Month: March 2018

The House Transportation Committee met this morning to hold a public hearing and take action on Engrossed Substitute Senate Bill 5955, the car tab relief bill that would reduce the funding stream for Sound Transit 3.

Rep. Judy Clibborn (D – Mercer Island), the chair of the committee, proposed an amendment that would strike most of the amendments made by the Senate. In particular, it would restore the $518 million in education funding paid for out of ST taxes sooner rather than later, and remove Sen. Marko Liias’ (D – Lynnwood) language expediting permitting decisions for ST3 projects. The amendment leaves the bill nearly identical to the version of EHB 2201 the House passed last year when Republicans controlled the Senate, and that it passed again earlier this year.

The primary exception is that Sen. Guy Palumbo’s (D – Maltby) language banning ST3 from eliminating light rail projects and bus rapid transit projects (even if the legislature does not cooperate with local cities’ efforts to have functional rapid lanes that won’t leave buses stuck in traffic) remains. This restriction is an unprecedented straightjacket that, if applied to ST1 and ST2 light rail projects, might have made them look a lot different than what has been built and is being built. The fiscal note did not attempt to cost out the impact of Palumbo’s amendment.

Beau Perschbacher, Policy & Legislative Director for the Washington State Department of Licensing, pointed out that, as currently drafted to take effect September 1, 2018, the bill could cost an extra $8 million for hiring extra contract programmers for the DRIVES data management project and other cost overruns, and urged the committee to push implementation out to July 1, 2019, as has been done with several other bills affecting the department. He quipped, “We have no expectation you are going to give us the extra $8 million.” He also pointed out that the bill is not clear whether the retroactive motor vehicle excise tax credit would apply to the vehicle or the taxpayer. He also pointed out that the retroactive credit could be found unconstitutional, and then DOL would have to administer a follow-up process to try to re-collect the taxes.

David Beard, Education Policy and Advocacy Director for School’s Out Washington, testified in favor of restoring the full education funding. He has been involved in planning efforts for what King County schools would do with the money.

Nick Federici, representing United Way of King County, requested restoration of the education funding, while pointing out that many of those affected are transit-dependent, and therefore have “skin in this game”.

Shelley Holder, representing Snohomish County, testified in favor of removing Sen. Liias’ permit expediting language, just as Rep. Clibborn’s amendment does. In response to a question, she mentioned that Snohomish County has taken no position on spending the education fund on education or transit construction.

Rep. Mark Harmsworth (R – Mill Creek) praised the amendment, but said “We’d like to see more, but we’ll take what we can at this point.”

Clibborn’s amendment passed by nearly-unanimous voice vote.

Rep. Jake Fey (D – Tacoma) said “I actually loved the senate bill,” and will be voting No.

Rep. Lillian Ortiz-Self (D – Mukilteo) said she would vote for the amendment and to pass the bill out of committee, but expressed hope that, during continuing negotiations, a way could be found to backfill Sound Transit’s funding “that isn’t on the backs of our children”.

Rep. Javier Valdez (D – Seattle) cited “the work of my predecessor” (Jessyn Farrell) as a reason to vote Yes.

The bill, as amended by the House Transportation Committee, passed 19-4-2.

The House is in session today, and could take up ESSB 5955 as amended, at any time. The two houses have through next Thursday to agree on the final bill language, unless they go into extra sessions to finish the budgets.

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.

Continue reading “Senate approves SB 5955 MVET bill”