OLYMPIA — A state Senate panel on Tuesday approved a plan to give car owners a little savings on their Sound Transit car tab fees and to still keep the regional transit authority from losing out on hundreds of millions of dollars of revenue in the process.
Sound Transit must stop calculating those fees with an outdated depreciation schedule and start using one that better reflects a car’s actual worth under a bill passed by the Senate Transportation Committee.
To make up for the loss of car tab collections, the panel agreed to redirect $518 million in future sales tax payments by Sound Transit out of a special account for education services and into projects in the $54 billion expansion approved by voters in 2016.
“I think what we’ve worked out is a good balance,” said Sen. Marko Liias, D-Lynnwood, a committee member. “I’m glad we’re getting to a place where we’re fixing a problem and moving forward.”
Sen. Steve Hobbs, D-Lake Stevens, the committee chairman who worked with Liias on the final language, said it is “not the perfect bill” and anticipates more refinements as it moves through the process.
It will bring “real relief” for car tab payers and ensure Sound Transit can deliver the projects on time as promised to voters, he said.
“We want our projects (in Snohomish County) to show up while we’re still alive,” he said. “This will help.”
But Republican Sens. Steve O’Ban, of University Place, and Hans Zeiger, of Puyallup, said there’s too little savings for taxpayers and too much help for Sound Transit.
“This bill does not go far enough,” Zeiger said. “People feel like an injustice has been committed. We have a chance to right this wrong.”
Snohomish County Executive Dave Somers, who is chairman of the Sound Transit Board of Directors, did not express an opinion on the Senate bill.
“We have been working with the Legislature to find solutions for the MVET (motor vehicle excise tax) schedule for Sound Transit,” he said in a statement. “I support reasonable solutions, as long as they simultaneously adopt measures to keep budgets whole and continue to prioritize the “spine.” We appreciate the Legislature’s partnership as we work to build out a system that serves our residents and businesses.”
Sound Transit 3 passed in November 2016 on the strength of support in Snohomish and King counties. Voters in Pierce County rejected it.
The plan calls for adding 62 miles of new Link light-rail line, including an extension to Everett Station by 2036, via the Paine Field industrial area. Other new light-rail destinations envisioned in ST3 include Tacoma, Ballard, West Seattle, downtown Redmond, south Kirkland and Issaquah.
To pay for the upgrades, the sales tax went up half a percent within the district. There’s also a new property tax assessment of 25 cents for each $1,000 of assessed valuation. And the tax rate for figuring car tab fees went from 0.3 percent to 1.1 percent, resulting in a near trebling of costs for some vehicle owners.
A contributing factor to the surge is Sound Transit’s use of a 1990s vehicle depreciation schedule in calibrating increases. That schedule overvalues vehicles, which means higher charges.
Under Senate Bill 5955, Sound Transit must use a depreciation schedule enacted in 2006 in its car tab calculations starting in September.
Once the switch is made, vehicle owners in the three-county transit district could wind up owing less. When their renewal notice arrives it will show what their tabs would be under the old and new methods and if there’s a savings it will be treated as a credit.
This is the same approach taken by the House in a bill it passed last month.
But the Senate panel went further, helping the agency cope with an estimated loss of $780 million in future car tab collections as a result of the change, money Sound Transit counted on to finance its expansion.
Under the bill, Sound Transit will get use of $518 million now slated to flow into the Puget Sound Taxpayer Accountability Account and be spent 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.
The account was created in the 2015 transportation package as part of a bipartisan deal clearing the way for Sound Transit to put its expansion plan in front of voters.
Those dollars will come from a portion of sales tax Sound Transit will be paying on ST3 projects. Those proceeds are to be divided between King County ($318 million), Pierce County ($111 million) and Snohomish County ($89 million).
Money won’t start flowing into the account until 2019 but the King County Council has already begun crafting a plan for spending its share. A similar effort is not yet under way in Snohomish County.
This proposed diversion of dollars is not included in the car tab relief bill that the House passed on a 60-37 vote in January.
But it isn’t a totally new idea.
Last year, as Democrats pondered ways to provide vehicle owners relief from the surge in car tab fees, Liias proposed switching to the newer depreciation schedule for calculating fees, and offsetting the loss of incoming revenue with funds from the account.
At that time, Republicans controlled the majority in the Senate and did not adopt the idea.
Meanwhile, House leaders reportedly prefer not tapping into the account. Rather, they want to consider ways to reduce project costs by not requiring Sound Transit pay the state Department of Transportation to lease right-of-way for construction or airspace when its passenger service is operating in state-owned corridors.
Sound Transit anticipates spending $424 million through 2041 on such leases, according to a spokesman for the transit authority.
Senate Bill 5955 now awaits action in the Rules Committee.