What $30 car tabs could cost the Thurston County region
If you’re a Washington voter, you’ve likely heard of Initiative 976, the “$30 car tab” initiative. The initiative is spearheaded by Tim Eyman and largely aimed at eliminating Sound Transit taxes and fees charged in King, Pierce and Snohomish counties to fund the expansion of light rail.
But local governments across the state are bracing for other impacts of barring and reducing vehicle-related taxes and fees, if the initiative passes.
Governing bodies in Olympia, Tumwater, and Thurston County have passed resolutions opposing I-976, and the city of Olympia sent out a “Vote NO” mailer against I-976 that is being investigated as a possible campaign law violation.
In many cases, local officials are struggling to put a dollar amount on the potential effects of I-976, and some are easier to predict than others. Thurston County’s Intercity Transit and Olympia’s Transportation Benefit District are among entities that could feel the impact.
One analogy for the initiative, from state Transportation Improvement Board Executive Director Ashley Probart: “It’s like an onion, and every time you peel one layer off, you find another layer of complications.”
What I-976 does
According to the Office of the Attorney General, the initiative limits car-tab fees — another name for annual vehicle-registration fees — to $30 for vehicles that weigh 10,000 pounds or less, unless the fee is approved by voters.
Many fees in excess of $30, which vary based on where a car is registered and the type and weight of vehicle, would be eliminated or reduced.
Now, a base license fee ranges from $30 to $93 for most passenger vehicles, according to the Attorney General’s Office. An additional vehicle weight fee ranges from $25 to $65, and some local jurisdictions tack on their own fees.
Owners of electric vehicles pay a $150 fee, which would be cut to $30, as would fees charged for snowmobiles and commercial trailers. A separate $75 fee owners of electric vehicles started paying in August is not affected.
A current state excise tax of three-tenths of one percent on top of the general sales and use tax on the sale or lease of vehicles would be eliminated, as would the authority to impose a local vehicle excise tax to support passenger-only ferries.
Cuts and reductions from I-976 could potentially impact several state budget accounts, according to the Office of Financial Management, including:
the Multimodal Account that funds transportation projects;
Washington State Patrol’s highway account that funds traffic enforcement;
the Puget Sound Ferry Operations Account;
the Motor Vehicle Account that funds highway construction and maintenance; and
the Transportation Improvement Account that funds local transportation projects.
The resulting loss of state revenue totals $1.9 billion over six years, and local governments would lose $2.3 billion over the same time period, according to OFM projections.
The argument in favor of the initiative centers on opposition to taxes imposed without taxpayer permission as well as concern over an inflated valuation system Sound Transit uses to calculate a motor vehicle excise tax. I-976 would change that valuation system to be based on the Kelley Blue Book.
“Stop getting ripped off — your vote for I-976 tells politicians you’re taxed out,” the voters’ pamphlet statement in favor of the initiative reads.
What passage would mean for Transportation Benefit Districts
Transportation Benefit Districts (TBD) are independent taxing districts that can raise money for specific transportation projects, according to the Municipal Research and Services Center. Under I-976, they would no longer be allowed to charge car-tab fees without voter approval.
TBDs currently can impose fees up to $50 without asking voters. The TBDs that charge a sales tax, on the other hand, have to ask for voter approval already and wouldn’t be impacted by the initiative.
Olympia’s TBD relies on a $40-per-year car-tab fee for 40 percent of Olympia’s budget for street reconstruction and repair, according to the city’s mailer. If the initiative passes, the immediate hit to Olympia is $1.5 million in street-repair money per year.
Other area TBDs wouldn’t be affected: Lacey, Shelton, and Tumwater collect revenue through voter-approved sales tax, according to the Municipal Research and Services Center. And County Manager Ramiro Chavez confirmed that while Thurston County established a Transportation Benefit District in 2014, it never established a source of revenue.
Intercity Transit impacts
At the Tumwater City Council meeting where it approved a resolution opposing I-976, members also discussed threats to Intercity Transit and concern for vulnerable populations.
Intercity Transit risks losing over $12 million in state revenue in the 2019-21 biennium if the initiative passes, according to General Manager Ann Freeman-Manzanares, depending on what the Legislature would decide to do with the operating and project funds the authority gets from the state.
A draft budget for Intercity Transit shows a projected $131.4 million in revenue for just 2020, so the $12 million sounds like a relatively small hit, but Freeman-Manzanares pointed to several specific projects that can be traced to accounts with potential revenue impacts:
$3.9 million for expanding its facility on Pattison Street Southeast, which Freeman-Manzanares said is built to support 80 vehicles but is currently supporting 400;
A little over $1.1 million to operate Route 612, which runs from Olympia to Tacoma;
A little over $3 million to pilot an express bus line that would change a 70-minute ride on Martin Way to 30 minutes;
Almost $2.3 million to operate the Dial-A-Lift program that provides door-to-door transit for people with disabilities;
A little under $700,000 for six replacement Dial-A-Lift vans;
$750,000 for the DASH shuttle, about half the funding needed to run the free bus from the Capitol through downtown Olympia; and
$220,000 for expanding the regional Vanpool program.
“If we lose these funds, we would have to readjust our thinking about what it is that we could deliver to the community,” Freeman-Manzanares said.
Local uncertainty
“There’s absolutely no way we would know, in the future, how much money we might lose from these funding sources,” Thurston County Budget Director Robin Campbell said in an interview.
She mentioned that residents here drive on state roads like Deschutes Parkway and Yelm Highway “every day.” And it’s not clear how long-term projects on state roads, such as the study of congestion on Interstate 5 from Tumwater to Mounts Road, could change.
If I-976 passes, she said the county would put its projects on hold while the Legislature decides what to do. Thurston County doesn’t go out for bonds or enter debt for transportation projects.
“It’s a conservative approach, but it’s also a way to live within our means,” Campbell said. “And not knowing if we’re going to have the state funds will just really harm our ability to move forward with projects.”
Officials in Lacey — where the City Council opted not to pass a resolution opposing the initiative — Tumwater, and Yelm point to a few specific projects that required the kind of state money that would be jeopardized.
In Lacey, Public Works Director Scott Egger said a past project, the redesign of Hogum Bay Road in northeast Lacey, got $4.8 million out of $7.5 million from the state.
In Tumwater, spokesperson Ann Cook said there’s $2 million that could possibly be impacted in a $4 million Capitol Boulevard improvement project that would install a roundabout at X Street in 2024-25, and $240,000 out of $300,000 for a Safe Routes to School project at Michael T. Simmons Elementary School.
In Yelm, spokesperson Andrew Kollar said the city is concerned it could delay funding for the second phase of the Yelm Loop project that’s scheduled to begin construction in early 2022.
“It’s not clear where they would begin to cut funding, however, it’s simple math that when you remove revenue from a dedicated fund source, you must cut projects,” Kollar wrote to The Olympian. “We are concerned that if I-976 passes, it would have a negative impact on transportation projects in the Yelm area and the entire South Sound region.”
Lacey’s Egger mentioned that I-976 could have an effect on jobs for consultants, builders, and suppliers who work on publicly funded transportation projects.
In Shelton, City Manager Jeff Niten said that in addition to potentially losing state transportation grants, the city is concerned about possible cuts to the Washington State Patrol, which has its academy just outside Shelton.
One area city that doesn’t seem too concerned: Tenino. John Millard, the city’s Clerk Treasurer, said Tenino doesn’t use state grants and any impact would be indirect.
“There’s no project that Tenino is either executing or is planning to execute that license plate-tab fees would impact,” Millard said in an interview. In Tenino, he said, “our residents would see their tabs decrease” if the measure passes.
When asked how he’d respond to local governments and agencies that are worried about the initiative, Eyman went back to the idea that governments should ask permission before imposing taxes.
“If they want more money from the taxpayers ... they simply need to turn around and go back to voters and say, ‘Will you please give us some additional funds?’” Eyman said.
The ‘ripple effect’
The primary concern local officials have: If the state loses all that transportation revenue, how does the loss ripple out?
Transportation Improvement Board Director Ashley Probart said the board distributes about $100 million per year in local transportation grants. The loss of TBD funding, for example, can multiply for cities that use that funding as match dollars for transportation grants. Just this week, he said TIB was reaching out to cities to confirm they would still have match dollars if I-976 passes.
Also, TIB would lose some of its funding for grants it distributes if voters approve I-976.
The first $1 million from the electric vehicle fee goes to the state Department of Transportation, then TIB gets 15 cents per dollar collected, Probart said. The initiative would cut that fee drastically — an immediate $700,000 hit in the first two years, but not much for an agency that gets about $100 million from the gas tax per year.
It would only have a small impact on the upcoming grant cycle, maybe one or two grants, Probart wrote in an email, but it’s projected to mean more in the future.
TIB’s revenue from that tax is forecast to rise to $2.6 million in the 2023-25 biennium, according to the OFM forecast. “Internally, we view the growth in the electric vehicle fee revenue as a hedge against inflation and declining gas tax revenues,” Probart wrote.
Jane Wall, managing director for the Washington State Association of Counties, pointed to another program that gets funding from the electric vehicle fee and would “be on the chopping block” under I-976: the Rural Arterial Program, which funds rural road improvements and reconstruction.
According to the Rural Arterial Program’s website, Thurston County has gotten a varying amount from the account associated with the program. In 2018, Thurston received just $1,745, but the number was over $1 million in 2014.
There’s an active project for Thurston that’s slated to spend $1.8 million out of the program’s trust account to improve Vail Road Southeast near Yelm and two other proposed projects in the county that would require a combined $2.2 million from the account.
Again, County Roads Administration Board Executive Director John Koster said the initiative wouldn’t initially be a “huge hit” to the Rural Arterial Program, but that can change as interest in electric cars grows.
“A couple million is meaningful for counties,” Koster said.
The Legislature has also appropriated millions of dollars to the County Roads Administration Board and the Transportation Improvement Board from the Multimodal Account.
OFM projects that account would lose about $128.7 million in 2020, and more each year after that.
Over $14 million funds a TIB program called Complete Streets that averages 30 to 40 grants per biennium, Probart said.
Olympia got a $500,000 Complete Streets award this year for a 2020 project to construct a roundabout at Henderson Boulevard and Eskridge Boulevard, enhance pedestrian crossings at Adams Street and 5th Avenue, and upgrade the pedestrian crossing at Olympia Avenue and East Bay Drive.
It’s not clear how the Legislature would triage and shuffle money to balance out impacts to funds like the Multimodal Account if I-976 passes. Directors Probart and Koster each pointed out that funding from the gas tax, per the state constitution, can only be used for roads.
Eyman insisted in an interview that the state would backfill programs “they say are so important” using reserves the Revenue Forecast Council estimated in a September forecast would reach $3.5 billion by the end of the 2017-19 biennium. The council projected reserves could amount to $3.1 billion by the end of the current, 2019-21 biennium.
About $2.2 billion of the projected $3.1 billion at the end of this biennium is predicted to be in the “Rainy Day Fund.” Appropriating money from that account requires a three-fifths vote from the Legislature, unless the governor declares an emergency from a catastrophic event or state employment is forecasted to grow less than 1 percent in a fiscal year, according to OFM documents. The other money in projected reserves could be appropriated with a simple-majority vote.
Directors Koster and Probart both pointed out the state is currently committed to a non-negotiable cost: A federal court injunction to repair or replace state-owned culverts blocking fish passage by 2030.
In July, the Tacoma News Tribune reported cost estimates for that effort had reached $3.8 billion.
“The way I look at this is that, whenever you contract $1 out of the transportation system, it’s usually several dollars that reaches every community in Washington state,” Probart said. “Reduced grant funding, reduced day-to-day transportation projects, it just doesn’t stop.”
This story was originally published October 27, 2019 at 6:00 AM.
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