EVERETT — Residents will pay a $20 car tab renewal fee starting next year.

The money, estimated to bring in $1.2 million per year, will be used to pay for transportation-related projects within the city.

The car tab measure was one of the issues put forth earlier this year by Mayor Ray Stephanson to address the city’s increasing deficits.

Other measures already enacted by the council are now reflected in the city’s budget projections for 2015, which show a deficit of $2.6 million, compared with $12.7 million before the various revenue and expense cutting measures were implemented.

The city is still working to address longer-term budget deficits, which are expected to grow over the next five years.

The car tabs were permitted through a special taxing authority called a transportation benefit district, or TBD, which covers the entire city and is governed by a board comprised of the members of the City Council.

The law that allows TBDs specifies that revenues collected by the state Department of Licensing would be earmarked for specific transportation projects that benefit the area where the district operates.

More than 60 TBDs have been created in Washington state over the years, including Marysville, Arlington, Stanwood and Monroe, according to the Municipal Research and Services Center, a nonprofit research group.

Most have implemented a vehicle license fee, but others have used a sales tax to fund it. Monroe’s district was enacted in 2012, but wasn’t funded until the Aug. 5 primary election this year, in which a 0.2 percent sales tax measure appeared to be passing.

The Everett measure was enacted during Wednesday’s City Council meeting by a 5-1 vote, with Councilman Ron Gipson casting the “no” vote.

“I’m trying to protect the money to make sure it stays in the city,” Gipson said.

Without a specific list of projects identified, it “sounded like an open checkbook,” Gipson said. He wanted to make sure the revenues raised would support projects to benefit residents.

Gipson compared that with Community Transit, which receives city financial support for the Swift bus but also serves outlying areas.

The council, acting as the board of the TBD, will draw up a list of specific projects later this fall. Revenue raised through the TBD will not go into the city’s general fund, but will allow general fund money used for public works to support other projects.

Richard Tarry, the city’s Engineering Services Manager, told the board that the Department of Licensing takes at least six months before it starts to collect revenues from new TBDs, so the new car tabs won’t go into effect until early 2015.

Chris Winters: 425-374-4165; cwinters@heraldnet.com. Twitter: @Chris_At_Herald.