Senate Bill 6606, introduced last week by Senator Marko Liias, is the latest effort in the Legislature to resolve the three years old controversy over the MVET valuation schedule. The bill would potentially reduce Sound Transit tax revenues by just over $1 billion over the next 20 years.
The MVET valuation schedule has been a political challenge for Sound Transit and the Legislature since the first higher car tab bills began arriving in mailboxes in early 2017. Sound Transit has levied a 0.3% MVET since 1996, and added another 0.8% MVET with ST3 in 2016. The latter heightened awareness that Sound Transit was using a valuation schedule from 1999 that assigned relatively high values to newer cars. An alternative schedule which the Legislature approved in 2005 will not take effect for Sound Transit taxpayers until 2028. That is the year when the original 0.3% MVET expires after bonds are paid off, and the remaining 0.8% MVET is reset to the newer, generally lower, schedule.
Many car owners, particularly of course those who never liked the MVET, rebelled against what they saw as an unfair tax. There have been bills in the Legislature to address this in 2017, 2018, and 2019, none of which passed. In November 2019, statewide voters repealed all of Sound Transit’s MVET authority, but that initiative is the subject of ongoing litigation and is currently enjoined from taking effect with uncertain long-term prospects. I-976 failed 46-54 within the Sound Transit area. It passed by large margins in Pierce, Snohomish, and South King County, but failed by even larger margins in Seattle.
Sound Transit last month reiterated that they would “work collaboratively with the State Legislature to address concerns related to Motor Vehicle Excise Taxes while preserving the agency’s ability to fully deliver the voter-approved plan within the adopted timeline”. In other words, fix the valuation problems, but make Sound Transit whole on the foregone revenues.
The Liias bill repeals I-976 in the event that the courts allow it to go into effect. It then reforms the schedule for MVET taxes going forward. In doing so, it goes somewhat further than previous bills. The lower schedule applies to both the 0.3% MVET from 1996 and the 0.8% MVET approved in 2016. It also adjusts the levels for older cars so that nobody would pay more than currently. (The 2005 schedule is generally lower than the 1999 schedule, but is higher for cars older than eleven years. The bill protects those car owners against a tax increase).
Sound Transit estimates the revenue reduction at $1.024 billion through 2041, higher than the $700-$800 million cost in earlier bills because of those added elements. So far, the bill does not identify any offsets, though Liias has indicated he is looking into offsets.
Sound Transit further estimates an additional reduction of $1.887 billion after factoring in borrowing. That’s the accounting cost of the debt servicing through 2041 if they make up all of the tax revenue reduction through borrowing. That number shouldn’t be taken too seriously. As Sound Transit borrows, it then incurs more debt to make the principal and interest payments on the first, then yet more to service that debt. The nominal accounting is correct, but overstates the rather smaller economic impact. The calculation also assumes conservatively high interest rates.
Much more consequential than the nominal accounting of debt service costs is whether this pushes Sound Transit past statutory debt limits. That’s the point at which projects would be delayed (and you should care more about delays than rolled-over debt expenses). On current long term projections, it’s a close call whether the loss of $1 billion in tax revenues would delay projects. Legislators will not know whether they are voting to delay projects when they vote on this bill because the critical “pinch point” in agency finances in the late 2020s and early 2030s.
In the event that Sound Transit is fully constrained by the statutory limit, the $1 billion revenue loss should be seen in the context of a 2020 capital budget of $2.5 billion. Factor in that ongoing projects would proceed unaffected, and the worst case scenario is about a six month delay on future projects. If you think suburban politicians will be relaxed about that, however, look no further than 130th St station. There a debate is ongoing about a debt impact of just tens of millions on future projects.
Prospects for the bill are rather uncertain. The repeal of I-976 provisions require a 2/3rds majority. At this time no corresponding bill has been filed in the House. The 14 sponsors are all Democrats from mostly suburban cities, and the bill will require both Seattle Democrats and Republicans to pass.
45 Replies to “Liias bill would reset MVET valuations”
Is it possible and/or sensible to attach an increase of the statutory debt limit to this bill as an offset to Sound Transit? That might allow for both taxes to be lowered without having to delay projects, in exchange for paying ST2 and ST3 taxes for a longer period of time after projects are complete.
I thought about that. But, I would imagine such a move would be viewed by investors as increased risk, thereby leading Sound Transit to pay increased interest rates.
Start trimming, beginning in Pierce County where the highest margins in favor of the Initiative were accumulated. I would shrink the ST District in Pierce to just Fife, Tacoma and Lakewood. Forget about Sounder to Dupont and close the Puyallup and Sumner Sounder stations.
Elections should indeed have consequences, and they should fall heaviest on the freeloaders outside the district who don’t pay the taxes anyway.
Who are these freeloaders you are trying to punish?
Puyallup and Sumner get over 2K boardings each, and are stations in the middle of walkable downtowns, not parking wastelands like Tacoma Dome or Tukwilla. Are you going to pay those cities back for the investments they have paid for, just to save time on a Sounder run? Very odd goal.
Most of those 2K boarding are people who drive from the outback. I would bet at least half live outside the ST district; ergo, they are freeloaders.
The “walkable downtown” of Sumner is about three blocks square. There is one three-story townhome development adjacent to the station. If everyone who lives there commutes to Seattle on Sounder, that’s about half a car. The rest is car-oriented single-story sprawl.
And the point is NOT to “save time”. It is to serve the people who pay the taxes and vote to support the system while bypassing those who don’t. As I said, “shrink the district to Fife, Tacoma and Lakewood.” People in Puyallup and Sumner would no longer pay any taxes for the system.
Except that Dupont and the overall JBLM area has consistently supported Sound Transit by large margins. And closing the Puyallup and Sumner stations wouldn’t actually save ST much money, since it doesn’t make the trip any shorter and the stations already exist. You could, I suppose, cancel the handful of express buses serving these towns.
One intriguing compromise idea is to have a tiered system where sales tax is collected across the entire district (ST needs the tax revenue from exurban car dealers), but MVET only in the more urban parts.
Politically, it will never happen. But, the general idea that some areas should pay more in taxes, and expect more in service, than others, does make some amount of sense.
Very good point.
It would probably require an overlay tax district for the MVET. The entire ST area is a single tax district, and you can’t tax part of a tax district differently.
Deleting Puyallup and Sumner would do almost nothing. They are stops along the existing rail alignment and add a whopping 2 or 3 minutes to a 60 to 80 minute trip. If you want to cut costs/improve usability, my suggestion would be to keep Puyallup and Sumner open, and develop the current parking real estate into TOD to be sold or leased at a profit. You could still remove Sumner and/or Puyallup from the ST taxing district. I would argue for removing Sumner, as it votes much more conservative/reduce taxes, but Puyallup is starting to turn a new leaf. Don’t rule out downtown Puyallup as a lost cause. I would also remove Bonney Lake and unincorporated South Hill, Frederickson, Parkland, and surrounding areas.
Here’s a map of the ST tax area (including results from the 2016 election):
Here’s a map of incorporated & unincorporated areas in Pierce County:
If you eliminate the unincorporated areas of Pierce County, plus Sumner & Bonney Lake, you cut out the areas that are voting against transit, as well as the areas that are most difficult to serve effectively. Keep the City of Puyallup in the ST district though. They are in-line, relatively easy to serve with access to the Sounder alignment and good freeway access, as well as close proximity to both Tacoma & Auburn.
You have to think about this… there are EXTREMELY large swaths of Pierce County that have ZERO viable Sound Transit service. There’s a skelaton of a bus route that runs SR 512 with a very poor level of service and reaches exactly zero destinations, but instead forces a transfer to Sounder. Most of the folks who MIGHT use a route in these areas would rather drive to park at Lakewood or Puyallup than drive to park along 512, take a bus, transfer, then get on a train. There’s too much lost time. Transit here doesn’t make sense unless you are going to express route people to Tacoma and Seattle. ST has decided that express routing an area like Parkland or Frederickson or South Hill to Tacoma or Seattle isn’t worth the investment. So, cut them out of the district.
Interestingly, from that precinct map linked above, it seems that Milton & Edgewood are voting against transit, despite their proximity to future Link. Part of the problem is that they don’t have decent local transit – nobody in Pierce County does – making it difficult to use ST. Another factor is that it is a lot of older homeowners on very large pieces of real estate. Given the lack of viable building lots in our region, there is a lot of ongoing infill development which will make Edgewood-Milton much more viable to provide local transit in coming years – bringing in younger families with improved density as old homes on multi-acre lots give way to denser subdivisions and apartments.
I can see from the map the Puyallup DID vote in favor, so OK, keep Puyallup.
Hey, while you’re add it, why don’t you argue for Ballard to UW being build instead of Ballard to downtown as a money saving device? Amazon didn’t really go all out in I-976 expenditures compared to their Seattle City council election donations, so aren’t they sort of “free-riders” as opposed to freeloaders.
Punishing “freeloaders” will get laughed out of court as a defense.
System needs both Ballard/Downtown and Ballard/UW. Second one first. Wish we could get more civil engineering drawings in these discussions, because I’ve always wondered if an east-west line under Wallingford would be as straight and obstacle-free as it looks.
Possible advantage of doing that one second is likely advancements in tunneling equipment. And when it undercrosses Lynnwood-Everett line at the University, could emerge at Laurelhurst and be continued to Kirkland and east.
Would like to “nail down” the term “Future Proof.” Does it mean certain protection against problems ahead, or perversely-pig-headed permanent man-made obstacles?
With Ballard-UW, maybe they could get it built sooner than 2036. Ballard certainly needs it, like now.
Who is going to court? The people in the areas to be expunged WANT to be expunged. They voted heavily FOR I-976. Let them go, BUT make sure that the most convenient opportunities for them to ride the system are embargoed. Engineer’s idea to sell the parking for TOD makes sense.
Look, I get it “MOAR RAIL!!!!!” I like riding trains too, but the outback boonies of Eastern Pierce County is going to resist being made “urban” like Donald Trump is resisting subpoenas. It AIN’T gonna happen. Deal with it and cut them loose!”
You are missing the point. It’s NOT “to save time IR money OR both”. It’s to prune the ST District to those areas who want it, will use ir, and who will support it at the ballot box. Ideologues — even “progressive ideolegues — are a waste of electronic ink. Find your allies and give them great servicevand cut the Goobers out of the picture. Neuter them — and quit pussing them off — by moving the boundaries if progressive services inside where they live.
In ab ideal wirld tgere would be Gerrymandered countries, not House Districts.
ST has to treat all parts of the tax district equally because they’re paying the taxes regardless of their vote. It can give less service to Bonney Lake because it’s small and undense, but it can’t retaliate against them for their vote.
There is some movement for Pierce to secede from Sound Transit, led by the Pierce County executive who’s now a Sound Transit boardmember. He said he’d pursue it if the Tacoma Dome Link extension can’t be opened on time. It’s unclear what kind of severance would be involved or how Pierce would fulfull its past debt obligations. Maybe Sounder South would be truncated at Auburn or canceled entirely, depending on whether South King can pay for it on its own.
It’s hard to see how the Pierce subarea could shrink to exclude Sumner and Puyallup but leave inTacoma Dome and Lakewood. Sounder was predicated on southeast Pierce paying for part of its operations and capital expenses. If you shrink the district but keep the stations, then the net effect is southeast Pierce would continue to ride Sounder but wouldn’t be contrbuting taxes to it. If you bypass those stations and stop at Tacoma Dome, then they’ll drive to Tacoma Dome or Auburn and you’ll have the same problem, plus it would create pressure to enlarge those garages.
How does it work out? Well, since ST is no longer required to “serve” Puyallup and/or Sumner… they could keep the inline stops “open”, but eliminate express buses (which are currently nearly non-existent), eliminate any shadow Sounder service (again, almost non-existent), and eliminate all station “amenities.” Build TOD, then own, operate, and profit from it. If TOD doesn’t pencil, charge full market rate for the parking structures, increasing pricing until you hit a market equilibrium. Consider adding a fare surcharge for non-ST stations to boost revenue.
Regarding “freeloaders” riding the system:
-rural east Auburn
-northeast Lake Tapps
-south Bellevue/east Newcastle
-east Mill Creek
They all have the same ability to drive to park and rides that the currently-underserved portions of Pierce County have, and in many cases have better proximity to better service levels than their Pierce County counterparts who live in Spanaway, South Hill, or Elk Plain. If you live in Graham, you pay the ST taxes, but have to drive 25 minutes to get to Puyallup station for peak-only service every 25 minutes on Sounder and no usable bus service. If you live just east of Newcastle, you DON’T pay ST taxes, but you are only 15 minutes from both Eastgate & South Bellevue & Kennydale Park and Rides, and have all-day and all-weekend service to Bellevue, Seattle, Redmond, Renton, Seatac, etc.
Got it? How hard is it for people to understand. Folks in Pierce are getting taxed but getting nothing in return. I don’t care what the “total” is that my city or subarea pays in. I pay the same in taxes on my car as the guy in Seattle as the guy in Everett as the guy in Redmond, but if I am getting far less in return, it’s a bad deal.
Engineer, exactly. You SRE getting a bad deal IF you’re in The District. But if you live outside and commute to Seattle on Sounder, you get a GREAT deal. Ditto those in non-district King or Snihomish places.
I like your idea of a full-cost fare for people from outside tge dudtrict, but what you’d end up with is a black market in “certificates of residency”.
Bypass the obvious opportunity for fraud by making it hard for non-district riders to board.
I know a couple of co-workers who commute to downtown from Puyallup via Sounder – they would be screwed.
At the most cut Sounder to Dupont.
Considering traffic conditions on I-5, much better to terminate Sounder ten minutes’ farther south at the Amtrak station in Olympia’s suburb of Lacey.
Starting recently, Intercity Transit’s moved into expansion mode. Along with cash-free boarding, which, no, is not a free ride. Express bus schedule designed to meet every train could make Olympia’s downtown transit center a twenty minute ride if green-light pre-empt can be installed.
‘Nother possibility. ST 574 on a half-hour all-day headway could connect legislators’ offices at the Capitol (after starting at the downtown Transit Center) with flights at Sea-Tac Airport.
Where legislative presence might finally assure that elevator to the footbridge into Sea-Tac Airport Station is finally kept working.
Might also do Senator O’ban good to have some transit at least offered to his district. There’s a precedent.
I view ST’s Pierce rebellion as an indictment of ST’s failure to serve Pierce County well. The failure is an absence of agency vision and attention within the district’s part of the county. To me, it’s a loud cry for attention; the Pierce County interests feel like step-children and for good reason.
ST should be addressing this in 2020! ST should be rolling out an inspiring and widely-promoted vision of how a 2025 and 2031 ST Express network will look. Since Federal Way has direct access ramps and I-5 Tacoma improvements are wrapping up, structuring a new version of ST Express is possible if not mandatory.
Instead, ST seems to be merely sitting on their hands and waiting until 2023 to start bus feeder planning and accompanying promotion for ST Express service after Federal Way’s opening. I think that it’s ST inattentive and negligent management’s fault that this rebellion is occurring.
But ST’s service profile is mostly based on what the Pierce county and cities asked for. ST is unilaterally responsible for some short-term tactical decisions like the refusal to reorganize the ST Express network in practically any way. But the major decisions were pushed by the Pierce delegation and the rest of the board rubber-stamped them. (“Cuius regio, eius religio” — the local king decides the local religion.) The delegation promoted unrealistic expectations and failed to address Pierce’s long-term geographical issues.
By that I mean, Lynnwood is in the middle of the Snohomish subarea and 15 miles from downtown Seattle. Bellevue is in the middle of East King and 12 miles from downtown. Redmond is in the outer corner and 20 miles from downtown. In contrast, Federal Way is 20 miles from downtown and Tacoma Dome is 33. Puyallup, Lakewood, and Spanaway are even further, and you still haven’t gotten to JBLM or Bonney Lake or Orting yet. That’s the geographical problem. Tacoma Dome is barely into the Pierce subarea; it’s like UW Station or central Fremont in North Seattle. The interim UW terminus is causing all kinds of problems, and when the 26/28 were frequent only to 34th & Fremont Ave they served only a tiny walkshed in North Seattle. No wonder most of the Pierce subarea is complaining it has to drive an hour to even reach high-capacity transit. (Although that’s surely exaggerated. How long can it take to drive from Orting to Puyallup or JBLM to Lakewood or Spanaway to Lakewood or Tacoma Dome?) This is the geographical problem the Pierce delegation never came up with an adequate plan for. Both the distance, and the gap between Tacoma Dome and 95% of the subarea. That’s not just ST’s fault; it’s largely Pierce’s fault, so stop blaming ST.
I apologize for being slightly off-topic here, but since the article referred in passing: assuming the I-976 repeal doesn’t pass, when might we expect the courts to finalize their ruling?
From what I’ve heard the first decision might be this spring or summer. Then it might be appealed. Basically the agencies are in uncertainty for several months. Metro is planning a round of cuts in March but we haven’t gotten the details yet. Seattle is holding the TBD MVET revenue in an excrow account in case it has to refund it. Seattle’s TBD expires this year or next year so it’s critical to renew it in November or replace it with a countwide Metro measure. I-976 may not be resolved by then, or at least not in August when the ballot measure is finalized.
Metro won’t be making any cuts. The TBD reserves are enough to cover most of the potential shortfall, and there’s a fresh TBD vote no later than the end of the year, so they have enough latitude to struggle through in the event they have to refund the money.
#1. No compromise without backfill. Or we primary these state legislators. Period. Hold the line folks – not just Seattle folks, all of us.
#2. Backfill? Start with highway construction, then if need be Amtrak Cascades. We need WSF/Washington State Ferries fully funded, we don’t need more highways (and bus routes) to nowhere when the Central Puget Sound is crying out for relief and ST3 projects to be completed ahead of schedule!
But I guess when you drive everywhere, you just don’t care and assume transit riders will take their crumbs and be happy. That has gotta change.
Joe, trouble with time being on our side is that it’s got no sense of how much time it generally takes to get anything done. Also has this awful habit of at least seeming to do nothing for several hundred million years and then using a meteor to get a lot done really fast.
For cars and transit, huge lot depends on technology. But sooner or later, and I think transit’s best hope right now, people are discovering through experience that their only chance to keep physically moving at all through their day’s travel is to be aboard a large vehicle on a right-of-way strictly reserved to it by law.
At least across any distance too far to walk or steep to bike. BTW, what’s the transit scene in Skagit County? Speaking of ages and eons, any scheduled service to Marblemount yet?
Big Skagit news coming up in the spring but I have to be tight lipped until then.
Here’s a thought: why don’t we keep the MVET schedule as-is instead of switching to a more regressive one that puts a bigger portion of the tax burden on lower-income residents.
Or increase it at the top, while lowering it in the middle, and leaving the bottom as it is. Consider it a “luxury surcharge”.
So has anyone figured out if / how much the tax burden shifts down the income (car value) ladder due to the revised MVET?
For transit’s own sake, and come to think of it the rest of politics, I think it’d do us huge good to lose the word “freeloader.” And along with it, the whole idea of dealing out punishment to constituencies whose fiscal votes this year we don’t like.
Instead, develop the practice of an eighteen-year forward view of the calendar. The length of time between a passenger’s first ride cuddled up to their mom and the day they’re old enough for their family to watch them vote. Including as a member of the state legislature.
A time-space when, in addition to an object lesson in civic performance in general, whatever effort is needed to be sure that every single figure in a police officer’s or fare inspector’s uniform treats them with consummate respect. Same for the text of every rule. Writ large for the rest of their experience with transit operations.
Also doubt I’m the only Thurston County voter with a serious grudge over the way the Seattle housing market slaughtered my years-long access to excellent public transit system when it got my Ballard home. Term “reparations” [On-Topic.]
In Europe, it’s long been common for political parties and other social movements to sponsor a youth wing, to give tomorrow’s voters the earliest possible introduction to, and practice with, the participation they can beneficially hold for life.
We have to look at boundaries this way: that two-year old on their first train-ride- whom grandparents swear children widely prefer to the grown-up’s purpose for the trip….in 18 years could swing the transit vote in Centralia.
Think that at some level Intercity Transit’s probably on this effort already. Spirit of the times.
Sorry, Mark, but you don’t get that the people who vote against Sound Transit, either directly or by voting for something that undoes ST indirectly, don’t WANT to be included.
Let them go. How hard is that to understand. I was under the incorrect impression that Puyallup is part of that “Let me out!” group, but the precinct map clearly shows a blue blob right where downtown Puyallup lies. So, yes, let Puyallup stay nut cut theareas to the south loose.
And if it means no taxes from the sale of cars there, how bad is that REALLY?
I commend State Senator Liias for putting forth this bill to finally address the self-inflicted valuation issue that has been a problem for quite some time but didn’t garner much attention until ST’s MVET tax jumped from .3% to 1.1% as a result of passage of ST3 in 2016. I live in Marko’s district so it’s great to see that he’s been listening to his constituents. Personally, I’ve communicated with him and/or his office on the matter several times over the last three years as the various MVET bills that have intended to address the valuation issue have been introduced in the legislature. I can only surmise that his office heard from many similarly concerned constituents, particularly with the lead up to the fall election and I-976. I hope he can gather support for his bill in both chambers, though I do wish he had put the initiative repeal in a separate piece of legislation as a technical matter.
One minor correction to the blog piece above is needed. The legislature adopted a new MVET schedule in 2006, not 2005 as stated, with the passage of SSB 6247 which was signed by the governor at the end of March 2006.
This bill is going nowhere. There is no way a sitting, probably lame-duck governor like Inslee would sign it. We’ve been over this before. At most the legislature passes something and the governor table-vetoes it. My guess is won’t even get that far. This is all political theater.
Now, what is quite likely to happen is that the legislature specifies that *future* funding (of any type) follows a different schedule. Oh wait, it appears that happened a while ago.
Now there is always the possibility that the state — if it was really being responsible — would come up with a *revenue* neutral plan that changed the funding. That would probably require a new vote. But if people approved, then some people would pay more, and some people would pay less, which is true no matter how they value property.
Inslee is running for governor again, and the big democrat names, who were going to run if his presidential campaign actually went somewhere, all politely bowed out of the race, so the only way he is a lame duck is if the republican nominee wins. Yes?
Are you predicting that?
Liias is on good terms with The Speaker of The House. While Inslee may veto it, the bill has a good chance of getting out of The House at the very least.
Been warned about linking “The Radical Republicans in the Civil War”, so I’ll let somebody else hit Wikipedia and do it.
Too bad they failed to end slavery their first try. After murdering thousands of Republicans in Dixie during so-called Reconstruction, Southern Democrats renamed it the Department of Corrections (you name the State). But elsewhere the radicals did give us the civil service exam.
Also, important progress on transit in Seattle thirty years ago in Sound Transit’s birthing years, as we started our regional electric rail system with buses.
Only one man’s opinion across the decades, but I can’t remember a time when this country’s population had less idea what’s going to happen either economically or politically.
I think best we can do is stay curious and try to have our facts straight. And make sure our elected representatives have our names, addresses, and thinking memorized through frequent contact. And do our utmost to convince our younger family-members of transit’s importance.
My last few years’ attendance, which used to be a lot better, convince me that across the political spectrum, I think the ST Board and their interested constituents can reach an agreement with the American Civil Liberties Union to spare the whole Ruth Fisher Boardroom from the currently-habitual repetitive personal abuse that couldn’t be better suited to lowering participation.
Because I truly think that at this point in history, the survival of our Republic might well depend on people’s ability and willingness to talk politics with each other. Across all kinds of perceived barriers. In Washington State, especially about public transit.
Senator Pedersen’s comment when I e-mailed asking him to oppose the SB:
“Dear Mr. […] —
Thanks for your message and for sharing your concern regarding SB 6606. I have been very frustrated by the level of misinformation about the Sound Transit motor vehicle excise tax. Under current law, the depreciation schedule will automatically adjust to the “new” schedule as soon as the ST1 bonds are paid off in 2028. The courts confirmed almost 20 years ago that changing it sooner will cause an impairment of the bond contracts. So I would oppose this bill and other efforts to undermine funding for the expansion of transit across our region that has been repeatedly approved by the voters.
Best wishes, Jamie”
Hope other senators are taking note!
Can always count on Jamie. When he decides he wants to be Governor or Senator, it will be a sad day for the 43rd District.
Lol. Well Mr. Pedersen may want to have a conversation with Desmond Brown, ST’s chief counsel in the Black et al vs CPSRTA case currently before the WA State Supreme Court. This (what Senator Pedersen is asserting in his letter) IS NOT what the agency’s own attorney has argued, both in his filed briefs as well his oral argument, in this class action suit challenging ST’s MVET authority under ESSB 5987 and ST3.
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