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Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Monday, February 25th, 2019

Sound Transit says House Bill 2123 (vehicle fees) would blow a big financial hole in ST3

Legislation introduced by State Representative Mike Pellicciotti and other House Democrats would negatively affect Sound Transit’s ability to deliver voter-approved light rail, express bus, bus rapid transit, and commuter rail expansion projects, the agency said in a statement provided to NPI late this evening.

The bill’s cosponsors presently include Representatives Leavitt, Kilduff, Entenman, Ryu, Goodman, Bergquist, Kloba, Slatter, Valdez, Springer, Pollet, Pettigrew, Kirby, Stanford, Lovick, Orwall, Davis, Hudgins, Ortiz-Self, Sullivan, Walen, Senn, Thai, Mead, Robinson, Peterson, Santos, Ramos, and Callan.

House Bill 2123 concerns “the collection of a motor vehicle excise tax approved by voters of a regional transit authority in 2016.” It seeks to create “a market value adjustment program to provide a credit based on the difference between the vehicle valuation schedule used by the authority to determine the tax amount under current law and the vehicle valuation schedule in RCW 82.44.035.”

Translation: Some House Democrats want to amend the 2015 bipartisan Connecting Washington Transportation Package to require Sound Transit to use a newer methodology for determining a vehicle’s value for tax collection purposes, even though the Legislature decided that Sound Transit ought to continue using the older methodology back when the package was being put together.

Switching to that newer methodology with House Bill 2123 would cost Sound Transit a significant amount of money, agency spokesman Geoff Patrick says. Here is his full statement to the House Transportation Committee:

Members of the House Transportation Committee,

In light of the introduction of HB 2123, I wanted to provide an update and some additional information that we have had staff develop since first seeing the bill draft on Friday.

The Sound Transit Board’s officially adopted position is to work collaboratively with the Legislature on changes to the depreciation schedule as long as any negative fiscal impact can be offset by cost savings or other solutions so the agency can deliver all voter-approved projects within their adopted timelines.

Unfortunately, HB 2123, which would create a rebate program effectively moving Sound Transit to the 2006 MVET [motor vehicle excise tax] depreciation schedule immediately rather than in 2028 as currently contemplated in statute, does not meet the Board’s standard in keeping the agency financially whole.

Sound Transit staff has developed an estimate of the fiscal impact HB 2123 would have on the agency as currently drafted.

Of the $633 million revenue loss that Sound Transit would see, the bill’s proposed offset of waiving the federal share of WSDOT land acquisitions would recoup only $147 million – meaning that this proposal would restore less than 24% of the revenue lost.

In terms of the impact to Sound Transit’s overall finance plan including debt service costs, the proposal would offset roughly a fifth of the impact, leaving a deficit of just under $1.4 billion. Sound Transit staff has in the past proactively shared a number of options that would fully offset the revenue loss contemplated by this bill and would be happy to share that list with any member that is interested. I am also including a chart below with a breakdown of the impacts in a graphic format.

We will be sharing testimony in more detail during the public hearing on this bill this coming Tuesday but wanted to share this information as soon as we had it completed for your awareness.

Please don’t hesitate to contact me if you have any questions.

Table 1. House Bill 2123 Revenue Impacts (Courtesy of Sound Transit)

Proposed Change (HB 2123)Total Revenue / Reduced CostsDebt Service ChangeFiscal Impact
(Revenue or Cost Change Less Debt Service Change)
Money Flow
MVET depreciation schedule change on 0.8%*$ (633,000,000)$ 1,141,000,000$ (1,774,000,000)Consistent flow
Waive federal share of land bank obligations**$ 147,000,000$ (229,000,000)$ 376,000,000Not consistent – varies by project schedules.
Net Offset$ (486,000,000)$ 912,000,000 $ (1,398,000,000)
* Total represents revenue lost due to new depreciation schedule for MVET beginning Jan. 1, 2020.
** Total represents land bank waiver of federal share for ST3 projects beginning in 2019.

We badly need the transit infrastructure that ST3 will create. The Legislature should be helping Sound Transit deliver these investments as fast as possible, not passing bills that take away voter-approved revenue for voter-approved projects.

The Legislature created Sound Transit in the 1990s and gave the agency the authority to propose plans to serve the people of this region with high capacity transit. The people have voted repeatedly to invest in mass transit.

Now the Legislature has an obligation to ensure that Sound Transit is successful in carrying out its voter-approved mandate. Yanking revenue — like Tim Eyman wants to do on an even grander scale with Initiative 976 — jeopardizes financing, and that means cutting or cancelling projects, which is simply unacceptable.

If legislators really want to change the valuation method, altering the terms of the Connecting Washington package, then the Legislature must ensure that Sound Transit receives 1:1 replacement funding so that its projects are not jeopardized. House Bill 2123 does not provide 1:1 replacement funding.

NPI therefore opposes it and urges the Legislature not to move it forward.

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  1. […] Hopefully, this means stalling out of the legislative effort that Sound Transit says would blast a $1.4 billion hole (year of expenditure) in the $54 billion (year of expenditure) package of transit upgrades voters […]