Sen. Marko Liias, D-Mukilteo, sits at his desk on the Senate floor in 2017 in Olympia. (AP Photo/Ted S. Warren, file)

Sen. Marko Liias, D-Mukilteo, sits at his desk on the Senate floor in 2017 in Olympia. (AP Photo/Ted S. Warren, file)

Lawmakers renew attempt to reform Sound Transit car taxes

A Senate bill would bring some savings. Foes say it doesn’t go far enough and ignores will of voters.

OLYMPIA — Lawmakers are talking again about reducing the motor vehicle excise tax that helps fund Sound Transit expansion.

But leaders of the regional transit authority are cautioning, again, against leaving them without an adequate stream of dollars to build promised light rail projects.

It’s a familiar discourse. The past three legislative sessions ended without lawmakers doing anything to provide a modicum of financial relief for vehicle owners.

This session may bring a different conclusion, thanks to passage of Initiative 976.

Voters across the state revealed their frustration with the cost of car tabs. While the measure failed within the Sound Transit boundaries in Snohomish, Pierce and King counties, it enjoyed strong support in many of the taxing district’s cities, including Everett.

A bill introduced last week by Sen. Marko Liias, D-Lynnwood, requires the regional transit authority to stop using a 199os depreciation schedule to calculate the motor vehicle excise tax (MVET) on vehicle registration and switch to a schedule adopted by lawmakers in 2006.

The newer depreciation schedule better reflects a car’s actual value, and the change would result in a little savings for vehicle owners when they renew their car tabs. Senate Bill 6606 also revises the depreciation schedule to ensure older cars are not overvalued. It also retains the existing 1.1% excise tax rate by erasing language in the initiative to repeal the tax rate.

Sound Transit already must switch depreciation schedules in 2028, when bonds sold in the 1990s for the agency’s initial construction are paid off. The proposed legislation would make it happen much sooner — this year.

Liias said he didn’t expect pushback from Sound Transit directors, citing their comments in December urging lawmakers to make reforms to assuage taxpayer concern.

“We’re addressing the unfairness in the valuation schedule and keeping faith with the voters who want light rail,” he said.

Sound Transit leaders are concerned, however.

The bill will reduce collections by an estimated $1.0 billion, said agency spokesman Geoff Patrick. The overall impact would be in the neighborhood of $2.9 billion because of anticipated financing costs associated with borrowing money to cover the gap, he said.

“The core concern of Sound Transit is our ability to complete voter-approved projects on the timelines committed to voters,” Patrick said. “Our board continues to want any changes to be revenue-neutral, either offset by reducing costs that Sound Transit would incur or provide other revenues to offset the anticipated loss of collections. Our board is very interested in working with legislators.”

There are detractors in the Legislature, too.

“This bill should be called the ‘Thumb Our Noses at the Taxpayer Act’ or the ‘Sound Transit Dream Bill.’ I can’t decide which, but both are accurate,” Sen. Steve O’Ban, R-University Place, said in a statement Friday.

O’Ban criticized the bill for not doing more to reflect the will of the voters. Specifically, he decried the failure to switch to use of Kelley Blue Book values to figure the MVET, as prescribed in the initiative.

Liias’s bill will receive a hearing soon in the Senate Transportation Committee.

“It looks like a good candidate to come out” of committee, said Sen. Steve Hobbs, D-Lake Stevens, the panel’s chairman.

To get it through the Legislature won’t be easy. It will require a two-thirds majority in both chambers because it would revise content in Initiative 976.

“Everybody wants to do something. It shouldn’t be a problem,” Hobbs said optimistically.

Sen. Curtis King, R-Yakima, the committee’s ranking Republican, said “there’s a chance that it could happen. I can’t speak for my caucus. I think they’ll listen.”

Anger with the motor vehicle excise tax stems from the 2016 passage of Sound Transit 3, a 25-year, $54 billion expansion.

It hiked the MVET from 0.3% to 1.1%. When the increase took effect in March 2017, the cost of car tabs surged and caught many vehicle owners unaware.

Frustration further soared as it became widely understood that the taxes are calculated using a a 1990s depreciation schedule which overvalues newer vehicles, thus leading to higher payments for the annual registration.

That schedule is tied to the manufacturer’s suggested retail price and shows a car’s value dips only 5% or 6% a year. The 2006 schedule used in Liias’s bill shows a car loses 19% of its value after one year, 55% after five years.

Switching to the 2006 schedule is not a new idea.

“My bill fixing the valuation has been passed three times by the House,” said Rep. Mike Pellicciotti, D-Federal Way. “I’ve truly been focused on getting the schedule fixed and ensuring people are not paying inflated values for their vehicle.”

His successes came in the 2017 and 2018 sessions.

In 2018, legislative staff compiled examples of how car tab costs might change. Projected savings from switching to the 2006 schedule ranged from $13 on a 2009 Volkswagen Jetta to $53 for a 2016 Toyota Prius to $83 on a 2018 Tesla Model S, according to the analysis.

The 2019 version, House Bill 2123, did not emerge from the House Transportation Committee. It’s not clear if it will be revived this session or if the Senate bill will become a potential vehicle for the reform.

“I hope we get something,” Pellicciotti said.

Part of the reason for the past failures was political differences between the chambers and partly it was the difficulty of finding a revenue-neutral solution.

Rep. Jake Fey, D-Tacoma, chairman of the House Transportation Committee, said the latter problem isn’t resolved in the Senate bill.

“There’s more work to be done,” he said.

This story has been modified to update figures for the change in Sound Transit collections and the necessary borrowing costs under the proposed plan.

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

Talk to us

More in Local News

Logo for news use featuring Whidbey Island in Island County, Washington. 220118
Head-on crash on south Whidbey Island hospitalizes 3 people

Alcohol or drugs were involved, per the Washington State Patrol. Two victims are Lake Forest Park teens.

Marysville
Marysville man dies after motorcycle crash on Ingraham Boulevard

The man, 58, was heading east when he lost control in the single-vehicle crash, according to police.

Builders work on the Four Corners Apartments on Beverly Lane near Evergreen and 79th Place SE on Wednesday, March 1, 2023 in Everett, Washington. DevCo, the real estate company building the affordable housing, is receiving a $1 million grant from the city of Everett. (Olivia Vanni / The Herald)
As Washington rents go up, up, up, the air gets thin for tenants

Hal Zack’s rent has tripled, and he’s scared he’ll be homeless soon. How did we get here? And what is the state doing now?

People walk down through a row of trees planted in remembrance of those lost in the Oso Mudslide on Tuesday, March 22, 2022 in Oso, Washington. (Olivia Vanni / The Herald)
Oso mudslide 9th year memorial set for Wednesday

The public is invited to attend this year’s remembrance ceremony at the site of the slide that killed 43 people in 2014.

Everett Memorial Stadium and Funko Field on Wednesday, Sept. 2, 2020 in Everett, Washington. (Olivia Vanni / The Herald)
Drive to build new AquaSox ballpark gets $7.4M boost from state

The proposed Senate capital budget contains critical seed money for the city-led project likely to get matched by the House.

Judge Bruce Weiss speaks to the attorneys during jury selection at the Snohomish County Courthouse on Tuesday, March 14, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Dozens dismissed as jury is pared in Richard Rotter trial

The process came to a halt Friday when an unidentified man told some potential jurors to give “the chair” to Dan Rocha’s alleged killer.

Left to right, Saharah Mendoza, Cielo Mendoza and Octavio Mendoza, reunite in Everett, Washington on Friday, March 17, 2023. The USS Barry arrived to its new homeport at Everett Naval Station, previously from Yokosuka, Japan. The crew is led by Commanding Officer, Cmdr. Grant Bryan. (Annie Barker / The Herald)
USS Barry sails in to new home, Naval Station Everett

Three-hundred sailors arrived Friday in Everett after the destroyer’s six-year deployment in Japan.

Jeff Niten
New Mountlake Terrace city manager set for $200K salary

Jeff Niten’s start date is April 17. He’ll oversee the city’s 190 employees and work to implement city policies.

WSDOT workers open up the Smokey Point Rest Area on Tuesday, May 17, 2022 in Arlington, Washington. (Olivia Vanni / The Herald)
‘Massive amount’ of homeless RV camping closed Smokey Point rest area

Since November, 38 homeless people were identified through outreach. Six have accepted housing offers with case management.

Most Read