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No state sales tax for mega projects?
JOSEPH TURNER; joe.turner@thenewstribune.com
Published: February 4th, 2008 01:00 AM
State lawmakers may exempt the Tacoma Narrows bridge, the Highway 520 bridge and other huge highway or bridge-building projects from the state sales tax to hold down costs and help pay for the so-called “mega” projects.

For the new Narrows bridge, it would be mean wiping out almost $44 million in sales taxes that are still owed and otherwise would have to be paid by tolls collected from drivers who cross the bridge.

The tax break wouldn’t mean a toll break for drivers.

Although $44 million is a lot of money, it’s negligible considering the overall amount of money that will be collected from tolls on the Narrows bridge over the next 23 years. Payment of state and local sales tax already have been deferred until 2012 and would be paid over a 10-year period. Waiving the state portion of the sales tax means the total amount of money paid by tolls through 2030 would be $1.994 billion instead of $2.037 billion.

That’s about 2 cents of the $3 toll for cash-paying drivers.

The tax exemption would apply only to transportation projects that use tolls to pay for at least $1 billion of the total cost or use tolls to pay at least 50 percent of the cost. The $735 million Narrows bridge qualifies because more than 90 percent of its cost will come from tolls that will be paid through 2030.

For the replacement Highway 520 bridge across Lake Washington, the exemption would cut $180 million from the cost of a project that is now estimated at $4.38 billion.

Other projects that could be eligible for the sales tax exemption are a new Interstate 5 bridge across the Columbia River, which will cost $3 billion to $5 billion, and the north-south corridor in Spokane, which is expected to cost between $2 billion and $2.5 billion.

Rep. Judy Clibborn, D-Mercer Island, chairwoman of the House Transportation Committee, said “everybody’s on board,” referring to House Democratic leaders, including House Speaker Frank Chopp of Seattle.

Shifting sales taxes to transportation projects would be a huge departure from past practices. Generally, the sales tax goes to pay for schools, prisons and social service programs and the gas tax goes to highway, bridge and ferry projects. And the budget writers historically have been protective of “their” respective pots of money.

Clibborn said she thinks the money shift measure, House Bill 3051, has a chance of passing the Legislature this year because it’s limited only to the state portion of the sales tax on a few huge transportation projects.

“And it plows it right back into the projects,” she said.

The House Finance Committee held a public hearing on HB 3051 Friday.

Rep. Larry Seaquist, D-Gig Harbor, the bill’s prime sponsor, said Narrows bridge commuters feel as if they are paying twice, once when they pay the toll to build the bridge and a second time because the sales tax on the bridge goes to pay for other general government programs.

Committee chairman Rep. Ross Hunter, D-Medina, said he expects his committee to approve the bill no later than next week.

“Many states take their transportation money out of the general fund,” Hunter said. “We don’t. This is painful to take out of the general fund. I agree.”

Toll payers still would have to pay the local portion of the sales tax. That is, the 6.5 percent state portion would be forgiven, but the 2.3 percent sales tax that goes to cities, counties and transit agencies would still have to be repaid. The total sales tax in Tacoma is 8.8 percent.

Joseph Turner: 253-597-8436

blogs.thenewstribune.com/politics


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