
Last night, the Washington House of Representatives approved HB 2201. The bill effectively resets the valuation schedule for the 0.8% ST3 portion of the MVET to the lower of the 1999 and 2006 schedules. The outcome is lower taxes for owners of cars less than 10 years old, and a refund for those who have already paid their 2017 car tabs.
Reversing voter-approved taxes, barely five months after the ballot, isn’t a great look. But it is within the Legislature’s authority (second-guessing of initiatives is not new). Democrats have responded to sincere voter anger. The MVET increase was greater than many expected even if voters who carefully read the ballot ought to have understood. Owners of newer cars are taxed against a scheduled valuation higher than their vehicle resale values. Even though Sound Transit has used the same schedule for twenty years, and never presented it otherwise, it just seems unfair.
If HB 2201 becomes law, Democrats expect it to correct the anomalous MVET valuations while delivering ST3 projects on schedule.
The bill creates a credit for taxpayers offsetting the difference in valuation schedules. Crafted this way, HB 2201 doesn’t interfere with Sound Transit’s bond program and doesn’t require defeasement of Sound Move bonds. It means the 0.3% Sound Move MVET, pledged against bond repayments on the now obsolete 1999 schedule, is not prematurely repealed and can remain in place until the bonds are paid off in 2028. Unlike some Republican proposals to simply switch schedules across the board, HB 2201’s credit does not increase taxes for owners of older cars.
The vote was 64-33, with all Democrats in favor. Republican reaction was mixed. Some are willing to accept any tax reduction; others decried that the bill didn’t meet their more ambitious goals. The bill moves to the Senate today where Republicans may make a play for larger tax cuts.
The revenue impact is modest. $780 million in revenues is 1.4% of the $54 billion program over 25 years, albeit front-loaded so the real impact is higher than the year-of-expenditure (YOE) calculation. The credits only run through 2028, after which the Sound Move 0.3% MVET expires and the ST3 MVET switches to the ‘lower’ valuation schedule.













