Lawmakers press Sound Transit to change course on car tabs

OLYMPIA —State senators on Monday vented their frustration with Sound Transit’s soaring car tab fees, demanding the transit authority stop using a formula for valuing vehicles that has been rejected by voters.

In an hour-long legislative hearing, lawmakers pressed leaders of the regional transit authority to discard its method of calculation that overvalues vehicles and is contributing to significant hikes in the cost of re-registering vehicles.

“There’s a difference between right and wrong. This is clearly wrong,” said Sen. Dino Rossi, R-Sammamish, in the Senate Transportation Committee meeting. “It is blatantly unfair.”

Lawmakers say they want to ease the financial pain wrought by tax hikes approved by voters last year to help pay for a $54 billion expansion of light rail known as ST3. It passed in November on the strength of support in Snohomish and King counties. Voters in Pierce County rejected it.

To pay for the upgrades, the motor vehicle excise tax collected by Sound Transit went from 0.3 percent to 1.1 percent. Also, the sales tax is going up half a percent in the district and there’s a new property tax assessment of 25 cents for each $1,000 of assessed valuation.

The car tab fee hike took effect March 1. When bills started arriving in February, some owners realized that a nearly tripling of the rate resulted in them paying two to three times as much as they did a year earlier.

Lawmakers are angry because Sound Transit calculates its excise tax using a state-developed depreciation schedule drawn up in the 1990s in which the car’s value dips five or six percent a year. The Department of Licensing updated its depreciation schedule in 2006. It shows a car loses 19 percent of its value after one year, 55 percent after five years.

But under a 2015 law, Sound Transit isn’t expected to switch entirely to the newer schedule until 2029 when bonds from the first two phases of expansion are retired. Those were sold with an assumption of car tab collections tied to the older schedule.

Senators don’t want to wait that long.

“Let’s be fair. Let’s be reasonable,” said Sen. Curtis King, the committee chairman. “I’m hoping Sound Transit will go back and look at that and see if there isn’t some way they can can get an MVET that is based upon the real value of a car and not some inflated value that is out there in na-na-land.”

Under questioning, Sound Transit Chief Financial Officer Brian McCartan acknowledged it is difficult but theoretically possible to pay off or refinance those older bonds in order to facilitate a switch sooner.

“We are looking at this issue in depth. The financial impacts are complicated,” he said after the meeting.

One factor complicating a swift course correction is Sound Transit took advantage of low interest rates last fall to sell some ST3-related bonds and agreed to pay them off with revenue collections using the older depreciation model.

If the agency acted to pay those off in some manner relying on a new stream of dollars using the newer schedule, it could create a confusing situation for vehicle owners.

Because Sound Transit would still have those older bonds to retire, it would have to value the same vehicle in two different ways when collecting its excise tax. It would use the pre-ST3 rate of 0.3 percent combined with the 1996 depreciation schedule to cover the old bonds. Then it would use the 0.8 percent approved by voters and the newer depreciation model to pay off the ST3 bonds.

Adding the two payments would presumably result in a smaller overall increase than would occur without any change whatsoever. This would require explaining on tax bills.

McCartan told committee members there were discussions of such potentialities before ST3 and “it seemed cleaner and simpler to have a single valuation system” through 2028 when that 0.3 percent rate expires as well.

Switching sooner could mean the agency takes in fewer dollars and that could affect its ability to carry out the plan approved by voters, he said.

Sen. Steve O’Ban, R-University Place, who opposed ST3, isn’t sympathetic.

“I’ll let them figure it out,” he said. “That’s their problem.”

After the hearing, King said the only option for lawmakers may be to keep applying pressure publicly because bills to require Sound Transit use Kelley Blue Book or National Auto Dealer Association car values came in too late to be considered.

Sen. Marko Liias, D-Lynnwood, a committee member and ST3 supporter, said the hearing provided Sound Transit critics a chance to grandstand.

“This was just an opportunity to beat up on them some more. It didn’t feel like anybody was here to hear the answers,” he said. “This is a technical, complicated issue.”

“To me what’s not complicated and what’s not technical is we need light rail to Everett,” Liias said. “These bills jeopardize that.”

Jerry Cornfield: 360-352-8623; Twitter: @dospueblos.

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