OLYMPIA — Sound Transit’s chief executive officer assured a House panel Thursday he’s “open and willing and happy” to try to ease the effects of a surge in car tab costs that’s angered vehicle owners and lawmakers.
But CEO Peter Rogoff did not commit the regional transit authority to stop using an outdated vehicle depreciation model to calculate car tabs as some lawmakers are publicly demanding.
Rogoff told members of the House Transportation Committee that doing so could endanger the agency’s ability to carry out the $54 billion expansion approved by voters last fall.
It would reduce future revenue collections counted on to complete Sound Transit 3 projects including extension of Link light rail to Everett by 2036, he said.
To further complicate matters, President Donald Trump’s proposed budget would axe a $1.2 billion grant for an extension to Lynnwood and $500 million grant to get to Federal Way, Rogoff said. He called it “kick in the gut” that brings a new layer of uncertainty to the financial picture. ST3’s budget and schedule are based on assumptions about building out from those now imperilled extensions.
“I want members to know that the Sound Transit board and for that matter the Sound Transit staff know and understand that when you do a dramatic increase in a tax you are going to engender a good deal of upset,” he said in a special work session on the agency’s implementation of ST3.
“We are open and willing and happy to discuss with members if there is a way to alleviate the concerns on the depreciation schedule,” he said.
Rogoff’s approach didn’t sit well with Rep. Mark Harmsworth, R-Mill Creek, a committee member who has introduced legislation requiring Sound Transit to switch its methods.
“I was a little disappointed that they were not a little more responsive to the taxpayers,” he said. “I was hoping he would come and say, ‘We hear you and we are going to adjust the schedule’. But he didn’t.”
Thursday’s session comes a week after a similar hearing in the Senate Transportation Committee.
Both occurred in response to the disbelief and anger expressed by vehicle owners in large parts of Snohomish, King and Pierce counties upon seeing how much more they must pay Sound Transit on their car tabs.
Under the measure approved by voters, the motor vehicle excise tax rose from 0.3 percent to 1.1 percent, the sales tax will rise by a half-percent April 1 and there’s a first-ever new property tax assessment.
What frustrates legislators is that Sound Transit calculates its excise tax using a depreciation schedule drawn up in the 1990s, in which the car’s value dips about 5 percent a year. A 2006 update shows a car loses 19 percent of its value after one year and 55 percent after five years.
Under a 2015 law, Sound Transit gets to keep using the older method until 2028, when some bonds sold in the earlier phases of expansion are retired. That’s also when the previously existing 0.3 percent rate expires.
Rogoff and Chief Financial Officer Brian McCartan explained there are $2.3 billion in outstanding bonds to finance the agency’s three phases of development — Sound Move, Sound Transit 2 and now ST3. To pay them off, the agency relies primarily on the money it gets from sales tax and motor vehicle excise tax.
All the dollars, including the ones that will be generated from ST3, are put in the same pot of money for those repayments. This enables the transit authority to get lower interest rates, they said.
If the agency tried to sell new bonds between now and 2028 using a new valuation schedule it could result in higher interest rates and potentially affect the agency’s top bond rating, they explained.
Lawmakers have been hearing this explanation for a couple of weeks and are still pursing a legislative fix.
Republican senators have introduced a raft of bills. One would prevent the state Department of Licensing from contracting with Sound Transit for collecting motor vehicle excise fees unless the regional transit authority changes the vehicle valuation method it uses.
Democratic representatives, meanwhile, have introduced five bills aimed at easing the pain of the car tab fee hikes, providing rebates on some ST3 taxes for those with lower incomes and adding accountability measures.
None of the measures have advanced in either chamber, so far.
At the work session, Erik Ashlie-Vinke, of the Economic Alliance of Snohomish County, asked the committee to tread lightly in its response.
“Our concern is we don’t want any legislative efforts to delay our projects,” he said. “Everett has waited since the 1990s to get light rail and finally we have it.”