House passes car tab fees fix, bill goes to Senate

OLYMPIA — Lawmakers set about Wednesday to give a couple of million car owners a little break on their Sound Transit car tab fees.

A Democrat-drafted response to surging fees passed the state House on Wednesday amid criticism of it as an “itsy-bitsy fix” that will produce small savings for most vehicle owners.

The bill requires the regional transit authority to stop calculating the fees with the use of a 1990s-era depreciation schedule, which overvalues vehicles, and start using a schedule adopted by the Legislature in 2006, which better reflects a car’s actual worth.

Once the switch is made, an estimated 2.5 million vehicle owners would get a credit for any extra they paid under the old method, or a refund if they’ve already spent money to renew their tabs this year.

The whole point is to soften the blow of an increase in the motor vehicle excise tax rate that voters approved in 2016 to fund the $54 billion expansion known as Sound Transit 3. The plan promises to bring light rail to downtown Everett by 2036, with other extensions in Seattle, Pierce County and King County’s Eastside.

“It is past time to fix this issue,” said Rep. Mike Pellicciotti, D-Federal Way, the prime sponsor, in the floor debate. “The public expects us to do this today. Good government demands we pass this today.”

Rep. Mark Harmsworth, R-Mill Creek, reluctantly voted for the bill, saying it didn’t go far enough.

“This is just an itsy-bitsy fix,” he said. “We’ll take what we can now. We still need to work on it.”

The bill, which passed on a 60-37 vote, is the same legislation the House approved in 2017. It now goes to the Senate for consideration.

Those projected savings for car owners add up to $780 million less in revenue collections for Sound Transit through 2041. Agency officials estimate having less money to bond against would mean having $2.2 billion less for the long-term financing of planned expansion.

The bill requires the transit authority to make it up in savings and cost reductions on its parking facility, commuter rail, bus rapid transit and light rail projects, in that order.

But Sound Transit’s allies in the Legislature don’t think it’s possible. And they have heard agency officials warn that without those dollars, the ability to deliver the light rail, commuter rail and bus rapid transit projects as promised to voters is jeopardized.

As a result, lawmakers are looking for ways to ease the pain and two possible sources are getting attention.

One idea is to reduce project costs by no longer requiring Sound Transit to pay the state Department of Transportation to lease right-of-way construction or airspace when its passenger service is operating in state-owned corridors.

Sound Transit anticipates spending $424 million through 2041 on such leases, spokesman Geoff Patrick said.

Another idea — and one fraught with political challenge — is to divert $518 million expected to flow into the Puget Sound Taxpayer Accountability Account in the coming years.

The account was created in the final hours of negotiation on the 2015 transportation package to “improve educational outcomes in early learning, K-12 and higher education” with a focus on youths who are low-income, homeless or in foster care.

Those dollars will come from a portion of sales tax Sound Transit will pay on ST3 projects. Under existing law, proceeds will be divided between King County ($318 million), Pierce County ($111 million) and Snohomish County ($89 million).

With money expected to start flowing into the account in 2019, the King County Council is now crafting a spending plan. A similar effort is not yet under way in Snohomish County.

Last year, as Democrats began working on this issue, Sen. Marko Liias, D-Lynnwood, proposed switching to the newer depreciation schedule for calculating fees, and offsetting the loss of incoming revenue with funds from the account.

“The position of the Sound Transit board is that any reduction of (the motor vehicle excise tax) revenues should be accompanied by offsetting measures to ensure … the schedules promised to the voters,” Patrick wrote in an email. “We are in dialogue with legislators about such potential measures.”

In the meantime, the Senate Transportation Committee on Wednesday held a public hearing on a Senate bill to reduce car tabs.

Sen. Steve Hobbs, D-Lake Stevens, the committee chairman, said he supports providing relief “though at the same time we have to make sure those projects are funded and completed on time.”

He said he’s aware of ongoing conversations about not charging for use of right-of-ways and tapping the education account.

“I think we should at least look at those possibilities,” he said. “I think it’s too soon to know what will happen.”

Jerry Cornfield: 360-352-8623; jcornfield@herald net.com. Twitter: @dospueblos.