Bill that would reduce car tab rates passes the state House

The state House of representatives passed a bill on Wednesday that would reduce car tab taxes that help finance regional transportation projects.

The bill, HB 2201, would require Sound Transit to change its formula for valuing cars and, by extension, tab rates—a move that mass transit advocates say will stymie the development of the region’s transit infrastructure.

The Legislature’s move comes a year after lawmakers complained that Sound Transit uses a dated valuation formula that sometimes inflates the value of cars—and devalues others—and that some vehicle owners were experiencing “sticker shock” after tax hikes caused by the agency’s massive $54 billion transit expansion package that was approved by regional voters in 2016 by almost 20 points.

Sound Transit estimated that the tax hike would raise rates by $110 per $10,000 in vehicle valuation, while reports emerged early in 2017 noting steep increases, such as from $90 annually to more than $260.

The tax formula, which was approved by the legislature in the 1990s, calculates value based on vehicle type and age, as opposed to market-value rates determined by sources such as Kelley Blue Book, resulting in some vehicles being overvalued.

Since 1996, voters in the Sound Transit taxing district—which includes the densely populated areas of King, Snohomish, and Pierce counties—have approved three major transportation funding packages, all of which were funded, in part, by taxes generated through the controversial valuation system. The latest of these was Sound Transit 3, which will build out the region’s light rail network from Seattle to Issaquah, Tacoma, Everett, and elsewhere.

The bill—which passed the House 60-37—is sponsored entirely by House Democrats, but garnered many Republican votes. It was originally introduced during last year’s legislative session and passed the House, but never made it to the governor’s desk over disagreement on how much to reduce the rate.

During the debate leading up to the floor vote, proponents of the legislation bemoaned the tax burdens on car owners while railing against Sound Transit, characterizing it as an unaccountable and freewheeling public agency.

“It is past time to fix this issue and replace it with the most current and accurate valuation system that currently exists,” said Rep. Mike Pellicciotti, D–Federal Way, the primary bill sponsor. “The public expects us to pass this today, good government expects us to pass this today.”

“When my constituents get their car tab fees, it smacks them right in the face,” said Rep. Mark Hargrove, R–Covington. “We need to make much greater strides to give more relief to our constituents. I’ll support it but it’s a shame that we didn’t go much further.”

“I think people are feeling that they were lied to by the process, whether that’s true or not,” said Rep. Morgan Irwin, R–Enumclaw. “I think we need to go after Sound Transit in other ways to make sure that we’re holding it accountable to the people that it’s supposed to represent, because folks out there don’t feel like it does.”

Rep. Christine Kilduff, D–University Place, said that the legislature needed to move fast to reduce the tax rate or risk facing the wrath of the voters in their districts. “There’s a ton of sticker shock out there,” she said. “If we don’t take action on this legislation, our constituents are going to be even angrier.”

The bill now goes to the Senate Transportation Committee for consideration.

Both Sound Transit staff and its proponents argued in the run-up to and aftermath of the vote that the tax rate reduction will siphon off crucial tax revenue for voter-approved projects and increase the already long building timelines for light rail expansion. The line to Issaquah, for instance, was originally slated to be finished by 2041 while the lines to West Seattle and Everett were projected to be finished in 2030 and 2036 respectively.

Geoff Patrick, a spokesperson for Sound Transit, said that the bill, if signed into law by the governor, would cut $780 million over the next 11 years from the agency’s tax revenue, and could also cost it more than $2 million in the long-term if the agency was forced to take out more bonds to finance projects.

“With the loss of that 780 million, you would need to borrow more to balance the financial plan,” he said in a telephone interview. “That would carry debt service cost beyond what we previously assumed.”

Patrick added that, if the state Senate doesn’t find a way to offset the revenue decrease from HB 2201, that the agency, which is also at risk of losing federal grant funding from the Trump administration, will definitely have to elongate project timelines. “The only real alternative if money does not come in is slowing things down so that tax revenue can come in to build projects. That’s the risk.”

Some of the Democratic representatives who voted for the bill paid tribute to the financing issues posed by the tax rate reduction while speaking on the House floor prior to the vote.

“We’re going to make sure that the Sound Transit tabs are fair when it comes to car values. But we’re also going to make sure that we fund those projects because in the central Puget Sound area, those projects are critical,” said Rep. Judy Clibborn, D–Mercer Island.

“My district supported ST3 and my district voters and the citizens expect that light rail will reach Tacoma, just as people in Snohomish County expect that light rail will reach Everett,” said Rep. Jake Fey, D–Tacoma. “780 million dollars is a big gap.”

The biggest defense of Sound Transit came from a Republican, Rep. Jacquelin Maycumber of Republic, who voted against the bill. “Seattle is a world class city and it deserves a world class transit system and that’s why the people spoke,” she said. “This bill, it goes against what the people requested and what the people voted for.”

Seattle-based transit advocates were livid after the vote. House Democrats, “just sold us out on #HB2201 earlier today,” read a Jan. 24 tweet from Seattle Subway, a pro-mass transit group.

Other activists, however, are more optimistic about Sound Transit’s financial future. Abigail Doerr, advocacy director at Transportation Choices Coalition—a pro-mass transit advocacy group that helped orchestrate the ST3 campaign in 2016—said in a phone interview that she is very “encouraged” by her conversations with state senators who are sensitive to the funding gap and want to amend the legislation to find additional revenue.

“We’ve been in conversations with them and heard a strong commitment and desire and intention to address the revenue loss with offsets,” she said.

Patrick with Sound Transit said that one possible revenue source in discussion is reducing the price that Sound Transit pays for right-of-way costs on land owned by the state Department of Transportation.

A spokesperson for Democratic Governor Jay Inslee’s Office said that his office hadn’t reviewed the bill yet.

Meanwhile, Sen. Steve O’Ban, R–University Place, a longtime critic of Sound Transit, is sponsoring a bill that would amend Sound Transit’s governance structure to make its board members directly elected and require that they not hold other positions in elected office. Currently, Sound Transit’s 16-member board is composed of elected officials from the various cities and counties in the agency’s taxing district.

This report was produced by the Olympia bureau of the Washington Newspaper Publishers Association.