No relief for Sound Transit 3 car-tab fees coming anytime soon

The furor over the high cost of car tabs under Sound Transit 3 failed to prompt action from Washington’s Legislature this year.

State lawmakers adjourned their record-long session Thursday without approving proposals to reform Sound Transit’s system of governance or ease the cost of car-tab renewals following the passage of last November’s ballot measure.

“None of those things happened,” said Rep. J.T. Wilcox, R-Yelm. “We’re going to keep trying. And we have next session — but I’m not very hopeful.”

The $54 billion Sound Transit 3 package relies on about $28 billion in revenue from increased car-tab fees, higher property taxes and a hike in the sales tax across Sound Transit’s three-county taxing district. Over the next 25 years, it will pay to extend light rail to Tacoma and Everett, as well as improve bus service and commuter rail throughout the Puget Sound region.

While most voters in King and Snohomish counties approved the measure, a majority of voters in Pierce County rejected it.

Some drivers were surprised by the cost of their car-tab renewals when the new Sound Transit 3 fees kicked in in March. The ballot measure increased car-tab fees by about $80 for a vehicle valued at $10,000.

Many state lawmakers also said they didn’t realize that car-tab fees under Sound Transit 3 were being calculated using an outdated formula that overestimates the value of vehicles in their first 10 years of life, leading to higher fees. Although the Legislature approved an updated formula for calculating car-tab fees in 2006, the new Sound Transit 3 measure still charges drivers based on an older vehicle valuation schedule from the 1990s.

State Rep. Judy Clibborn, D-Mercer Island and the chairwoman of the House Transportation Committee, said she and other House Democrats had hoped to pass a plan that would assess people’s car-tab fees based on the 2006 schedule, which she said more closely matches cars’ actual resale value.

A bill from state Rep. Mike Pellicciotti, D-Federal Way, would have given people refunds or credits for the difference between what they’re being charged now and what their car-tab fees would have been under the 2006 formula.

Clibborn said that solution would have provided taxpayers with some relief, without dramatically disrupting Sound Transit’s ability to pay back bonds it has already taken out using some Sound Transit 3 revenues. She estimated the proposal, House Bill 2201, would have returned about $780 million to taxpayers and cost Sound Transit a total of about $1 billion over 25 years.

A Sound Transit spokesman, Geoff Patrick, pegged the cost at more like $2 billion that same period.

Republicans in the state Senate wanted to cut car-tab fees much more dramatically.

The Senate’s proposal would have based car-tab fees on vehicle values as determined by Kelley Blue Book or the National Automobile Dealers Association, whichever was lower.

Senate Republicans later amended the plan to cut Sound Transit’s car-tab fee collections roughly in half — a move Democrats said would threaten the agency’s ability to complete voter-approved projects.

Ultimately, the two sides couldn’t find a middle ground.

“You don’t go back and change the will of the voters that easily,” Clibborn said.

Democrats hold a slim majority in the state House, while Republicans control the state Senate with the help of a conservative Democrat who caucuses with them.

GOP senators had also floated the idea of replacing the 18 appointed members of Sound Transit’s governing board with 11 members who would be elected directly by voters, as well as creating ways for individual jurisdictions to opt out of paying the new taxes under Sound Transit 3.

None of those proposals moved forward this year. On Thursday, the Legislature ended its third special session, setting a new record of 193 days in session in a single year.

State Sen. Steve O’Ban, R-Tacoma and the sponsor of several of the Sound Transit-related measures, said passing a car-tab fix that includes only small rebates like the House proposed wouldn’t have been enough.

Voters need relief in the form of a more substantial rate cut, O’Ban said.

“If we’re going to deal with this issue politically and get a real resolution that people will be satisfied with, you’ve got to do it with the rate,” O’Ban.

O’Ban said his proposal was “a meaningful tax cut” that would have caused people to say, “OK, thank you, I’m satisfied.”

Geoff Patrick, a Sound Transit spokesman, said O’Ban’s plan to cut collections by half and switch to a Kelley Blue Book-based formula would have cost the agency about $6 billion over the next 25 years. O’Ban said the cost would have been less than that, closer to $4 billion.

“It would have caused significant delays of projects, and it would come on top of major uncertainties we currently face with federal funding,” Patrick said.

Sound Transit opposed the Senate plan, but didn’t take a formal position on Pellicciotti’s bill in the House.

Shefali Ranganathan, executive director of the pro-transit Transportation Choices Coalition, said her group opposed the House plan as well, because even $2 billion or so in lost revenue could affect the completion of important transit projects like the extension of light rail to Tacoma and Everett.

Ranganathan said with any loss of revenue, the question becomes, “How do we make sure that these communities, especially at the end of the line, get projects that quite frankly they have been waiting on for a long time?”

Pellicciotti said he plans to renew his efforts next year to bring Sound Transit car-tab fees in line with the newer vehicle valuation schedule using rebates or credits.

Wilcox, the House Republican floor leader, said at a minimum he had hoped the Legislature would act to stop “using the old depreciation schedule that overcharged people.”

But Wilcox said he also had hoped lawmakers would approve a way to allow Pierce County residents or individual cities to remove themselves from the Sound Transit taxing district. Right now, there’s no method in state law for cities or counties to do that.

O’Ban said he expects lawmakers will end up doing something to reduce car-tab fees when they reconvene in 2018, if only to stem the threat of a citizen initiative that could cut Sound Transit’s car-tab collections more dramatically.

Anti-tax activist Tim Eyman has already started gathering signatures for a proposed statewide initiative to reduce almost all vehicles’ annual car-tab fees to $30. Eyman would need to collect nearly 260,000 signatures by Dec. 29 for the initiative to advance to the Legislature in 2018.

Lawmakers would then have the option of either passing the measure or sending it to voters at the next statewide general election.

“We’re seeing how angry people are — of course this isn’t going to go away,” O’Ban said. “The Legislature needs to deal with this, we need to provide real, meaningful, comprehensive tax relief for voters.

“Otherwise, we’re going to be facing Tim Eyman’s $30 car tab tax initiative.”

This story was originally published July 21, 2017 at 11:00 AM with the headline "No relief for Sound Transit 3 car-tab fees coming anytime soon."