Car-tab taxes will remain unchanged for now, while the state’s highest court considers whether Initiative 976 to slash those taxes is constitutional.
The Washington State Supreme Court issued an order Wednesday agreeing to hear the case challenging I-976 this spring, rather than sending the case to the state Court of Appeals. An injunction that stopped the initiative from taking effect after it was approved by voters in the fall will remain in place.
I-976, sponsored by longtime anti-tax activist Tim Eyman, would lower state vehicle registration costs, eliminate some local car-tab fees and attempt to roll back Sound Transit taxes, though Sound Transit has disputed how the initiative affects the agency.
The measure passed a statewide vote in November. Soon after, Seattle, King County and others sued and won a temporary halt while the legal fight played out. In February, a King County Superior Court judge upheld most of the initiative as constitutional, but later opted to keep it on hold until the high court decided whether to take the case.
The Washington State Attorney General’s Office is defending I-976 in court.
Taxes affected by the initiative include a $60 car tab fee in Seattle that funds Metro bus service and free transit passes for public high school students. Other car-tab fees in Seattle and around the state fund pothole repair and other road projects.
The initiative blew a hole in the state transportation budget, which lawmakers dealt with this year largely using one-time fixes and punting more dramatic fights to next year. The coronavirus pandemic and economic downturn will only worsen the financial picture for state and local governments.
Because of the COVID-19 outbreak, the Washington State Department of Licensing has closed driver licensing lobbies. Car tabs can be renewed online.
Instead of flat fees, Sound Transit collects car-tab taxes based on the value of vehicles to fund the expansion of light rail and rapid-bus lines. But the formula used to calculate those taxes overvalues many vehicles and has led to backlash from some vehicle owners, Republican lawmakers and Eyman.
Eyman, who is also running for governor, claims language in I-976 should force Sound Transit to lower its car-tab taxes and pay off bonds already sold against car-tab revenue, but Sound Transit has continued to collect car-tab fees, arguing the initiative sets no deadline for paying off bonds.
In an email Wednesday, Eyman called the ongoing legal battle “infuriating” and said vehicle owners should refuse to renew their car tabs. “Voters rejected these taxes and fees and they shouldn’t be forced to pay them because of the ‘system,’ ” Eyman said.
Seattle City Attorney Pete Holmes said in a statement the city is “thankful to the court for accepting direct review of the case, which will help lead to a speedy resolution of the multiple constitutional issues we’ve raised.”
The order from the state Supreme Court sets deadlines for parties in the case to file documents with the court throughout May and June, meaning a final decision might come this summer.