House Committee Passes Bipartisan MVET Bill
Crowded Link Train on April 6 (Seattle Subway - Twitter)
As ST3's Motor Vehicle Excise Tax (MVET) drama continues, yesterday the House Transportation Committee passed HB 2201 by a bipartisan 20-5 vote. The compromise bill would require Sound Transit to use the newer 2006 vehicle depreciation schedule, and to offer credits and refunds to those who had already paid under the old one. In addition, the bill requires Sound Transit to find the money to do this without impacting project delivery. The bill states that if this new valuation method threatens project delivery, the agency has trim project elements in a specified order:
If, when implementing the program, the RTA is not able to deliver the plan as approved originally, the RTA must identify savings and cost reductions first, from parking facility projects; second, from commuter rail projects; third, from transit-bus related projects; and fourth, from light rail projects.
It's hard to believe it's only been six weeks since Sound Transit 3's (ST3) Motor Vehicle Excise Taxes (MVET) took effect. Car tabs have always been a political minefield. People pay them up front in a lump sum, and those who drive but don't take transit experience them as a punitive taking. On March 1, the voter-approved MVET went up by 266%, from 0.3% to 1.1%. Endless digital ink and legislative oxygen has been spilled decrying the MSRP-derived depreciation schedule that calculates the MVET. That formula tends to inflate car values over their realistic resale price for the first decade or so of a car's life.
The resulting sticker shock has proven a golden opportunity for disingenuous legislative grandstanding. To hear Republican legislators tell it, this controversy proves that Sound Transit is an agency in need of sweeping accountability reforms after hoodwinking voters and stealing from them.
But this framing is like a hunter blaming the bear for stepping into a trap it set. The depreciation schedule was not a Sound Transit creation, but a legislative directive clearly contained in the 2015 transportation revenue package (SB 5987). From the Final Bill Report:
Motor Vehicle Excise Tax (MVET). An MVET is a tax paid on the value of a motor vehicle. For the purpose of determining any locally imposed MVET, the value of a vehicle other than a truck or trailer is 85 percent of the manufacturer's base suggested retail price of the vehicle when first offered for sale as a new vehicle, excluding any optional equipment, applicable federal excise taxes, state and local sales or use taxes, transportation or shipping costs, or preparatory or delivery costs, multiplied by the applicable percentage listed in the depreciation schedules. [emphasis mine]
And from the bill itself:
Notwithstanding any other provision of this subsection or chapter 82.44 RCW, a motor vehicle excise tax imposed by a regional transit authority before or after the effective date of this section must comply with chapter 82.44 RCW as it existed on January 1, 1996, until December 31st of the year in which the regional transit authority repays bond debt to which a motor vehicle excise tax was pledged before the effective date of this section. Motor vehicle taxes collected by regional transit authorities after December 31st of the year in which a regional transit authority repays bond debt to which a motor vehicle excise tax was pledged before the effective date of this section must comply with chapter 82.44 RCW as it existed on the date the tax was approved by voters.
So the ST3 MVET was intended to have a business-as-usual formula, just at a higher rate, and this language passed the Republican-led Senate 37-7 and passed the Democratic-led House 54-44. If anything, it was the conservatism of the package's framers that has caused the controversy, as all parties involved simply grandfathered in an existing structure rather than create a new one.
None of this is intended to say that voters haven't experienced unpleasant surprise at their car tabs, or that certain low-income or high-income-cash-poor citizens haven't found it burdensome. Talks to rework the formula, or to add low-income rebates, etc, are valid discussions. Whether you support a rate reformulation or not, this sort of legislative back and forth is normal and healthy.
But the political posturing about Sound Transit's conduct throughout this process continues to be dishonest and misleading. The aspersions cast upon the agency neglect the layer cake of process and filters through which all of these proposals must pass before they see the ballot box, the tax bill, or groundbreaking. It is all a painstakingly conservative process by design, and Sound Transit has been following the rules to the letter. If legislators want to change the letter of the law, that's their prerogative. But Sound Transit works with what they are given, and they cannot bill us a penny without our aggregate consent.