Sound Transit car-tab tax can stay, high court rules

Sound Transit may continue to collect its car-tab taxes despite the passage of tax-cutting Initiative 776, the state Supreme Court ruled this morning.

The statewide initiative, sponsored by Tim Eyman and approved in November 2002, sought to slash motor vehicle excise taxes to a flat $30 per year.

However, Sound Transit sold its first series of construction bonds in 1999 — and the bond agreements promised investors the car tax will be collected through 2028.

The agency has argued that its bond contract trumps I-776.

Sound Transit has continued to fund its light rail line from Westlake Center to Seattle-Tacoma International Airport, and plan for future lines, as if it would keep collecting the car-tax.

Critics have said the agency should have paid off the investors through its other sales-tax proceeds, then reduced its overall spending.

The vehicle tax amounts to about one-fifth of the agency's local money in Snohomish, King and Pierce Counties.

Justices siding with Sound Transit were Barbara Madsen, Gerry Alexander, Charles Johnson, Bobbe Bridge, Tom Chambers, Susan Owens, Mary Fairhurst and justice Pro Tem John Schultheis. Madsen's opinion said that to alter a bond contract "would imperil the ability of state and local governments to finance essential public works projects such as elementary schools, fire stations, highways, and bridges, by casting considerable doubt on the reliability of pledged funding sources."

Dissenting was Richard Sanders. He called the expected revenue from car taxes illegal, and said Sound Transit could easily comply with the public's tax-cutting vote, and still pay off its bonds using a larger pool of sales taxes.

In a statement issued today, Eyman said he has spent nine years working for "taxpayer protection," and in 36 of 39 counties, vehicle owners pay just $30 a year to license their cars.

He said voters can hold Sound Transit accountable next year when they are asked to raise the sales tax to finance new transit projects. "Will voters validate and reward Sound Transit and give more money for more of the same?" Eyman said. "That's up to them. But we're hopeful they'll consider Sound Transit's bulging multi-billion dollar bank account before they give them more."

The information in this article, originally posted December 7, 2006, was corrected December 8, 2006. Sound Transit's car-tab tax is expected to bring in $2.7 billion from 2007 through 2028. The earlier Web-only version cited an incorrect, low figure that came from a written dissent by Justice Richard Sanders.