Editorial: Light hand needed on tax changes for light rail

By The Herald Editorial Board

This late in the game — with a second 30-day special session now concluded, a third session certain and a partial state government shutdown looming if lawmakers don’t pass a budget by June 30 — it’s the wrong time to dig in and refuse compromise.

That’s overwhelmingly true of the state’s K-12 education funding crisis, but also true for other issues the Legislature has attempted to resolve, including the sticker shock felt by some vehicle owners in Sound Transit’s taxing district, following voter approval in November of ST3.

In approving ST3, voters agreed to a package of tax increases that will help fund construction of the third phase of Sound Transit’s Link light rail system including its extension north to Everett Station via Paine Field by 2036. The project’s total estimated cost, $54 billion, is to be funded through local, state and federal contributions.

The tax package paid by those in the Sound Transit district included an increase in the sales tax equal to 50 cents for a $100 purchase and a 25-cent increase in the property tax for every $1,000 of assessed value and a significant boost in the motor vehicle excise tax from 0.3 percent to 1.1 percent of a vehicle’s value.

When tab renewals went out beginning in March, some vehicle owners — particularly those with newer and pricier cars and trucks — were surprised by the jump in the annual fee. It didn’t take long for Republicans in the Senate and House to seek to capitalize on that discontent and demand tax relief.

Relief is a relative term. If you own a newer $101,500 Tesla, yes, you can expect to pay a lot for tabs with an increase of $80 for every $10,000 of value. But those with more modest vehicles — the median car value in the taxing district is about $5,300 — can expect to pay less, about $43 more a year for that $5,300 car.

Senate Republicans have attempted three times now to pass legislation that would roll back the Motor Vehicle Excise Tax increase and also force Sound Transit to use a different depreciation schedule for the value of vehicles, as reported Wednesday by The Herald’s Jerry Cornfield.

The depreciation schedule is an issue because Sound Transit is using a schedule that assumes values for vehicles that are higher than market value and higher than a new schedule that was adopted by the state in 2006. But the transit agency was allowed, with bipartisan legislative approval, to use the older schedule as it sought to retire bonds for earlier light rail segments.

The compromise offered by Democrats in the House and Senate would adopt the newer depreciation schedule, which still will reduce funding for ST3, but not as drastically as the latest Senate bill’s terms, which would use the new schedule and slash the MVET from its current 1.1 percent by more than half to .5 percent.

We will repeat what we said in March: Voters knew they were approving significant tax increases, but did so because they recognized the investment they were making in the region’s transportation needs for the future. The depreciation schedule was not widely discussed before the election, but Sound Transit and others offered calculators that gave voters the opportunity to estimate the increase they would be paying in sales tax, property tax and car tabs.

The problem with providing “relief” from the vehicle tab tax is that it’s only relief in the short-term. It doesn’t change the overall cost of the project, so reducing the amount collected by the MVET increase is likely to delay or significantly change routes for ST3’s light rail trains.

In the background of this debate, the Trump administration has proposed cutting federal funding for Sound Transit’s ST2 extension to Lynnwood, removing $1.7 billion in federal tax revenue from the project, now scheduled for completion by 2023. Coupled with the federal cuts, a reduction in local funding for ST3 — approved by the voters — would devastate efforts to extend the light rail system.

If the local tax package for ST3 is significantly reduced, how much later than 2036 should Everett expect to see light rail? And how is that fair to taxpayers here?