A regressive tax is the only way to save transit (again).
A regressive tax is the only way to save transit. LESTER BLACK

Nobody really wants to increase a sales tax to fund Seattle's expiring Transit Benefit District (STBD), but it's pretty much the only way to do it and save bus service in the city.

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The STBD, which originally passed in 2014, pays for bus service in Seattle as well as other programs such as free ORCA cards for Seattle high schoolers and reduced fares for low-income residents. The ordinance will expire next year, and so Seattle will need to vote on Proposition 1, which boosts the STBD's sales tax from 0.1% to 0.15%, to keep transit service afloat in the city.

The 2020 STBD vying for your vote in November is significantly slimmer than the 2014 STBD for a few reasons, most of which involve the pandemic. Budgets are tight, transit service is down, and people don't want to be overburdened with taxes.

Our old friend Initiative 976 also complicates things. Voters passed Tim Eyman's measure to cap car tab fees at the expense of transit last year, and it's been a real doozy for transportation funding, especially since the thing is still tied up in the Washington State Supreme Court. Regardless of the court's decision, the STBD on November's ballot will not rely on car tab fees as it has done in the past.

Without a graduated income tax to right Washington's upside-down tax code, Seattle must rely on sales taxes and car tab fees to fund transit benefit districts. Other funding options exist, but they're fairly useless:

  • General obligation bonds: Only one TBD in Washington has ever tried to get funding this way, according to the Municipal Research and Services Center. It was Auburn. The measure failed. Seattle is not exploring general obligation bonds.

  • Border area fuel taxes: This allows the legislative authority to impose an excise tax on gas. However, this is only allowed for "cities and towns within ten miles of an international border crossing," according to state law.

  • Construction impact fees: This is a fee an STBD can impose on any new construction. It's a one-time fee, though, and the money can only be spent for transit infrastructure, not service.

  • There's also a property tax option: But it only lasts for one year and has to be approved by voters. A sales tax lasts for up to 10 years. The STBD sales tax will expire after six years.
  • "At the city level our hands are tied," Alex Hudson, the executive director of Transportation Choices Coalition told The Stranger in an interview last week. "We’d need changes in Olympia."

    Hudson cited congestion pricing as a better way to fund transportation but said "we don't currently have it." For now, we're stuck saving our buses with a sales tax.

    If voters approve Prop 1, the 2020 STBD will be funded by a 0.15% sales tax, which will raise around $42 million a year. The old version imposed a 0.1% tax with $60 car tab fees and raised $56 million a year. Lower revenues will force cutbacks and some delays to our bus service, but at least we'll still have bus service. And, if Prop 1 passes, at least those buses will still arrive about every 15 minutes.

    This summer, the Seattle City Council had the option of bumping the tax up to 0.2% for the STBD but ultimately decided against it. Sales taxes are regressive, and the council didn't want to overburden Seattleites when their livelihoods are already being threatened by the COVID-19 pandemic and the disastrous economic landscape it has left in its wake.

    As it stands now, households that make $100,000 annually will pay around $27 a year toward the STBD. Households that make $25,000 annually will pay $12 a year, according to Hudson.