state. The property tax hikes are getting a lot of attention on top of the MVET hikes. I am worried about some changes in the makeup of our state legislature because of the dislike of “Democrat taxing”. If that happens, a lot of other things could go sideways besides transportation.

      1. >hope that it stops the funding attacks
        spoiler alert: it won’t
        most of the “sticker shock” people are experiencing is the change in the MVET rate from 0.3% to 1.1%, and changing the valuation method won’t affect that
        people are going to complain about taxes regardless of how well intentioned or how fair they are

      2. People are particularly sensitive to car tabs and property taxes because they tax the American dream. We have had tax revolts: see all the Eyman initiatives that passed and allt the income-tax proposals that failed. This has been turning around in the past two decades, but not enough to be completely safe.

      3. The property tax hikes are terrible this year, but for most people will return to roughly current levels in 2019 when local levies will be restricted.

      4. If the new method were to be used some people would get more angry. Then they would keep blaming ST3. Apparently in the more updated formula, the car tab tax is higher for new cars than older ones Unlike how under the old formula old cars costed more.

  8. It seems all but likely this bill or something close will pass so I am curious to know what the impacts of this will be for the network in terms of the subarea equity requirements. I feel like Martin H Duke talked about this briefly on a podcast a bit ago, but my understanding it this could negatively impact the less urban subareas more since car ownership is higher there.

    If my understanding is true, this means the Seattle lines to Ballard and West Seattle will likely stick to the general schedule proposed compared to the ends of the spine. It seems the end of the spine are a mildly upset at Sound Transit already since it appears that Seattle is getting more build out, but it seems like it’s a direct correlation with the subarea equity requirements…

    1. North King has a lot of high-income people so it has a higher tax base relative to its population. It also has a lot of nonresident workers and tourists who pay sales taxes, and company headquarters that pay high property tax (or their landlord does). That gives North King more revenue to buy more ST3 projects per capita. East King is second in all these, Snohomish third, and South King and Pierce are last.

      There’s an interesting dynamic because North King and East King has more wealthy people with expensive cars, but in southeast Pierce transit is minimal so more people have to drive everywhere. I don’t know which factor outweighs the other. But southeast Pierce is also the area that never wanted ST3 and is most angry about car tabs, so those are two more factors.

      1. What proportion of South Sounder ridership boards or deboards in Puyallup and Sumner? Tacoma touches King County north of Fife. Maybe the Sound Transit district needs to be shrynk in pierce just to include Tacoma, Fife and Lakewood. That might shut O’Ban up if his poor little rich kids in University Park and Dupont didn’t have to pay tabs on their Mercedes and Bimmers.

      2. That’s exactly the imbalance in the ST district: Pierce has far more exurban land in it than King or Snohomish do. Spanaway and Orting are in, but Covington, Marysville, Lake Stevens, and Monroe are out. Apparently Pierce thought it was getting a good deal at the time getting ST to extend regional transit to those areas. And maybe it still does. But the heavy No vote from that area and complaints about car tabs and they say it “takes an hour just to get to ST service” makes things harder.

        I don’t know about Sumner and Puyallup, but that’s where the railroad track goes, so if you want Sounder to Tacoma it has to go through those cities.

  9. Has the “American Dream” degenerated to such a degree that the collection of status symbols is its sole expression?

    Sure.”getting ahead” has always been a part of it. People braved the two-months-if-you’re-lucky crossing of the Atlantic for the promise of free or nearly so land. They lived in the squalor of late nineteenth century cities.

    They walked to Oregon through tribes of skeptical — or worse — native tribes.

    But there was another element that ameliorated the drive for riches: the quest for character and good citizenship.

    That is largely gone from America today. Look who we chose for our President: a man almost totally void of those attributes which denote “character”.

    The great thing about Democracy is that the people get the government that they chose, for good or ill.

    Unfortunately, though Lincoln was right that “You can’t fool all of the people all of the time”, it’s clear that you can fool enough to get 306 EV’s one time.

    1. This was supposed to be a reply to Mike’s comment on taxophobia. I guess I didn’t click “Reply” firmly enough.

    2. It’s amazing that the incredible rise of single-family house prices now throughout the state has not led more people to turn against single-family houses, or at least embrace row houses. Yet the Suburban Times mostly talks about SF houses as if they’re the only choice. A lot of people aren’t buying houses now because they can’t, but you don’t hear of a movement of people saying “We didn’t want your stinking house anyway” or pushing for more housing choices (such as row houses or small condo/apartment buildings or ADUs or tiny houses or …). Will Mark’s prediction that rising traffic congestion will eventually push people into supporting Sounder to Olympia and comprehensive local transit, also apply to housing? Will the shortage of single-family houses eventually push people into supporting more housing types at the edge of urban villages and in single-family zones?

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