King County could seek sales-tax hike to avoid Metro bus cuts
King County officials are weighing whether to send a sales-tax increase to voters — a tax that would help avert Metro bus cuts but add to an already regressive tax structure.
Seattle Times transportation reporter
King County would need the Legislature’s permission to send county voters a proposed car-tab tax of $150 per $10,000 vehicle value, to be split 60 percent for Metro Transit and 40 percent among county, suburban and Seattle road funds.
The county would go it alone under the 2007 transportation benefit district law. That could mean sending voters a proposed sales-tax increase of 0.1 percent or 0.2 percent for transit, and a flat car-tab fee of $60 or $80 for roads.
While the public is preoccupied with spending money on holiday gifts, their elected officials in King County are considering whether to seek a higher sales tax in 2014.
Doing so could help Metro Transit, which has been gaining riders lately, to avoid what it says could be a 17 percent service cut.
But new taxes also would increase the burdens on the poor and middle class, in a state already labeled as having the nation’s most regressive tax structure. Even in a liberal, transit-supporting stronghold like King County, officials know it could be a tough sell to persuade voters to not only nudge total sales taxes to nearly 10 percent but also pay a flat car-tab fee for roads.
Still, the odds of such a campaign increase every week the Legislature doesn’t allow for some other revenue source for local transit.
King County Executive Dow Constantine has threatened a “Plan B,” to craft a plan in December to go to the ballot in early 2014, under laws allowing a local transportation benefit district.
The exact amounts haven’t been set.
Meeting the most dire needs would require a sales-tax hike of 0.1 percent or 10 cents per $100 purchase, and a $60 car-tab fee, said Sung Yang, the executive’s chief of staff. The law allows 0.2 percent and $80, respectively.
Officials might feel pressure to seek the full amount: Ridership is back up to 400,000 weekday boardings, and many buses are packed .
A sales tax would add to the 90 cents per $100 spent (0.9 percent) that Metro collects already, and 90 cents for Sound Transit. (A 50-cent per $100 countywide sales tax in restaurants and bars, to finance Safeco Field, expired in 2011.)
According to the Insititute for Taxation and Economic Policy (ITEP), the poorest fifth of Washington state households pay 17 percent of their income in state and local taxes, while the richest fifth pay less than 7 percent. Those are statewide averages, so the disparity grows in urban Puget Sound, where transit sales taxes are higher.
“(In) a state that is already clearly the most regressive in the nation, amazingly you’d have localities where it is more regressive,” said Matt Gardner, ITEP executive director.
“In fairness, there aren’t a lot of other choices available to lawmakers in Washington,” said Gardner.
The long-term answer lies in transitioning to income taxes, he said. But state voters three years ago rejected a tax on incomes over $200,000 a year.
Katie Wilson, co-founder of the left-leaning Seattle Transit Riders Union, said her group faces a “delicate position” because it opposes sales taxes that fall hardest on the poor. Yet, “it would be better for those things to pass than for service to be cut.”
Constantine says he prefers “Plan A,” considered this year by the Legislature. This requires a bill allowing the county to seek a voter-approved car-tab tax of $150 per $10,000 of vehicle value, split 60 percent for transit and 40 percent for roads. This is presumably fairer, because the owner of an $80,000 Tesla would pay more than a handyman driving an old van.
The sticking point? Senate Majority Leader Rodney Tom, D-Medina, has insisted transit taxes be concurrent with a state highways plan, paid mostly by gas taxes, which may emerge in 2014, or maybe in 2015.
Metro wants answers sooner, because in mid-2014 it will lose a temporary $20 car-tab fee, state money to operate buses in the Highway 99 construction zone, and extra bus-replacement cash that’s been spent since the recession.
Councilmember Larry Phillips says he has no idea how voters might respond: “We’re going to make the case at some point, this is what we need to do, and if voters say no, they say no.”
Sales taxes have a winning track record here.
King County voters approved an increase in 2000, to replace transit dollars lost when lawmakers enacted Tim Eyman’s Initiative 695, slashing car-tab taxes to $30. In 2006 voters passed a sales tax for Transit Now, which helped to convert certain busy bus lines into more-frequent RapidRide routes.
Both times, the county over-predicted sales-tax income — then delivered minimal service increases. This year’s transit operating budget is $640 million, of which 54 percent comes from sales tax.
“They promised with the last two tax increases to deliver 1.2 million hours of bus service, but they only delivered one-third of it. They should deliver on their promises before they ask voters for more money,” said Bob Pishue, analyst for the conservative Washington Policy Center.
In 2008 voters raised sales taxes enabling Sound Transit to start building three suburban rail lines.
Nationally, sales taxes comprise 65 percent of the local and state subsidies for transit, according to the American Public Transportation Association (APTA).
“The pain of paying it is to some degree offset by the utility of the product you’re enjoying,” said Art Guzzetti, APTA vice president for policy. “You are getting something, you’re not just sending money away.”
Community Transit in Snohomish County has mounted a “Buy Local for Transit” campaign, to remind neighbors a piece of their sales tax goes to buses.
Portland funds Tri-Met transit mainly through a payroll tax of $7.14 per $1,000 of wages.
Vancouver, B.C., Translink sits on a wide tax base of transit fares; fuel, property and parking taxes; emissions-testing fees and even bridge tolls.
More than most bus agencies, King County Metro caters to so-called “choice” riders who own cars but leave them home.
Therefore, public subsidies serve not just low-income all-day riders, but the professional class who fill many of the commuter routes. Metro has evolved into a utility for business in the University District, Overlake, downtown Bellevue and especially downtown Seattle, where only 35 percent of employees drive alone.
Businesses gain from broadly shared taxpayer subsidies that help deliver their workforce.
But Kate Joncas, CEO of the Downtown Seattle Association, said Portland-style payroll taxes are a bad idea, because every cost erodes competitiveness. She mentioned that Seattle already mandates paid sick leave.
Joncas said employers already support transit by buying employee passes in large numbers.
“Businesses are not the only users of transit, so why should they have to pay all the freight? That doesn’t seem any more equitable than a sales tax,” she said.
Employer taxes are unpopular enough the Seattle City Council yielded to business, repealing a $25-per-worker head tax for streets in 2009.
Joncas prefers taxing by car value, in conjunction with a state highway plan.
Yang said a Plan B could be divided fairly into a 0.1 percent sales tax sending $50 million a year into transit, and a $60 car-tab fee raising $80 million for local streets.
“Drivers are accustomed to paying user fees,” Pishue said. “It’s more palatable when the money they pay in taxes comes back to benefit them.”
Politically, Plan B could be seen as a political opportunity, to defuse the complaint that drivers are shaken down for the sake of bus riders.
Mike Lindblom: 206-515-5631 or email@example.com.
Information in this article, originally published Nov. 28, 2013, was corrected Dec. 2, 2013. A previous version of this story incorrectly stated that a $60 car-tab fee in King County could bring in $54 million a year. The county’s actual estimate is roughly $80 million a year.