Both Democrats and Republicans say they want to change Sound Transit’s inflated system of assessing a car’s value for tax purposes. But with Republicans also looking to attach broader tax cuts, the parties are finding little agreement.
Democrats in Olympia say they want to change how Sound Transit calculates car-tab taxes.
Republicans in Olympia say they want to change how Sound Transit calculates car-tab taxes.
Even Sound Transit says it’s OK with changing how it calculates car-tab taxes, a change that would bring the agency less money.
Despite the agreement, the Legislature is not making much progress in changing how Sound Transit calculates car-tab taxes.
There was a flurry of legislative action this week, but none of it seemed to bring legislators any closer to addressing their stated goal — getting Sound Transit to use a system that more accurately assesses a car’s value for the purposes of taxing it.
House Democrats refused to consider Republican measures that would change the valuation formula, while Senate Republicans attached a broader tax cut to their car-tab valuation bill, making it a nonstarter in the House.
Sound Transit has long used an inflated valuation system, one that it inherited from the Legislature and that was again authorized in 2015, when lawmakers voted to let the agency put its Sound Transit 3 proposals to voters.
That valuation system spits out inflated values for cars that are less than 10 years old, resulting in higher tax bills. It’s not a new system, but the nearly fourfold increase in the car-tab tax rate that came with ST3 has brought it new attention — along with scads of constituent complaints to lawmakers.
Legislators have responded with more than two dozen bills targeting Sound Transit — some narrowly crafted to fix the car-tab formula, and some taking much broader aim at the agency’s governance and finances.
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“This traffic is going to stop the growth of our economy,” Gov. Jay Inslee said on Thursday, noting that he’d also like to see legislators address the “sticker shock” some people are seeing on their car-tab bills. “We need to build a better infrastructure system if this state is going to grow and you can’t do that for free.”
Republicans, meanwhile, are much more eager to cut taxes, effects on Sound Transit be damned.
“I’m not concerned about Sound Transit, they can take care of themselves,” said Sen. Steve O’Ban, R-University Place.
On Thursday, Republicans in the state House, where they are in the minority, tried to force a vote on six measures aimed at the transit agency. Two of them addressed the car-tab formula, but the other four made more drastic changes, including letting cities and counties secede from Sound Transit.
Offered as amendments to the House transportation budget, none went anywhere. After hours of each party conferencing in private the House held one vote, with no debate, on whether to consider the amendments. It failed, 50-48, along party lines.
The next day it was the Republican-controlled Senate’s turn to vote on a bill to change the car-valuation formula. Sound Transit says such a change would cost it $6 billion, a disputed figure that lawmakers of both parties have been skeptical of.
The Republican bill would force the agency to use Kelley Blue Book or National Auto Dealers Association values to estimate a car’s worth. Sound Transit says that change would cost so much because it has sold bonds based on taxes calculated with the inflated formula. If that formula goes away, Sound Transit says, it will have to repay those bonds ahead of schedule, leading to a cascade of higher borrowing costs.
Senate Democrats proposed a solution that would allow the agency to switch to a more accurate formula that’s already in state law, but currently unused. That proposal would offer refunds to car owners who have already paid based on the inflated formula, but would avoid the forced bond repayments.
The change would cost the agency $780 million, Senate Democrats said, but much of that would be recouped by raiding a Sound Transit-funded account that gives money to schools in King, Pierce and Snohomish counties.
The proposal failed, essentially on party lines.
“It felt like the Republicans aren’t trying to find an answer, they just see this as a political issue that they can use to drum up public anger at Sound Transit,” said Sen. Marko Liias, D-Lynnwood, the amendment’s sponsor. “If we actually solved it, they wouldn’t have it as an issue to drum.”
The Senate ultimately passed the Republican bill, essentially on party lines, but not before lawmakers added an amendment chopping the car-tab tax rate by more than 50 percent.
“If you simply change the formula you get a little tax relief, but really what’s necessary here is adjusting the rate,” O’Ban said. “What I really want is meaningful tax relief and I think our bill is the only one that does that.”
That bill, Democrats say, is both a nonstarter in the House, and is unconstitutional, because it would force Sound Transit to make changes to the agreements underlying the bonds it has already sold.
“We moved the goal posts of this bill by cutting the [tax rate] in half,” Sen. Mark Mullet, D-Issaquah, said in a floor speech. “I’m kind of baffled.”
The legislative session ends April 23, although lawmakers may go into a special session as they try to pass a state budget and change how schools are funded.