NPI's Cascadia Advocate

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, March 8th, 2021

With revenue declining and costs increasing, Sound Transit lobbies for state and federal aid

On the sur­face, Sound Tran­sit has much to cel­e­brate over the next three years.

By 2024, ST’s light rail net­work will almost triple in size to six­ty-two miles. Exten­sions to Fed­er­al Way, Lyn­nwood, and Red­mond are near­ing completion.

These accom­plish­ments, set in motion with vot­er approval of the ground­break­ing Sound Tran­sit 2 pack­age in 2008, will fun­da­men­tal­ly change the Puget Sound region’s tran­sit infra­struc­ture for the bet­ter. But beyond 2024, the out­look for the next set of Sound Tran­sit expan­sion projects gets murky fast.

In the months ahead, Sound Tran­sit will have to make some impor­tant deci­sions about its ST3 projects, which were approved by vot­ers in 2016.

With many impor­tant Sound Tran­sit board meet­ings loom­ing this spring and sum­mer, let’s take a moment to assess the chal­lenges the agency is facing.

Northgate Station Testing4

North­gate Sta­tion dur­ing test­ing pri­or to open­ing. Light rail vehi­cles on the guide­way and at the plat­form. Jan­u­ary 18, 2021.

The odd pandemic economy: pandemic plunge, creeping costs

Rough­ly a year ago, I remem­ber head­ing to King Street Sta­tion on a Thurs­day after­noon for a Sound Tran­sit board meeting.

On the agen­da that sun­ny Feb­ru­ary after­noon was the poten­tial open­ing of a light rail sta­tion at NE 130th St in North Seat­tle six years ahead of sched­ule, which I cov­ered for NPI’s Cas­ca­dia Advo­cate. At that moment, Sound Tran­sit enough finan­cial breath­ing room to con­sid­er accel­er­at­ing projects.

One year lat­er, the agency faces an “afford­abil­i­ty gap” total­ing $11.5 bil­lion through 2041. For con­text, the entire ST3 pack­age came in at $53.8 billion.

How’d the agency end up in this sit­u­a­tion? There’s more to it than the pandemic.

Over the first nine months of 2020, over­all agency rev­enue was down by 7.3%, or $106 mllion. This was dri­ven by major reduc­tions in rental car tax col­lec­tions, fare rev­enue, local and state con­tri­bu­tions, and sales tax col­lec­tions. (Note these fig­ures cov­er loss­es only until Sep­tem­ber, sev­en months into the pandemic.)

Fed­er­al dol­lars, through the CARES Act and else­where, com­plete­ly cov­ered Sound Tran­sit’s loss­es dur­ing that peri­od. That helped. But those one-time mea­sures can­not be relied on for long-term planning.

The oth­er major squeeze: our region­al hous­ing short­age and increas­ing land val­ues are dri­ving up project costs, bigtime.

For the light rail projects cur­rent­ly in the pipeline ― includ­ing light rail to West Seat­tle and Bal­lard, the con­nec­tion from Fed­er­al Way to the Taco­ma Dome, and a new main­te­nance facil­i­ty in the South Sound ― right-of-way cost and asso­ci­at­ed design costs have risen by between $4.8 bil­lion and $6.2 billion.

That’s close to 50%. And that fig­ure does­n’t direct­ly fac­tor in oth­er projects cur­rent­ly in more pre­lim­i­nary design phas­es, like Link to Issaquah. (Future project cost ranges are already scaled up when cur­rent project cost ranges increase.)

The news is not all disconcerting.

Cost esti­mates for bus rapid tran­sit (BRT) along the exist­ing I‑405 and State Route 522 cor­ri­dors have remained rel­a­tive­ly stable. 

The I‑405 project, con­nect­ing Burien to Belle­vue to Lyn­nwood, has stayed at around $1 bil­lion ever since it was pre­sent­ed to vot­ers in 2015.

Since Stride bus rapid tran­sit will make heavy use of exist­ing trans­porta­tion infra­struc­ture, it is not sub­ject to land val­u­a­tion fluctuations.

The Sound Tran­sit board issued a state­ment in Feb­ru­ary call­ing on law­mak­ers in Olympia to help ease the loom­ing $11.5 bil­lion project fund­ing gap.

The call comes at a moment when the Leg­is­la­ture is con­sid­er­ing mul­ti­ple large trans­porta­tion out­lays that will last through the end of this decade.

Alarm­ing­ly, these pack­ages do not con­tain fund­ing for Sound Transit.

A pro­pos­al advanced by Sen­ate Trans­porta­tion Chair Steve Hobbs (D‑44th Dis­trict: Sno­homish Coun­ty) would raise almost $8 bil­lion through a tax on pol­lu­tion over the next ten years. A price on pol­lu­tion is a log­i­cal means of fund­ing mul­ti­modal trans­porta­tion infra­struc­ture giv­en that the 18th Amend­ment to the Con­sti­tu­tion stip­u­lates that gas tax rev­enues must be devot­ed to highways.

But instead of invest­ing the rev­enue raised from putting a price on pol­lu­tion to tran­sit, one of the most effec­tive ways to curb emis­sions that dam­age the cli­mate, Hobbs’ plan calls for bil­lions in high­way capac­i­ty upgrades and oth­er invest­ments, and has vir­tu­al­ly no mon­ey for tran­sit expansion.

Rep­re­sen­ta­tive Jake Fey (D‑Tacoma), the House Trans­porta­tion Chair, pro­posed a $26 bil­lion, six­teen year pack­age that would give Sound Tran­sit more wig­gle room. Out of the $7.5 bil­lion pro­ject­ed to be raised (less per annum than the Hobbs pro­pos­al), $333 mil­lion is des­ig­nat­ed for to-be-deter­mined tran­sit projects.

Yet over the course of six­teen years, and with high-speed rail one of the many tran­sit invest­ments that mon­ey could be slat­ed for, there’s not much mon­ey in that pro­pos­al that could go to the already-approved set of ST3 projects.

In the oth­er Wash­ing­ton, U.S. Rep­re­sen­ta­tive Rick Larsen, who sits on the House Trans­porta­tion Com­mit­tee, announced that Wash­ing­ton will receive around $867 mil­lion in one-time grants through the Fed­er­al Tran­sit Administration.

This total includes funds for Sound Tran­sit, as well as oth­er agencies.

CEO Peter Rogoff is cer­tain to aggres­sive­ly pur­sue these funds.

Details are murki­er regard­ing the poten­tial fed­er­al infra­struc­ture pack­age Demo­c­ra­t­ic lead­er­ship wish­es to advance after the Amer­i­can Res­cue Plan is (hope­ful­ly) sent to Pres­i­dent Joe Biden’s desk for signing.

For­tu­nate­ly, Wash­ing­ton’s con­gres­sion­al del­e­ga­tion holds sig­nif­i­cant sway in the com­mit­tees that will be instru­men­tal in craft­ing infra­struc­ture legislation.

In addi­tion to Rep­re­sen­ta­tive Larsen, Mar­i­lyn Strick­land (D‑Tacoma) sits on the House Trans­porta­tion Com­mit­tee. (It is also chaired by Rep­re­sen­ta­tive Peter DeFazio of Ore­gon, who rep­re­sents Eugene, Lane Coun­ty, and sur­round­ing areas.)

Wash­ing­ton’s junior Unit­ed States Sen­a­tor, Maria Cantwell, now chairs the Sen­ate Com­mit­tee on Com­merce, Sci­ence, and Trans­porta­tion, while Wash­ing­ton’s senior Unit­ed States Sen­a­tor Pat­ty Mur­ray, a vet­er­an appro­pri­a­tor and ally of Sound Tran­sit, sits on the Appro­pri­a­tions Com­mit­tee’s Trans­porta­tion, Hous­ing and Urban Devel­op­ment, and Relat­ed Agen­cies Subcommittee.

Rogoff, who was the head of the Fed­er­al Tran­sit Admin­is­tra­tion before becom­ing CEO, often tells Sound Tran­sit’s board that there is a lim­it to how much mon­ey Con­gress will spend on projects in any region. And it is true that Sound Tran­sit bor­rows much more from the fed­er­al gov­ern­ment com­pared to peer agencies.

With all that influ­ence, and with the pos­si­bil­i­ty of a infra­struc­ture bill lat­er this year, an infu­sion of fed­er­al cash in 2021 does not seem out of the question.

State and fed­er­al finan­cial assis­tance now would be par­tic­u­lar­ly use­ful and effec­tive. Giv­en the nature of Sound Tran­sit’s finances, a dol­lar today is much more use­ful than a dol­lar tomor­row. Bor­row­ing costs are low right now.

On the oth­er hand, with less cash com­ing in, the agency will have less capac­i­ty to issue debt. This will lead to project delays, which then height­en the risk for increas­es in land acqui­si­tion costs, bor­row­ing costs, cre­at­ing a vicious cycle.

Realignment: A spring/summer of options and uncertainty

Sound Tran­sit is almost cer­tain to receive some funds from the Leg­is­la­ture or Con­gress in 2021. But they prob­a­bly won’t add up to $11.5 billion.

Inter­est­ing­ly, the agency is not slat­ed to run out of mon­ey until 2029, when the amount of cash on hand will decrease dras­ti­cal­ly. There­fore, it is plan­ning for next steps, so that its costs won’t exceed how much mon­ey it has in any giv­en year.

That process is known as “realign­ment.”

Last sum­mer, the board decid­ed that it would not take any final deci­sions on realign­ment until this summer.

This gave the board more time to see how the COVID-19 pan­dem­ic would play out before mak­ing deci­sions that will impact how we move around the Puget Sound region for the next century.

The fun­da­men­tal cal­cu­lus has always been straight­for­ward: Sound Tran­sit needs more mon­ey to fund its vot­er-approved mandate.

If it can­not afford to build every­thing in the ST3 plan, the board has the author­i­ty to delay or even can­cel projects beyond the cur­rent 2041 end-date.

For a detailed look at what realign­ment could look like, and the cri­te­ria being used to make deci­sions, The Urban­ist has a thor­ough piece describ­ing the Board­’s recent con­ver­sa­tions here.

Some key points to bear in mind:

  • The agency believes it could receive between $2.2 bil­lion and $7.8 bil­lion from the fed­er­al gov­ern­ment through var­i­ous pro­grams to fill the gap.
  • Vot­ers liv­ing with­in Sound Tran­sit’s region­al dis­trict (cov­er­ing most of Sno­homish, King, and Pierce coun­ties) could approve mea­sures to increase the agen­cy’s debt capac­i­ty lim­it and help it bor­row more with­out tax increase. 
    • This could free up between $1 bil­lion and $3 billion
    • Vot­ers could also approve a busi­ness head tax of $24 per year to raise $865 million.
  • Sub­stan­tial delays are like­ly for projects that are not part of the “spine” — the envi­sioned light rail links con­nect­ing com­mu­ni­ties from Everett to Tacoma.
  • Pri­or­i­tiz­ing equi­ty, max­i­miz­ing rid­er­ship, com­plet­ing the spine, and adher­ing to tech­ni­cal require­ments for the sequenc­ing of projects are the four main cri­te­ria being used to make decisions.

It is also pos­si­ble that cer­tain expan­sions — such as light rail to Everett and Taco­ma — will be opened in seg­ments (at Mariner and Fife, respectively).

Sno­homish and Pierce Coun­ty offi­cials were very resis­tant to this idea dur­ing the 2016 cam­paign, since they feared the board would short­en the exten­sions in the event of a down­turn. Now, Sno­homish Coun­ty Exec­u­tive Dave Somers is cau­tious­ly behind the pro­pos­al — though he made a point of stress­ing to his fel­low board­mem­bers that light rail to Everett must be even­tu­al­ly com­plet­ed.

There is also con­sid­er­able uncer­tain­ty around the ulti­mate size of the hole.

Board­mem­ber Clau­dia Bal­duc­ci, who chairs the Met­ro­pol­i­tan King Coun­ty Coun­cil, made clear dur­ing the Sound Tran­sit board­’s recent meet­ing that course out of the pan­dem­ic is still high­ly uncertain.

This “pro­gram realign­ment” item is too com­pli­cat­ed for tweets but just my own inter­ests are: I would like to see more infor­ma­tion, which may take more time than we are giv­ing this process, and a broad­er set of mean­ing­ful sce­nar­ios to consider.

— Clau­dia Bal­duc­ci (@KccClaudia) Feb­ru­ary 25, 2021

Bal­duc­ci is one of the most influ­en­tial mem­bers of the Sound Tran­sit Board. As a Belle­vue City Coun­cilmem­ber, she was heav­i­ly involved in choos­ing the align­ment for East Link, from Seat­tle to Mer­cer Island through Belle­vue to Redmond.

Her words under­score just how much uncer­tain­ty there is in the whole process, and how much uncer­tain­ty there still might be when the board is like­ly to make a deci­sion on realign­ment this summer.

Despite that, the board will most like­ly press on in the com­ing months. 

A timeline for next steps in realignment

At a Feb­ru­ary 2021 board meet­ing, Sound Tran­sit out­lined its realign­ment time­line for spring and sum­mer 2021. (Image: Sound Transit)

We hope Sound Tran­sit will pur­sue all pos­si­ble avenues to max­i­mize fund­ing oppor­tu­ni­ties and min­i­mize delays in deliv­er­ing the ST3 projects.

The past year has under­scored just how impor­tant an acces­si­ble, cli­mate-friend­ly region­al trans­porta­tion sys­tem is for the future of our region. 

And while com­ing up with a time­ly realign­ment plan is impor­tant, the long-term integri­ty of the sys­tem can­not be sacrificed.

This sys­tem will like­ly out­live us all — much like how the Lon­don Under­ground, the New York City Sub­way, and the oth­er ear­li­est urban rail net­works con­tin­ue to pow­er their cities more than one hun­dred years after their creation.

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