Jim Hammond likens planning for a big budget hit to awaiting a disaster.
“It’s hard to be fully invested in disaster response until the disaster hits,” said Hammond, intergovernmental program manager for the city of Shoreline.
Shoreline is one of more than 50 cities that rely on a fee targeted by Tim Eyman’s latest initiative, I-976, on the Nov. 5 ballot.
Beyond the initiative’s pledge to lower state vehicle fees and roll back Sound Transit car-tab taxes Eyman calls unfair, it also aims to repeal local authority to charge car-tab fees collected through transportation benefit districts. In cities across the state, those fees are used for paving, pothole repair, sidewalk construction and other projects.
Now, as voters weigh in on the initiative, some city officials are tentatively readying their backup plans.
“This would be a massive impact upon our budget,” Hammond said. “We’re starting to look at the ‘what if’ scenarios.”
Shoreline charges a $40 annual car-tab fee, which accounted for about a third of the city’s transportation revenue in recent years.
In some places, the prediction is clear. “We will be cutting necessary street projects. There are no alternatives,” said Normandy Park City Manager Mark Hoppen in an email. Normandy Park charges a $20 annual car-tab fee, which brings in about a quarter of its streets budget, Hoppen said.
Others are taking a wait-and-see approach. In Covington, where the city also charges a $20 fee, staff postponed an annual budget workshop until after the election. In Kalama, where the city fee is $40, officials considered bonding against the car-tab revenue but decided against it, City Administrator Adam Smee said in an email.
The City Council instead “decided it would wait for feedback from the voters on November 5th,” Smee said.
Eyman has downplayed potential effects, saying politicians can tap other sources or go to voters with tax proposals.
“Voters in your communities will be voting on the initiative also,” Eyman said when asked about city officials fearing cuts, “so you can find out whether or not your local community supported your decision to unilaterally take their money without a vote of the people.”
I-976 would cap many vehicle license fees at $30. Electric-vehicle licensing fees would also be lowered, although a new $75 fee for hybrid and electric vehicle owners would likely remain in place. Around Puget Sound, the initiative would repeal the car-tab tax used by Sound Transit to build light rail, commuter bus and Sounder rail projects if the agency could successfully retire, defease or refinance bonds it’s sold against the tax.
Sound Transit has faced outrage from some vehicle owners over the formula used to calculate its car-tab taxes, which overvalues many vehicles compared to the commonly used Kelley Blue Book, resulting in higher car-tab costs.
In total, the initiative would cost about $4 billion in state and local funding over six years, according to a state analysis.
Eyman, who is also embroiled in a campaign finance lawsuit brought by the state attorney general, has long tried to reduce car tabs. After a successful initiative in 1999, lawmakers initially agreed to cap car-tab fees at $30 but later reopened the door for local vehicle fees.
Today, local governments can impose car-tab fees of up to $20 without a public vote. If a $20 fee has been in effect for at least two years, cities can add another $20 without a vote. And if a $40 fee has been in place for two years, cities can charge up to $50.
Fees above those amounts must be approved by voters. Since 2009, several local governments have attempted voter-approved license fees but most have failed, according to the nonprofit Municipal Research and Services Center.
Local governments can also use sales taxes to fund transportation benefit districts, but must get voter approval. I-976 would allow sales taxes to go ahead, but repeal authority for the car-tab fees.
“It’s like self-evident that voters do not like these higher vehicle fees,” Eyman said.
Voter approval “presents an opportunity for the cities to engage with residents about what residents see as a need,” said Mariya Frost, transportation director at the conservative Washington Policy Center. Otherwise, “voters just find another fee on their car tabs that they don’t understand … That can be really frustrating.”
The center has not taken a formal position on I-976 but has cast doubt on doomsday-like warnings about past Eyman initiatives.
Just how dependent local governments are on car-tab fees depends on the city.
In Edmonds, a $20 fee brings in about 35% of the city’s transportation budget. In Roy, Pierce County, where the city population is 820, a $20 fee accounts for half the total revenue the city receives for transportation purposes. Roy uses about half of that money for street maintenance and saves the other half until it has enough for a project, according to the town treasurer.
For Mercer Island and Yakima, $20 fees account for about 12% of those cities’ transportation budgets, according to city staff. In Tacoma it’s 6% of the transportation operating budget. (Because cities break down their budgets in different ways, these figures may not be exactly comparable.)
In Kenmore, money from a $20 fee is about a fifth of the city’s budget for street maintenance, including treating pavement in an effort to make it last longer. “It’s not super sexy or super exciting, but it’s really important stuff,” said Kenmore City Manager Rob Karlinsey.
In Seattle, a $20 council-imposed car-tab fee pays for road improvements, bike lanes and other projects. The fee accounts for a large portion — 89% — of Seattle’s funding to fill potholes, according to the Seattle Department of Transportation.
Another $60 fee and a 0.1% sales tax, both approved by voters, pay for King County Metro bus service and transit passes. Passage of I-976 and no replacement revenue would force a cut of about 175,000 annual hours of bus service, likely including some cuts to the busy C, D and E RapidRide lines, Metro predicts.
Seattle is in the midst of building its 2020 budget. At a recent meeting, Councilmember Mike O’Brien asked about I-976: “Should we be planning a Plan A and a Plan B?”