NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's uplifting 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 […]

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