Why permanent tax authority for Sound Transit 3 is a bad idea.
SOUND Transit took issue with our advice to reject Sound Transit 3, a measure appearing as Proposition 1 on the Nov. 8 ballot, which would provide the agency with $54 billion in tax funding over 25 years.
Agency officials objected to a description of a “permanent tax authority” the measure would provide. This topic is worth additional discussion to inform voters and further explain this editorial board’s opposition.
Prop. 1 would give Sound Transit permanent tax authority. That authority reduces options for holding the agency accountable and is a reason this board opposes Prop. 1. We suggest voters demand a more reasonable transit plan with more accountability.
If ST3 were approved, Sound Transit would not have to return to voters periodically and ask to renew or extend taxes authorized in the ST3 measure: a new property tax, an increased sales tax and higher motor-vehicle excise taxes.
Sound Transit’s board has pledged to roll back some of the taxes after ST3 projects are built. It also expects some of the taxes would continue forever to pay for operations, maintenance and replacement.
Any major expansion of the system, like an ST4, in the future would require another public vote. But Prop. 1 is the big ask before voters. It provides funding for the agency to build — and perpetually operate, maintain and periodically replace — the core rail and rapid-bus-transit system in King, Pierce and Snohomish counties.
The ballot measure refers to this tax rollback, but does not specify which tax would be reduced or by how much. It gives Sound Transit’s board discretion to make this decision at a later date. At a minimum, Sound Transit would have to reduce one of the tax streams.
The agency believes it will be able to pay off its debt early, cut some taxes and reduce others around 2048. Potentially, the tax load could then be reduced by a third to a half.
That’s a good goal. But, unlike time-limited bond measures, Prop. 1 does not specify a year when the taxes would cease to be collected. Prop. 1 also would give Sound Transit flexibility to spend surplus tax collections on projects that aren’t in the current ST3 plan instead of retiring debt early.
Permanent tax authority has advantages for Sound Transit. It provides more certainty for the agency and likely better bond rates. Including maintenance and operation costs in the funding proposal also avoids surprising voters with these costs in the future.
There are also trade-offs. With permanent tax authority, Sound Transit wouldn’t have to regularly make a case to voters that it’s performing well with ST3, the plan is still appropriate and deserves to have funding extended.
Therefore, voters must consider not only whether ST3 is the right plan and worthwhile, but also whether they trust Sound Transit to be prudent and careful with money.
There are different ways to fund transit megaprojects.
San Diego and San Francisco are both seeking voter approval for big transit projects, including an overhaul of the Bay Area Rapid Transit system. Both have 40-year limits on bond measures. Los Angeles is taking the same approach as Sound Transit and going bigger — seeking $120 billion — with permanent tax authority that some have dubbed “forever taxes.”
If voters reject ST3 and demand a better plan with more accountability, Sound Transit should return with a measure specifying which taxes would be terminated and when. It should include periodic reauthorization votes and commit to using surplus tax collections to retire debt and cut taxes.