Two significant court rulings in the past few weeks provide both clarity on Sound Transit’s fee structure and throw into chaos the future of transportation funding.
The first case relates to how Sound Transit charges car-tab taxes. In a 7-2 decision, the Washington State Supreme Court ruled Sound Transit was correct in how it sets its current rates. Those rates are based on a law from 1990 that inflates the value of a vehicle. At that time, Legislators adopted this formula to bring in more revenue for the state. Opponents had argued that lawmakers should have republished the vehicle-value matrix they used to compute the new Sound Transit car-tab rates. This ruling is a huge win for Sound Transit, which was set to lose between $15-$18 billion in revenue that is needed to finish its build-out.
The second case related to Initiative-976 (I-976) that was passed by voters in November 2019. Among its numerous provisions, I-976 rolls back state and local motor vehicle license fees to $30 per year. It also repeals fees associated with motor homes, ferry service, electric vehicles, and vehicle weights. The loss of revenue to state and local governments is estimated to be more than $4 billion. Shortly after the Initiative passed, a coalition of stakeholders, including King County, filed suit arguing I-976 violates the state Constitution in several ways, including by involving more than one subject and misleading voters about the true effects of the measure.
A King County Superior Court judge ruled on Wednesday, February 12, that most of the Initiative was constitutional, including the multiple subject argument. However, he did not rule on two provisions related to the Initiative’s directive. The first relates to how Sound Transit calculates car-tab fees. Coincidentally (or perhaps not) the day after this ruling, the Washington State Supreme Court ruled on this issue (summarized above). The other deals with the city of Burien, who has sold bonds to be paid back with car-tab tax revenue it collects.
Because this decision is expected to be appealed, an injunction that was placed on the Initiative shortly after it was challenged will remain in place.
How this decision impacts the Legislature’s budgeting decisions is not yet clear. However, budget leaders have given every indication; they plan to develop a balanced budget, and based on the assumed losses in revenues as a result of the Initiative’s passage. This means lawmakers need to cut roughly $470 million from their 2019-2021 budget. Governor Inslee’s proposed 2020 supplemental budget made these assumptions and can be reviewed here.
I-976 likely has a long way to go before a final decision is made. For now, we will have to wait and see.