Politics & Government

Lawmakers want to ease sting of Sound Transit 3 taxes — or let cities opt out

Commuters step off a Link light rail train at the Commerce Station in Tacoma, Washington, Tuesday April 12, 2016. With Sound Transit 3, voters in King and Snohomish counties approved about $54 billion over the next 25 years to expand light rail, commuter train and express-bus services across the Puget Sound region. Some state lawmakers are now trying to ease the burden of the taxes included in the transit package, which voters in Pierce County rejected.
Commuters step off a Link light rail train at the Commerce Station in Tacoma, Washington, Tuesday April 12, 2016. With Sound Transit 3, voters in King and Snohomish counties approved about $54 billion over the next 25 years to expand light rail, commuter train and express-bus services across the Puget Sound region. Some state lawmakers are now trying to ease the burden of the taxes included in the transit package, which voters in Pierce County rejected. dmontesino@thenewstribune.com

State lawmakers have been getting an earful in recent weeks about the cost of Sound Transit 3, the $54 billion transit package King and Snohomish county voters approved in November.

Now, lawmakers in Olympia are looking at ways to ease the pain of those new transit taxes — either by reformulating how people’s car tab fees are calculated, or by letting cities and counties remove themselves from Sound Transit’s taxing district.

Both proposals are on the table in the state Senate, which is controlled by a mostly Republican majority.

And, while some of the efforts would face an uphill battle in the Democratic-controlled state House, the Democratic chairwoman of the House Transportation Committee said Wednesday that she, too, wants to look at whether Sound Transit could change how it calculates car tab fees to ease the sticker shock that voters are now experiencing.

“I’m not sure you can do that legally, but we’ll find out,” said Judy Clibborn, D-Mercer Island.

While voters in Pierce County rejected ST3, they still are obligated to pay the higher taxes and car-tab fees associated with the measure, since a majority of voters across Sound Transit’s three-county taxing district approved it.

The ST3 package will expand light rail throughout King, Pierce and Snohomish counties, as well as improve commuter-rail and bus service over the next 25 years, according to Sound Transit officials.

To pay for all that, the measure increases property taxes by $25 per $100,000 in assessed value, hikes sales taxes by 50 cents for every $100 purchase, and increases annual car-tab fees by about $80 for a vehicle valued at $10,000.

The new car-tab fees take effect in March, and drivers have recently started to receive notices to renew their tabs that include the higher ST3 fees.

Outdated way of calculating car-tab fees

State Sen. Dino Rossi, R-Sammamish, said he’s been hearing from constituents who are shocked by how much their vehicle fees have increased under ST3, and he thinks the outdated way Sound Transit calculates a car’s worth is largely to blame.

The formula the transit agency uses to calculate a vehicle’s value consistently overestimates how much a vehicle is worth during its first 10 years of life, The Seattle Times reported this week. That formula comes from state law, but is out of step with cars’ actual resale values.

Under a bill Rossi is proposing, Sound Transit would have to calculate a vehicle’s car-tab fees based on values provided by Kelley Blue Book or the National Automobile Dealers Association, whichever is lower.

“The value of the vehicle should be what you can sell it for,” Rossi said. “It’s a much more fair way to do this.”

State lawmakers already approved a different way of calculating vehicle values in 2006. But under current law, that newer scale won’t be applied to the car-tab fees being imposed under ST3 until 2029, after the agency finishes paying off older bonds.

Clibborn said she wants to see if there is a way to shift to the new method of calculating car-tab fees sooner than that.

She said she’d consider making the change if it wouldn’t substantially hurt Sound Transit’s ability to finish the projects outlined in ST3, or violate a constitutional provision preventing the Legislature from approving laws “impairing the obligations of contracts.”

Sound Transit spokesman Geoff Patrick said the situation is complicated by the fact that Sound Transit already has taken out some bonds to pay for ST3 projects.

He said the agency would have to conduct a legal review if Rossi’s bill passes, to see if it conflicts with the state constitution’s requirement that agencies must honor their bond obligations.

“I think we would have an obligation to uphold the commitments that were made to the bond holders,” Patrick said.

Opting out of taxes?

Another idea supported by several Republican lawmakers — particularly ones from Pierce County — is to let local communities opt out of paying ST3 taxes.

A proposal from Rossi would let local governments release their residents from paying all three tax increases under ST3: not just the car-tab fees, but the increased property tax and the sales tax.

A similar plan from state Sen. Steve O’Ban, R-Tacoma, would let counties and cities exempt their residents from only the property tax.

In either proposal, a city or county council could vote to exempt their residents from the Sound Transit taxes, or local voters could approve a citizen initiative to carve themselves out of the taxing district.

O’Ban, who also has signed on to Rossi’s bill, said he doesn’t think Pierce County’s voters would hesitate to extricate themselves from Sound Transit’s taxes. He said Pierce County’s residents don’t get enough from the package, given what they’re paying.

“One of the concerns I have here is that you’ve got really a Seattle, King County-centric transportation plan that is engineered to drive people into Seattle,” O’Ban said. “Instead, we ought to be focusing on, how do we make Pierce County a job and business growth hub?”

Pierce County residents are expected to pay about $5.2 billion in new taxes under the ST3 plan over its lifespan. Patrick, the Sound Transit spokesman, said that money would be invested back into about $9 billion worth of projects in the county.

Patrick said letting jurisdictions opt out of the Sound Transit taxing district “would raise a lot of additional ethical and practical questions,” partly due to the transit investments the agency already has in place throughout the Puget Sound region.

Additionally, he said, people aren’t asked where they live when they board a bus, making it hard to gauge whose residents are benefiting from transit service.

“Congestion doesn’t pay any attention to county or city lines,” Patrick said. “Nor does transit demand.”

Melissa Santos: 360-357-0209, @melissasantos1

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