Back in April, SMP finance director Daniel Malarkey predicted that the monorail agency's annual car tax would generate $29.6 million between June and December 2003. When June revenues came in 50 percent shy of predictions, monorail director Joel Horn went on the offensive, accusing the state Department of Licensing (DOL)--which provided the figures on which the SMP based its predictions--of incorrectly estimating the agency's tax base. Horn says the monorail agency based its estimate on inaccurate DOL figures that had suggested a tax base (the total value of cars in Seattle) 33 percent larger than the SMP originally assumed. "Obviously, those numbers were not right," Horn says. "They made a mistake. We're going to deal with it." (DOL spokesperson Gigi Zenk says forecasting isn't the DOL's responsibility, though neither agency has been able to explain the discrepancy.)
The 50 percent shortfall, Horn points out, only affects the SMP's budget for 2003, because the agency's long-term forecasts are based on the earlier, lower tax-base estimate. But Horn's response inadvertantly points to a larger long-term problem: Even assuming the SMP's more conservative early estimates, tax revenues still fell between 20 and 32 percent short of predictions. The agency will have to find some way to make up the shortfall, either by cutting its budget or by finding ways to increase revenues from monorail taxes.
One possible solution, Horn points out, is to tax used cars whose owners move here from outside the state; currently, the DOL doesn't apply the monorail tax to out-of-state used cars for one full year. "They see a car coming from out of state as a new car [that wouldn't be subject to the tax]," Horn says. But DOL spokesperson Zenk points out that the legislation that allowed the SMP to levy the tax--written by monorail-agency lawyers--explicitly says the tax only applies to cars at relicensing, a term it interprets to mean all cars that are new to the state, including used cars from other states.
The SMP is expected to detail likely reasons for the shortfall--and lay out its game plan for making up the lost revenues--at its finance committee meeting Thursday, August 21.
