Senator Liias testifies at yesterday’s hearing (image from TVW)

The Senate Transportation Committee held a hearing yesterday on several bills relating to Sound Transit. The most significant is SB 6606, a bill from Senator Marko Liias to reset MVET valuations. That bill saw a substitute amendment that would somewhat offset the revenue reduction to Sound Transit. The offset would not be enough to satisfy Sound Transit’s request they be made whole for lost revenue. Four other bills relating to Sound Transit were also examined, but are unlikely to proceed.

Liias’ bill, as we reported last week, repeals several sections of I-976. It would also replace the valuation schedule for vehicles subject to the motor vehicle excise tax. The new schedule is similar to one adopted by the Legislature in 2006, whereas Sound Transit uses an older schedule dating to 1999. Liias’ proposal would tweak the schedule for vehicles more than ten years old, thereby avoiding a small tax increase for owners of the oldest vehicles if they were to simply adopt the 2006 schedule.

A substitute bill from Senator Liias, filed on Monday, maintains the revised schedule from the bill as first introduced, but adds two significant amendments.

One provision would allow drivers to pay their Sound Transit taxes in installments, either monthly or quarterly. This would be achieved by linking the car tab bills to the vehicle owner’s Good-to-go account. That’s the system used for paying tolls to WSDOT on several local highways, and most drivers who use a tolled highway are likely to have an account.

A second provision could offset lost revenues by modifying land bank arrangements between Sound Transit and WSDOT. The land bank means WSDOT can lease or transfer WSDOT property or air rights to Sound Transit, and Sound Transit can earn credits for projects involving highway improvements. The transactions are at market rates. Rather than exchange cash for each transaction, Sound Transit makes payments on the difference. An important recent example is the transfer of the I-90 center lanes to Sound Transit, and the corresponding improvements on the outer HOV lanes funded by Sound Transit.

The substitute bill would allow Sound Transit to run a negative balance until 2042, effectively deferring payments to WSDOT for up to 20 years.

Just one day after the substitute bill was introduced, only preliminary analysis was available and it was not clear how much the revised land bank terms would matter. Legislative staff suggested the reduced payments from Sound Transit to WSDOT would be “somewhere in the hundreds of millions of dollars” by 2041. Peter Rogoff, in testimony before the committee, said Sound Transit’s initial assessment was that it “would not provide any protection for our ability to complete voter-approved projects” and the benefits would occur after ST3 projects were complete.

The risk to projects is due to the statutory debt cap, most critical between about 2029 and 2032. If the deferred payments mostly benefit Sound Transit after that date, it could simultaneous be a large saving and also too late to help deliver projects. It would simply come too late. Sound Transit does not lack debt capacity after the ST3 program is substantially complete. In any case, there seems not enough clarity about the land bank implications at this time.

A slide by Senator Liias showing how his bill uses values that are equivalent or slightly better than Kelley Blue Book, and significantly lower than the currently used 2006 schedule.

The other bills were more drastic in their effects, but aren’t going anywhere. All are sponsored by Senators Steve O’Ban or Steve Fortunato. SB 6108 invalidates all ST3 taxes in Pierce County. SB 6031, SB 6245, and SB 6350 all codify I-976 into law, rather as the 2000 Legislature restored an earlier Eyman car tabs initiative that had failed in the courts.

The last day to pass bills out of the Senate Transportation Committee and have them read on the floor is February 11.

22 Replies to “Legislature has hearing on Sound Transit bills”

  1. None of those bills will go anywhere. Any legislation that would adversely impact the bondholders’ interests in Sound Transit continuing its three taxes 1) at the current rates, 2) upon residents of the same geographic area, and 3) (w/r/t the car tax) based on the same vehicle depreciation schedule, would violate the constitution’s contracts clause. That is why that government locked in its taxes this way until 2048 by using the bond sale contracts resolutions the board adopted three weeks after the 2016 ST3 vote.

  2. Let’s say, hypothetically, that I-976 becomes law. I’ve heard the argument on here many times of “Pierce voted for 976, let’s take away all of their ST funding.” Fortunately, we have subarea equity in ST. However…. WSDOT doesn’t. What would stop the State of Washington via the legislature from enacting some sort of “subarea equity” funding model for agencies like WSDOT? This would essentially starve rural Washington and its conservative voters of any meaningful highway funding. Maybe the urban side of the state should stop subsidizing them. We’d even be able to sell it to urban conservatives as a way to cut government waste and lower taxes.

      1. Of course, Sound Transit has to follow subarea equity. It’s in the voter approved financial plan and not optional. The annual financial model has detailed analysis of revenues and outlays by subarea. There is an annual report on this.

        BTW, sockpuppetry is a violation of our comment policy here. You’ve posted this claim under other aliases before. Recommend you stick to one alias, please.

    1. You omitted the part which says “and terminate all their taxation” in reference to Pierce County. That’s a pretty enormously biased “summary” of the proposal.

  3. Wouldn’t a bill that amends portions of I-976 require a 2/3 majority to pass in the first 2 years after the initiative is passed?

    1. That’s correct. So even though it’s been picking up support and hasn’t gotten full-throated opposition in the legislature, it’s unlikely to meet that threshold. Both Republicans and Seattle Dems seem generally on sidelines so far.

  4. Dan — No idea who told you Sound Transit is complying with the ST3 “Financial Polices” (link above), but you were given bad information. The board can adopt terms that modify ST3 (just like it dropped the First Hill Link station from Sound Move).

    That “annual financial model” report you linked to doesn’t show what the five subarea financial plans must show: projected revenues and expenses for each subarea, and remaining debt capacity for each subarea. It is just a snapshot as of the end of 2018, showing the prior year’s expenditures.

      1. Thanks, AJ, but that just shows planned expenditures by subarea through 2041, and the sources of funds for those expenditures. Read what the ST3 Financial Policies (link above) require that the table you point to does not include: projected revenues, remaining debt capacity, and projected expenses (including debt expenses) for the “system plan” voters approved. That system plan doesn’t stop in 2041 — it continues until the mid-2050’s. Moreover the board can’t use that table you identify to do what the ST3 Financial Policies require: annually determine whether projected revenues in each subarea will be sufficient to cover projected expenses, and if not eliminate, reduce or delay projects AND if projected revenues exceed by 5% projected expenses then the board is to consider expanding the system beyond the representative alignments used as the ballot measure placeholders.

      2. Ask Sound Transit for a copy of the long term financial model. It’s all there. Every possible line item you could want by subarea. There is no independent debt capacity by subarea because that’s not how debt capacity works.

      3. Dan Ryan: Remaining debt capacity is to be reported according to the terms of the ST3 Financial Policies. Read them — link above.

        There is no “long term financial model” — you are referring to Sound Transit’s Long-Range Financial Plan (“LRFP”). It is described in the annual report that AJ linked to. It does not have the subarea by subarea information the ST3 Financial Polices require because it was produced according to different requirements and specifications: “The LRFP is produced in accordance with the Federal Transit Administration’s (FTA) “Guidance for Transit Financial Plans” and is maintained on a cash basis.” That’s a quote from the 2020 annual report (again, link above).
        Look, it’s all fine and good to be a fan of Sound Transit, but repeatedly claiming it is complying with the subarea equity budgeting process when that is not happening doesn’t do anyone any good, and the agency certainly doesn’t need your help communicating incorrect information to the public.

      4. Dude, I don’t know what to say. I’ve read the documents and you haven’t, so you don’t get to tell me they don’t exist. I’ve written about this repeatedly and you keep repeating false claims in the most condescending way possible.

        This is pretty far off-topic, so please take it up in an open thread post if you wish to discuss further.

  5. Maybe making ‘way too much of my own involuntary change of address six years ago. But I do wonder if same forces that relocated me to Olympia might also be changing the electorate of Pierce County toward the transit-positive column. Just curious.

    Mark Dublin

  6. I don’t really know much about bonds and debt levels and whatnot. From a transit user standpoint, what I want to know about this bill is:

    1) What practical impact will the bill have on ST service and ST3 projects? What fraction of ST3 projects would be delayed and/or cancelled?

    2) How do the above outcomes compare to the 2 extremes of A) WA Supreme Court declares I-976 completely constitutional and B) WA Supreme Court declares I-976 completely unconstitutional?

    3) Does it make sense to wait until the WA Supreme Court makes a definitive ruling on whether I-976 is constitutional? Which I suppose would mean at least 12 months since the current legislative session will almost certainly end before the Supreme Court decides.

    1. 1. The MVET portion of ST’s tax revenue is around 10-15%, so the cuts would be up to that level. I think ST estimated a 6-month delay across ST3 projects. We’re still waiting for details from ST and resolution of the court case. ST will very likely protect existing service and Northgate Link, and delay but not reduce the remaining ST2 projects (Lynnwood, Federal Way, Redmond), so most of the reductions would be in ST3 projects. 130th Station is uncertain because it’s not officially in Lynnwood Link yet. And the infill stations (130th, Graham, BAR) would be one option to delete first.

      The legislative bill would switch ST to a lower car-valuation schedule earlier than ST had planned, so that would have a small impact on ST’s MVET revenue. I-976 also seeks to revoke MVET entirely from all special-purpose districts. That’s where the 10-15% comes in, a permanent reduction in ST’s revenue. ST may get an exemption for existing bonds, but not for future bonds or cash expenditures.

      Also affected are Seattle’s TBD, Community Transit, Pierce Transit, most transit agencies in the state (which are TBDs), WSDOT, WSF, and rural counties’ road-maintenance programs. They will all lose their MVET revenue if I-976 is upheld. Seattle’s TBD is what’s filling in evening/weekend frequency on core routes, funding the night owls, helping capacity/reliability peak hours, and giving free passes to public-school students.

      3) Who would wait to do what? ST has declared it won’t make any cuts now; it’s depending on the bond-contract-integrity doctrine. Seattle’s TBD, WSDOT, WSF, and other TBDs are putting the revenue in an escrow account in case they have to refund it, so they’ll have to make cuts now. The earliest we might see it is Metro’s March service change, although Dan Ryan says Metro has enough booming-economy windfall to cover the loss. So ST is optimistically waiting, and the others are pessimistically not waiting.

  7. Ah…the legislative process. Where something as no-brainer as allowing car tabs to be paid in monthly installments is tied up in a controversial big mess of a bill. And because of the seasonal nature of the legislature, if the bill doesn’t advance in full by next week, *nothing* can get done on this for another year?

    This is not what the amendment does, but your insurance company has all the information they need to determine car tabs, and many people pay insurance in monthly installments. It would make too much sense to have car tabs be paid in monthly installments together with insurance.

    1. I don’t think I’ve ever paid insurance in monthly installments. Is that a normal thing to do?

      1. Nearly all companies allow it, but charge more for it/offer discounts for bulk (usually 6mo) payments.

      2. If you have a mortgage and pay an escrow, you’ll end up paying your homeowners insurance monthly.

      3. I was speaking of car insurance, not homeowner’s insurance, but since you mention it: I do have a mortgage, and I do pay escrow, and that covers property taxes only. I still write a check (metaphorically speaking) every six months for homeowner’s insurance.

  8. I don’t know why Senators Steve O’Ban or Steve Fortunato get to have hearings on bills that will never under any circumstances be voted out of committee. There should be a way to have a poll to see if a majority of committee members are even receptive to the broad concept.

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