Almost eight months after state voters approved car-tab tax cuts, the Washington State Supreme Court on Tuesday heard arguments about the legality of Initiative 976, including whether people were misled by the ballot title.
Previous vehicle fees and taxes, including those for city road work and Sound Transit, remain in effect. The court didn’t rule on Tuesday, and no date has been set yet for justices to do so.
A King County judge in February largely upheld the initiative but kept it on hold while the lawsuit seeking to overturn the measure was being appealed.
Justice Steven González critiqued a phrase in the I-976 ballot title that says vehicle taxes and fees would be lowered to $30 “except voter-approved charges.”
In some scenarios, notably a Seattle $60 car-tab fee to fund increased bus service, voters overwhelmingly gave local support.
“I want to know what the policy is. I’m having difficulty discerning it,” González pressed Alan Copsey, a lawyer for the state Attorney General’s Office, which is defending I-976.
“Is ‘voter-approved taxes’ those which are previously approved? Or those to be approved in the future?”
Copsey answered the measure repeals past voter-approved car taxes and fees, and moments later affirmed, “I am not aware of any that are not touched.”
González said, “What if it said ‘including voter-approved charges’ instead of, ‘except voter-approved charges.’ Would that be accurate?”
Other arguments explored whether it’s legal for I-976 to base state taxes on car values by Kelley Blue Book, a private company, which are lower than what’s in current state law. And if that’s illegal, was the ballot title therefore misleading?
Stephen Pidgeon, an attorney for tax opponent Clint Didier, a Franklin County Commissioner who is among those defending the initiative, supplied an answer: “That can be lawfully reverse engineered and already has been at the state-Senate level.”
In other words, the state could reduce tax bills by simply valuing cars with a depreciation system very close to Blue Book, as proposed this year in Senate Bill 5042.
Disgruntled drivers have asked for that provision, because Sound Transit uses a system that overvalues vehicles, based on state laws. For instance, a five-year-old car is assigned 65% of its new value for tax purposes, when Kelley Blue Book averages 39%.
David Hackett, an attorney for King County, argued that I-976 amounts to unconstitutional “logrolling” by mixing Blue Book valuations, a reduction of state car-tab fees to $30, and clauses not in the ballot title that aimed to reduce Sound Transit taxes and debt.
“This initiative is a dumpster fire by the standards of the law,” Hackett said. In particular, he highlighted how people in Spokane, Ephrata and Buckley, Pierce County, were thrust into voting about Sound Transit taxes not affecting them.
But state attorney Copsey told the court: “The question is not whether I-976 is good policy or bad policy. The voters have demonstrated that it is the policy they want.”
He further argued the main provisions of I-976 “are all categorically related to one another. They are all related to the limitation or restriction of fees on motor vehicles.”
With the measure tied up in court, the state Legislature and Gov. Jay Inslee have suspended some projects and shuffled budgets as if I-976 will ultimately take effect and reduce state cash flows. They are bracing for more-severe cuts in 2021.
Even before the COVID-19 economic collapse, the state Department of Transportation was on track to need 63% of its funds just to pay project debts by the late 2020s. So losing car-tab money could squeeze maintenance budgets harder, or impair the ability to keep big highway on track, barring some future gas-tax or other tax increase.
I-976 was sponsored by anti-tax activist and GOP gubernatorial candidate Tim Eyman. The lawsuit seeking to overturn the measure was brought by a coalition of groups including the Garfield County Transportation Authority, Seattle and King County.