Agencies debate car-tab strategy

By Mike Lindblom
Seattle Times staff reporter


11/21/02

People who voted for Initiative 776 this month may have done so thinking that its passage would guarantee them $30 car tabs by eliminating the transit tax on their motor vehicles.

But whether that actually happens is another matter.

Sound Transit is virtually certain to resist the initiative but has yet to announce details. This afternoon, the executive board will meet in closed session to discuss legal strategy, then have a public vote or announcement.

The agency could ask a judge to void part or all of the initiative.

More is at stake than just the controversial $2.4 billion light-rail project from downtown Seattle to Tukwila, which is the prime target of I-776.

"The initiative affects our ability to do bonds in the future," said Sound Transit spokesman Lee Somerstein. Losing the car-tab taxes would mean a thinner cash flow for extensions of rail or bus routes years from now, he said.

After a closed session a week ago, Sound Transit Chairman Ron Sims, the King County executive, would say only that chief counsel Desmond Brown was instructed to research legal issues.

Tim Eyman, who promoted the initiative, announced this week that Sims has already told Brown to "sue the voters" today, which he believes would flout the will of the people.

Elaine Kraft, spokeswoman for Sims, calls such comments premature and explained that the entire three-county Sound Transit board would have to approve any legal action.

The legal case for Sound Transit is that $350 million worth of bonds the agency sold in 1999 for light rail came with a pledge to bondholders that both car-tab and sales taxes would be available to repay the bondholders and therefore, Sound Transit insists that the car-tab tax cannot be repealed.

That tax amounts to $30 a year per $10,000 of vehicle value in the urban portions of Snohomish, King and Pierce counties. In addition, Sound Transit collects a sales tax of 40 cents on a $100 purchase.

Opponents say the agency has accumulated enough cash to cancel car-tab taxes and still pay for those bonds. The 2003 Sound Transit budget starts the year with $847 million in cash reserves.

For the time being, state agencies are siding with Sound Transit.

The Department of Licensing said Sept. 20 it would collect the Sound Transit tax until a judge rules otherwise.

And in a letter last Friday to legislative leaders, the attorney general's office affirmed the principle that the state constitution forbids any tax repeals that violate bond agreements. The state will continue to research the details of the bond obligations, though.

"After that review, we will be in a better position to determine the best way to assure that Initiative 776 is implemented to its full extent that is consistent with the contractual obligations to the bondholders," concluded Solicitor General Narda Pierce.

Sound Transit anticipates it will collect enough money to build the initial light-rail segment even if it loses the car-tab tax, about 20 percent of overall income. But a 20 percent loss would mean deferring projects such as high-occupancy vehicle ramps or park-and-ride lots. But those decisions are up to the entire board, not just Sims.

Meanwhile, Metro Transit is also continuing to collect a $15 car-tab fee, and reports selling $38 million in bonds backed by that income.

Other transit taxes collected by Snohomish, Pierce and Douglas counties the latter, which is east of Wenatchee are not linked to bond sales, and will be discontinued, the letter says.

Mike Lindblom: 206-515-5631 or mlindblom

 

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