In the latest step on their quest to placate frustrated drivers, lawmakers in the Washington State Senate have approved a new bill to reduce car tab taxes.
The bill would change the inflated valuation formula Sound Transit uses to calculate the taxes and provide credits to drivers who've already paid their tabs. But unlike past car tab bills, it attempts to cover some of the losses to Sound Transit's budget. Where did the state senate, newly reinvigorated by its Democratic majority, turn for that backfill? A pot of money planned to go toward education, including programs for students experiencing homelessness. Great fucking job, guys!
The bill would exempt Sound Transit from certain sales taxes paid by the agency during construction of new light rail lines.
Currently, $518 million of those taxes would go back to Puget Sound counties for programs serving students who are homeless, low income, or in foster care. The $518 million fund resulted from a legislative compromise back in 2015, when lawmakers were debating the transportation package that allowed Sound Transit to take the big transit package to regional voters in 2016.
The bill passed 30-14 early Thursday morning. It now needs approval in the state house and a signature from Governor Jay Inslee. The legislative session is scheduled to end March 8.
Former Seattle Representative Jessyn Farrell spearheaded the deal. When she ran for mayor last year, she repeatedly cited the fund as a place Seattle could turn to help address homelessness. So, giving Sound Transit a break on these sales taxes would help the agency, but gut a source of funding Puget Sound politicians have been expecting since 2015.
Four Democrats voted against the bill: Seattle-area Senators Reuven Carlyle, David Frockt, and Jamie Pedersen as well as Tim Sheldon, who represents Potlatch and caucuses with Republicans.
“The voters knew what they were doing and they voted for these taxes, including the [car tabs increase]," Pedersen said before the vote. "There were tax calculators everywhere...They knew what they were doing. They want us to make this investment."
Frockt said people in King County are “very, very concerned” about losing out on the expected revenue for education programs.
Senator Patty Kuderer, a Democrat from Bellevue who sponsored the bill, said she "heard loud and clear from my constituents about the pain they were feeling from car tabs." She cited a family that owned three cars and had to pay $500 for each one.
"This bill strikes a balance between giving relief to working families on this high cost of car tabs and honoring the votes that they cast to improve our transportation system and making sure Sound Transit can function," Kuderer said.
Sound Transit spokesperson Geoff Patrick said the agency is grateful for the partial backfill, but still concerned about the loss of funding from car tabs. If the $518 million backfill comes to fruition, it will reduce but the financial hit for Sound Transit. But it won't eliminate the losses.
Changing the car tab formula will directly cost the agency $780 million. The agency says the true cost will be much more, estimated at $2 billion due to increased borrowing costs to replace the lost funding. With $518 million less in direct costs, the agency will still have to pay about $1.2 billion in unexpected costs to replace the lost funding. (Part of this discrepancy also has to do with when the savings hit. If the agency was collecting the original car tab taxes, they’d be getting that money soon, while they're still at the front end of planning these projects. But by changing the formula, they take a hit in car tab taxes now and get these construction fee breaks later, during construction. The upshot: $518 million will help, but not as much as it sounds like it would.)
Republicans, meanwhile, used the late-night floor debate to further their crusade against Sound Transit.
“The underlying bill will simply not address the nature and degree of the injustice that ST3 created," said Senator Steve O’Ban, a Republican whose district is in Pierce County, where ST3 failed. O'Ban said he's heard from "thousands" of people upset about the car tab increases.
Senator Phil Fortunato, a Republican representing Auburn, held his phone on the Senate floor in order to read aloud comments on his own Facebook post about the bill. "The best one is the last one," Fortunato said, reading from the list of comments. "“It’s like a criminal stealing $100, giving you back 10, and asking you to say thanks.”
O’Ban, who opposed using the $518 million fund to help Sound Transit, said the agency could make up the funding lost from car tabs by reducing employee salaries or expensive office rental space. “My guess is they could come up with the money,” O’Ban said. Democrat Steve Hobbs shot back , “$518 million is certainly not going to be made up with salaries, rent, or opening ceremonies.”