Sound Transit officials chase more money to close $35B funding gap

Sound Transit's need to climb out of a nearly $35 billion shortfall, dramatized this month by proposals to drop or postpone promised light rail stations, will include stepped-up efforts to gather money.

A key strategy will be to borrow higher amounts, and for longer time periods. The agency will continue lobbying the Legislature to allow 75-year Sound Transit bonds, instead of the maximum 40 years.

The greatest benefit of all is ensuring we get the infrastructure built, and open, and serving the public as soon as possible," CEO Dow Constantine testified in Olympia this year.

Runaway construction inflation of 40% to 70% this decade, elaborate routes in tough topography and modernization projects to make existing service more dependable are among the factors wrecking Sound Transit finances.

The agency expects to seek as much as $17 billion in federal grants over the next quarter-century.

But a 75-year bond sale could also improve cash flow by $2.3 billion during a critical "pinch point" in the late 2030s, while heavy construction happens in at least three directions, according to Victoria Wassmer, deputy CEO for finance and business administration.

This approach could help take advantage of a Biden-administration law offering cheap, 75-year infrastructure loans to big builders, like Sound Transit. If Sound Transit can sell its own 55- to 75-year local bonds, that would lock down a source of dollars to repay Uncle Sam, said Hughey Newsome, chief financial officer. (Sound Transit previously borrowed $4 billion, at bargain 1.9% interest, that helped Seattle-Bellevue, Lynnwood and Federal Way projects.)

The beleaguered Sodo-to-Ballard line's downtown tunnel, meant to last a century, would be the prime candidate for a huge federal loan, pegged at $5.5 billion.

But there's a gamble.

Residents of urban King, Snohomish and Pierce counties, already on the hook into the 2060s, would pay steeper finance charges in later decades. Local bonds would carry interest rates closer to 5% unless Sound Transit manages to pay off debts early.

Sound Transit already collects $2.4 billion in sales, property and car-tab taxes per year, about half that borne by businesses. The total amounts to $700 per resident.

Washington Policy Center transportation analyst Charles Prestrud calls 75-year debt a desperate answer to a "self-inflicted budget problem," the extravagance of light rail compared with buses. In later years, he told lawmakers, it would leave "no hope of rolling back Sound Transit's taxes."

State legislators at a Ballard forum said they'll advocate for higher Sound Transit borrowing and a transit-construction jobs bill, but the agency needs to build trust.

"We will be your fighters in Olympia. But we can't be, if you cut Ballard out of the plan. Our constituents won't stand for it, said Sen. Noel Frame, D-Ballard.

Meanwhile, the board is expected to nearly triple a car-rental tax to $2.17 per $100 in a vote this month, which would bring in about $8 million more per year.

Tukwila Mayor Thomas McLeod and King County Executive Girmay Zahilay said the car-rental tax, mainly collected at the airport, should be earmarked for stations at Graham Street in South Seattle and Boeing Access Road in Tukwila, now deemed unaffordable.

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