Politics & Government

How did Sound Transit 3’s inflated car-tab fees slip by lawmakers?

Commuters wait for a Sound Transit Express bus heading for Seattle in 2016 at the Tacoma Dome Station. Lawmakers and taxpayers have been outraged by the increased cost of car-tab fees under Sound Transit 3, the $54 billion transit package voters approved in November. But lawmakers were the ones who authorized Sound Transit to collect those taxes — and provided the specific means for doing so — in 2015.
Commuters wait for a Sound Transit Express bus heading for Seattle in 2016 at the Tacoma Dome Station. Lawmakers and taxpayers have been outraged by the increased cost of car-tab fees under Sound Transit 3, the $54 billion transit package voters approved in November. But lawmakers were the ones who authorized Sound Transit to collect those taxes — and provided the specific means for doing so — in 2015. The News Tribune

State lawmakers have said they — like taxpayers — were caught off guard by the sharp increases in car-tab fees under Sound Transit 3, the $54 billion transit package voters approved in November.

Yet in 2015, those same lawmakers were the ones who gave Sound Transit the authority to raise those taxes, using an outdated method to calculate the fees.

Why, then, the shock and surprise two years later?

Some legislative leaders now say they were misled by Sound Transit, and that’s why they didn’t realize the details of what they approved.

Others attribute the oversight mainly to their focus on other aspects of the 2015 transportation agreement, including which highway projects to prioritize.

In addition to authorizing Sound Transit 3, the state’s 2015 transportation package raised the state’s gas tax by 11.9 cents per gallon to pay for about $16 billion in road improvements throughout the state.

Several lawmakers said this week that they didn’t realize they were authorizing Sound Transit to collect car-tab fees based on an outdated formula from the 1990s, rather than using a replacement formula lawmakers had adopted in 2006.

The older formula significantly overestimates a vehicle’s value in its first 10 years of life, leading to higher car-tab fees, while the 2006 formula sticks closer to cars’ true market value.

“They never mentioned that. They were intentionally vague and deceptive,” said Senate Majority Leader Mark Schoesler, R-Ritzville, of Sound Transit.

Formula was always in bill

Sound Transit officials, on the other hand, say lawmakers never raised concerns at the time about the proposed car-tab calculations, despite having ample opportunity.

The language that specified how the agency would calculate car-tab fees was included in every version of the transportation revenue bill lawmakers considered in 2015, dating to at least four months before the measure was finally approved.

The topic even came up on the Senate floor in February 2015, when the Senate voted down a proposed amendment to change the car-tab valuation schedule to a third, completely different formula.

“Each step of the way, this language was there,” said state Sen. Marko Liias, D-Lynnwood, one of the negotiators of the 2015 transportation package. Liias explained how the car-tab fees would be calculated in a short speech during the 2015 floor debate.

That didn’t mean all lawmakers were aware of it.

State Rep. Judy Clibborn, the chairwoman of the House Transportation Committee, said it hadn’t even occurred to her that Sound Transit would use the older method to calculate car-tab fees, which lawmakers long ago decided was unfair.

“Sometimes if you don’t think to ask the question, you make an assumption, because it’s not even on your radar screen,” said Clibborn, D-Mercer Island.

She said she was mainly focused on which projects to include in the 2015 transportation package, as well as how much to spend on road maintenance, preservation, transit and bike paths.

Her counterpart in the Senate, Republican Sen. Curtis King of Yakima, said he, too, glossed over the technical language dealing with car-tab calculations at the time, instead focusing on the size of tax increases the Legislature would allow Sound Transit to put on the ballot.

“All we concentrated on were the percentages of increases,” King said. “I don’t think any of us looked at the words that were in there — they were Sound Transit’s words. We didn’t pay any attention to that.”

In the end, lawmakers approved letting Sound Transit seek a property tax increase of $25 per $100,000 in assessed value, a sales tax hike of 50 cents for every $100 purchase, and car-tab fee increases of about $80 for a vehicle valued at $10,000.

The Sound Transit 3 package is projected to generate about $28 billion in revenue over the next 25 years from taxpayers in King, Pierce and Snohomish counties.

That money, once bonded, will pay for about $54 billion in projects, including extending light rail, improving commuter rail and expanding bus service throughout the Puget Sound, according to the agency.

Concerns about misleading language

Some lawmakers are now taking issue with the wording of the law that outlines how car tabs would be calculated, which was developed in concert with Sound Transit.

In March, Sens. Steve O’Ban, R-Tacoma, and Dino Rossi, R-Sammamish, sent a letter to the attorney general’s office arguing the section dealing with car-tab fees in the 2015 bill was unconstitutionally drafted.

The section in question said Sound Transit would continue to use the older method of collecting car-tab fees until after the agency’s existing bonds are retired in January 2029, and then would switch to the newer schedule after that.

O’Ban, an attorney, said the way the bill was written didn’t make it clear that lawmakers were amending the 2006 vehicle valuation schedule set in current law. Nor did the bill lay out the details of the older schedule that would be used.

“A lawmaker reading that would not know Sound Transit intended to use this repealed statute or schedule,” O’Ban said.

In a letter to O’Ban and Rossi, the attorney general’s office said it couldn’t issue an opinion on the language’s constitutionality, since the office may have to defend the law in court if it is ever challenged.

Still, the car-tab fees may not be the biggest issue fueling lawmakers’ anger over Sound Transit 3. Many of them thought they were authorizing Sound Transit to send a much smaller tax package to voters, they said this month.

At a committee hearing in 2015, Sound Transit board members repeatedly spoke of needing the Legislature to authorize “the full $15 billion” in taxing authority if the agency was to extend light rail to Tacoma and Everett.

Last week, several lawmakers said those kinds of statements led them to think they were approving only $15 billion in taxes for Sound Transit — not $28 billion that would be used to bankroll a $54 billion package.

Clibborn, the House Transportation Committee chairwoman, said she’s not sure lawmakers would have signed off on Sound Transit 3 if they had known how big the tax proposal would become.

“I think if you had said, ‘We’re going to bond this and we’re going to ask for $54 billion,’ it would not have gone anywhere,” Clibborn said. “Nobody was going to do that. ... Everybody was having this $15 billion in front of them.”

Geoff Patrick, a spokesman for Sound Transit, said agency officials were clear at the time that they were talking about how much Sound Transit 3 would raise over the course of the Legislature’s 16-year transportation package.

Because Sound Transit officials later chose to extend the timeline of the Sound Transit 3 package to 25 years, the amount of money the agency could raise under the law grew to $28 billion, he said.

“The legislation in no way constrained the length of the package that could be proposed to voters,” Patrick said.

Fixing the car-tab fees

Now, lawmakers are looking to reduce the costs of Sound Transit 3 by targeting the outdated car-tab formula. But they don’t agree on the best way to do that.

The state Senate, which is controlled by a conservative majority, passed a measure to base car-tab fees on a vehicle’s resale value as determined by Kelley Blue Book or the National Automobile Dealers Association, whichever is lower. Beyond that, Senate Bill 5893 would also dramatically cut the amount of car-tab fees Sound Transit can collect.

Democrats who control the state House favor a different approach: Giving taxpayers rebates so they pay car-tab fees in line with the 2006 formula, not the older, inflated vehicle valuation schedule from the 1990s. They say the 2006 formula comes very close to matching Blue Book values for cars.

Their proposal to charge taxpayers according to the 2006 schedule, House Bill 2201, cleared the House on Wednesday.

Clibborn said the House plan is preferable because it wouldn’t gut the transit package voters approved last year. She estimated under the House bill, Sound Transit would lose about $780 million in car-tab revenues, with the total costs to the agency not exceeding about $2 billion over 25 years.

“It doesn’t destroy the projects people voted for,” Clibborn said.

The Senate proposal, by contrast, would cost Sound Transit about $12 billion in revenue during that timeframe, said Patrick, the agency spokesman. That’s largely due to how the Senate bill would cut car-tab fee collections, in addition to changing how vehicle values are calculated.

King, the Senate Transportation Committee chairman, said he’s not sure the House plan goes far enough to provide relief to taxpayers. Clibborn said many people would get refunds of about $40 to $50 under the measure approved by the House.

“It does provide a little bit of relief, but if you look at the increases that occurred, to a lot of people it’s an unfair amount of money that is being collected,” King said.

“I sure think we ought to look at other alternatives than just that.”

Melissa Santos: 360-357-0209, @melissasantos1

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