Sound Transit lawyer says car tab fee can be collected for years despite I-976 vote

It turns out that a $30 car tab is not $30.

It’s $43.25, and for those in Sound Transit’s jurisdiction, it could continue to be considerably more for several years.

At Sound Transit’s board meeting on Thursday, general counsel Desmond Brown said the agency’s motor vehicle excise tax will not be repealed until the transit agency’s bonds and other debt are fully repaid. Sound Transit has $2.3 billion in bonds and other unpaid debt, Brown said.

“The initiative does provide that Sound Transit should retire those bonds, but it does not provide a date or deadline by which that occurs,” Brown told the agency’s board.

Initiative sponsor Tim Eyman said Sound Transit is misstating what the initiative says. He said when I-976 takes effect Dec. 5, Sound Transit is required to retire its bonds so the MVET — which is collected through car tabs — is repealed.

“You lost big, and the response is, ‘Batten down the hatches and ride it out because we can outlast them,’” Eyman told the agency’s board.

King County and the city of Seattle have filed a lawsuit challenging I-976 and seeking an injunction to prevent it from taking effect while the legal battle is waged.

The state Department of Licensing has released a fact sheet about what happens when the initiative takes effect Dec. 5. I-976, which statewide voters approved by a 53-47 percent margin, caps car-tab fees at $30 for vehicles weighing 10,000 pounds or less.

But DOL said the initiative did not repeal the following:

$8 service fee, which goes to the office that processes the transaction or to fund state ferry replacements if car tabs are renewed at a county auditor or at the DOL.

$4.50 filing fee, which is kept by the county in which the car tab tax is paid.

50 cent DOL license service fee, which is used to support its computer system and reimbursement of county licensing activities.

25 cent license plate technology fee, which also is used to pay for DOL computer work to charge the car tab.

The total: $43.25.

Eyman agrees.

“We were going after the big ones, the big guys. The fee itself is $30. There are some ancillary fees on there,” he said.

The initiative eliminates the additional fee the state charges based on the weight of a vehicle, which can range from $25 to $65. It also bars local governments from tacking on car tab fees through transportation benefit districts.

Eyman said he doesn’t see a problem because the initiative will cut car tabs substantially by eliminating the weight fees and targeting Sound Transit’s MVET, which is collected in the urban areas of Pierce, King and Snohomish counties.

“Are voters going to be furious because it’s $43? I don’t think so. They’re going to be fricking pissed if it’s $400 or $500 or $800,” he said.

In 2016, voters approved the Sound Transit 3 package that included increasing the MVET rate from 0.3 percent to 1.1 percent — or $110 for each $10,000 of depreciated vehicle value.

Sound Transit has said light rail will be extended from Federal Way to Tacoma in 2030 as part of Sound Transit 3.

Before the Nov. 5 election that decided I-976, the Attorney General’s Office issued an explanatory statement interpreting the initiative text.

If voters approved the initiative, Sound Transit would be required to “defease, refinance, or retire” bonds early if they are financed by an MVET “and if the bond contracts allow such action.” Defeasing a bond occurs when the borrower sets aside cash or bonds that can pay off the debt. Retiring a bond is when a borrower pays off the debt.

Once the bonds have been defeased, refinanced or retired, the authority to impose the MVET and the sales tax on rental cars would be repealed automatically, according to the Attorney General’s Office.

If Sound Transit is not able to completely defease, refinance or retire the bonds by March 31, 2020, any existing voter-approved MVETs would remain unchanged.

The initiative says the rate of Sound Transit 3’s MVET that voters approved in 2016 would be reduced from 0.8 per cent to 0.2 per cent.

But Brown, Sound Transit’s general counsel, said that provision does not apply to Sound Transit because its bond contracts require that the rate remain at 0.8 per cent until the bonds are retired.

He quoted the attorney general’s explanatory statement to buttress his argument that the MVET must continue to be collected and at its current rate until the bonds are retired.

I-976 also would require that any future vehicle taxes, including voter-approved MVETs, be determined by using a vehicle’s value using the Kelley Blue Book. That would scrap Sound Transit’s use of an inflated valuation formula for vehicles that pumps more money into the agency’s coffers.

Board member Bruce Dammeier, the Pierce County Executive, said support for I-976 in Pierce was fueled in large part by voter frustration with Sound Transit’s valuation formula.

“They are trying to send a very strong message,” Dammeier said. “The frustration at the end of the line is palpable. The perception that people are paying a high car tab based on an inflated or inaccurate value of their car absolutely exacerbates this problem.”

Sound Transit has said when the 1996 Sound Move car-tab tax of 0.3 percent expires in 2028, the agency will use a vehicle valuation method — adopted by the Legislature in 2006 but never implemented — for the Sound Transit 3 car-tab tax that would offer relief for vehicle owners.

James Drew covers the state Legislature and state government for McClatchy’s Washington papers: The News Tribune, The Olympian, The Bellingham Herald and The Tri-City Herald.