Proposed laws would let cities add taxes to repair roads

The road has been bumpy for the past couple of years for South County cities – literally.

With fewer tax dollars coming into city coffers, South County cities have had a hard time just paving roads and plugging potholes.

“It’s important for people to understand that with declining revenues, Edmonds has had no street overlays in two years,” Edmonds Mayor Dave Earling said. “We’ve done patch work, but we have had to reallocate overlay monies to balance the budget.”

Now, lawmakers in Olympia are pushing bills in the House and Senate that would give cities options for raising new money to fix ailing city roads. And part of those bills is an idea that would allow cities to collect a local gas tax of up to 3 cents a gallon, with voter approval.

“It has always been our desire to have the Legislature give us options,” Lynnwood Mayor Don Gough said. “We want to let our citizens decide the solutions that are best for them.”

Gas tax revenue may not prove to be a panacea for Edmonds, however. With only about eight gas stations in the city, Earling does not identify a gas tax as a big generator of funds, as it could be for cities such as Lynnwood or Everett.

“We need to have a variety of tools to help us get back on our own feet with transportation issues in our town,” Earling said.

In addition to the gas tax, the bills provide broader avenues to increasing road levies and car tab fees as well as reviving a motor vehicle excise tax.

Additional funding is needed locally to preserve and maintain street systems and to improve safety, said Mountlake Terrace city manager John Caulfield. As fuel tax collections continue to decline, transportation funding isn’t keeping up with demands for a reliable and accessible transportation system, he said.

Mountlake Terrace has the funding to continue with overlay and chip seal programs for the next few years, but decreasing revenues call for identifying new revenues.

The city’s newly formed Transportation Benefit District will help pay for a portion, $3.5 million, of the $10.5 million price tag to revitalize downtown. This voter-approved alternative could be an option to help fund the remaining amount; however officials need to evaluate further, Caulfield said.

It’s not known how many cities will take advantage of any of the options provided in the legislation.

With Edmonds’ recent history of not passing revenue-generating taxes, Earling says it would be a challenge to pass such a ballot measure. “However, I am hopeful if we can provide the correct information to voters, we would have the opportunity to do street overlays.”

Giving South County cities more ways of generating money is strongly backed by area lawmakers on the House Transportation Committee.

“I think it’s critical,” Rep. Luis Moscoso, D-Mountlake Terrace, said shortly before the House panel held its first public hearing on the bill Feb. 6.

Rep. Cindy Ryu, D-Shoreline, said that as a former mayor, she knows how important it is to be able to bring in revenue if state funding isn’t available. “We definitely have to have this conversation,” she said. “We definitely need these options.”

The Association of Washington Cities and the Washington State Association of Counties are backing the proposals working their way through the Legislature.

Existing law allows counties, with voter approval, to collect a fuel tax equal to 10 percent of the state gas tax. Today that would be 3.75 cents a gallon because the state rate is 37.5 cents a gallon. No county has done it.

Under the Senate proposal, cities would gain the same taxing ability as counties and the 10 percent rate would be removed, replaced with language allowing an increase of 1 cent, 2 cents or 3 cents on each gallon of gas.

Also, the combined amount levied by the county and a city could not exceed 3 cents. In other words, if a city approved a 1-cent tax, the county could impose no more than 2 cents in that city.

It’s not immediately clear how much money this could generate. Rough estimates prepared by the Department of Transportation show Snohomish County could net about $3.53 million from a penny increase and $10.58 million from 3 cents.

Another option in the Senate bill lets city and county leaders – with voter approval – increase the portion of property taxes for roads up to 3 percent a year. Today, there is a 1 percent cap on increases.

The bill also gives transportation benefit districts two options they do not have today – and then makes clear the districts could do one but not both.

One option is to collect a $40 fee on vehicle registration, up from the current state-allowed maximum of $20. This could be done by a simple majority vote of the district board of directors.

The bill also would let these benefit districts charge residents an excise tax of 1 percent on the value of their vehicles. This idea would need voter approval as well.

Tim Eyman, of Mukilteo, who’s carved out a political career by fighting most of these proposals, blasted the proposed bill.

“This is a Pandora’s box of a bill that may promise voter approval but you know they’ll take away that protection when no one’s looking,” he said.

Herald writer Jerry Cornfield contributed to this story.