Sen. Steve O’Ban said he and others anticipated what would happen when the state Legislature failed to take action after motorists complained in 2017 about having to pay sharply higher car-tab taxes triggered by the $54 billion Sound Transit package.
It was only a matter of time, said O’Ban, before anti-tax initiative promoter Tim Eyman collected enough signatures to put the matter on the ballot, which is exactly what happened. O’Ban, a Republican from University Place, said the Eyman-led initiative would cut transportation funding far deeper than anything lawmakers proposed. The initiative would cap car-tab taxes at $30 and also would reduce several other transportation taxes.
“Now we find ourselves in the very predicament that was entirely predictable and that was because we did nothing. I would urge this body to finally do something for the taxpayers,” O’Ban told the Senate Transportation Committee on Tuesday.
The Legislature must either approve Eyman’s initiative, let it go on the ballot or approve an alternative to compete with it. O’Ban made his comments after business and transportation groups urged legislators to “do nothing” and let the initiative go on the ballot, saying it would be easier to wage a campaign to defeat it.
O’Ban said he has received thousands of emails from vehicle owners who find the car-tab tax “punishing and regressive.” In some cases, he said, it has forced people to cut back on essentials like groceries so they can pay for their annual vehicle registration.
His bill would scrap Sound Transit’s use of an inflated valuation formula for vehicles, which dates to 1990 when the state levied a statewide tax based on vehicle values. O’Ban’s bill would base valuations on the Kelley Blue Book or figures from the National Automobile Dealers Association, whichever is lower.
The bill also would set up a tax-credit program retroactive to March 1, 2017, when Sound Transit first imposed the 0.8 per cent car-tab tax. That was on top of the 0.3 percent car tab tax that voters approved in 1996, dubbed Sound Move. A fiscal note for the bill said there are 2.5 million vehicles within the agency’s boundaries and a majority would be eligible for the credit.
Sound Transit said the legislation would lower the agency’s revenue by $5 billion and increase debt by $7 billion through 2041. As a result, it would have a “detrimental impact” on Sound Transit’s ability to complete the projects that voters approved in 2016, said John Marchione, chairman of the agency’s board of directors.
Voters approved Sound Transit 3 — the third in a series of transit packages — in November 2016 with 54 percent of the vote in a taxing district that includes Pierce, King and Snohomish counties. Most Pierce County voters said no to the package, but it carried in King and Snohomish.
The measure called for a $54 billion transit expansion in the Puget Sound area consisting of 62 miles of new light rail, along with new commuter rail and bus lines, by 2041. In addition to tripling the car-tab tax, the package included property and sales-tax increases in the urban areas of King, Pierce, and Snohomish counties.
At Tuesday’s committee meeting, O’Ban questioned Marchione about whether the revenue plan envisioned in 2016 has ballooned by $9 billion — from $54 billion to $63 billion because of higher-than-projected collections.
“I don’t know the answer to that question,” said Marchione, the mayor of Redmond.
O’Ban asked if Sound Transit receives $9 billion more than it anticipated, would that compensate for the estimated $5 billion the agency would lose under his bill.
Marchione said it would not, because major expenses such as the costs of construction and material probably would go up higher than $9 billion.
Sen. Phil Fortunato, R-Auburn, asked Marchione if he was saying that Sound Transit did not plan for inflation costs in its budgets.
“No, I’m not saying that, sir. I cannot vouch for the $9 billion,” he said.
If Sound Transit is getting more revenue than anticipated, Marchione said, Sound Transit would complete the $54 billion in projects “sooner, so we can stop our taxes sooner.”
Sound Transit has said when the 1996 Sound Move car-tab tax expires in 2028, the agency will use a vehicle valuation method — adopted by the Legislature in 2006 but never implemented — for the Sound Transit 3 car-tab tax that would offer relief for vehicle owners.
Tacoma city councilman Ryan Mello was among those who asked the committee to oppose O’Ban’s bill.
“Tacoma, we lovingly call in the Sound Transit world, is an end-of-the-line city. We have been paying into Sound Transit for many, many, many, many, many years now with the promise that we would be getting light rail and other significant infrastructure investments that would allow our folks to move around the region,” Mello said.
“Being an end-of-the-line community means that a lot of uncertainty is given when significant revenues get lopped off a voter-approved measure.”
Mello noted that a majority of voters within the Tacoma city limits supported Sound Transit 3.