Prop. 1: Isn’t there a better way to fund transit?
Voters are being asked for a third time since 2000 to increase sales taxes to fund King County Metro Transit. Is this a sustainable way to do business — and does anyplace else have a better idea?
Seattle Times transportation reporter
Where money comes from
Here are some examples of how taxes fund local transit agencies here and elsewhere. Additional money comes from fares and federal or state grants.
King County Metro
• Sales tax, currently 90 cents per $100 purchase; property tax of $7.46 per $100,000 of value; car-tab fee of $20 per year, to expire May 31, 2014.
• Sales tax of 90 cents per $100 purchase; car-tab tax of $30 per $10,000 of vehicle value; car-rental tax of 0.8 percent.
• Payroll tax of $7.24 per $1,000 of wages or self-employment income.
Vancouver B.C. TransLink
• Gas tax of 17 cents per liter (64 cents a gallon); property tax of $33 per $100,000 home value; parking tax of 21 percent; bridge tolls.
Los Angeles Metro
• Sales tax of $1.50 per $100 purchase, for rail, bus, and limited highway projects such as bus-carpool lanes.
Minneapolis-St. Paul Metro
• Vehicle sales tax collected on new and used cars statewide at 6.5 percent, with a share allotted to city transit.
Voters are being asked for a third time since 2000 to increase sales taxes to fund King County Metro Transit.
This month’s Proposition 1 follows a winning sales-tax vote to make up for reductions in state car-tab revenues, then a sales-tax measure that was supposed to expand bus service, but brought only a small increase as the recession sliced income $1.2 billion below what Metro expected over six years.
Now managers say they need more taxes, to avert a 16 percent service cut.
Is this a sustainable way to do business?
Even transit supporters readily admit the system is flawed, because sales tax falls hardest on people with lower incomes.
And revenues are unpredictable.
Nonetheless, the County Council voted unanimously to send Proposition 1 to voters. Ballots must be postmarked by Tuesday.
The measure would increase sales taxes by 0.1 percent while replacing a $20 car-tab fee with a $60 annual fee. Of the estimated $130 million that would be raised next year, about 60 percent would go to buses and 40 percent to city and county street funds.
“Cuts to bus service are far more regressive than the proposed taxes,” argues Katie Wilson, co-founder of Seattle Transit Riders Union. “Not being able to get to work or school or to the doctor is a far more serious hardship than having to pay an extra penny in sales tax for every 10 dollars you spend.”
Metro isn’t unusual in relying on sales taxes.
Of 403 transit-finance measures in the U.S. since 2000, a total of 247 sought sales taxes, 185 sought property taxes and 79 involved car fees or other revenue sources, says the advocacy group Center for Transportation Excellence. About two-thirds won.
What’s unusual here is how much we pay.
Sales tax for Seattle-area transit currently totals 1.8 percent, to fund both Metro operations and support Sound Transit’s new rail lines and express buses. The 0.1 percent increase would bring the total rate, including state tax, to 9.6 percent in Seattle and the surrounding suburbs.
Ridership is growing at Metro, which carried 118 million passengers last year. Some buses are so full they pass people at stops.
Expenses for wages, benefits, fuel and supplies are growing even faster, to the point where Metro spent $136 an hour to operate buses in 2012, up from $92 in 2002.
Opponents cite that trend as reason for casting a “no” vote, saying it’s the only way to exert discipline.
“If Metro didn’t exist and today the region was getting together to design Metro, it would look nothing like it does now,” said Dick Paylor, past president of the pro-roads Eastside Transportation Association.
As for transit sales-tax rates, only Los Angeles among big U.S. cities appears to be in the same league as Seattle, said Tom Rubin, a California transit accountant and analyst who criticizes rail megaprojects. L.A. Metro collects a 1.5 percent voter-approved sales tax.
L.A.-area voters in 2012 nearly agreed to stretch an existing sales tax beyond 2039, until 2069, allowing more projects to be debt-financed. The measure fell just short of the needed two-thirds supermajority.
Sound Transit has authority to prolong its sales taxes as long as needed to pay off construction bonds. If voters don’t approve any further expansions, taxes would be reduced in 2040, said spokesman Geoff Patrick.
Sales tax is also a prime source for growing transit agencies in Denver, Dallas, Salt Lake City and Phoenix.
“You spend $100, you pay 50 cents, and people will say ‘What the heck,’ ” Rubin said, though he perceives some resistance in California.
“It’s less about sales tax as against taxes period,” he said.
Just south of Seattle, voters rejected a 0.3 percent Pierce Transit sales-tax increase in 2012, resulting in deep service cuts. Community Transit in Snohomish County terminated Sunday buses and some weekday runs, rather than ask for new taxes, which the agency currently isn’t permitted to do under state law. Voters in Grays Harbor County passed a 0.1 percent increase in 2013 to restore lost service.
Other funding methods
There are other tools.
Portland’s Tri-Met subsists on an employer head tax of $7.24 per $1,000 wages. Oregon charges no sales tax.
That looks progressive, but there’s a downside.
“When the economy crashes, the one thing that crashes faster than sales tax is the payroll tax,” says Jarrett Walker, author of the transit planning blog Human Transit, who has consulted in Vancouver, Seattle and Portland. Property tax is a fairer, steadier method, he said.
Tri-Met cut service 13 percent and is slowly bringing it back to 2010 levels, said spokeswoman Mary Fetsch.
By contrast, King County Metro took virtually no cuts, though it dropped some low-use routes to shift buses to crowded parts of town. Overall, transit use is slightly higher in the Seattle area than in metro Portland.
To prevent cuts, Metro spent $100 million in surplus from its fleet-replacement fund; phased out 100 support and administrative jobs, phased in $1 in fare increases, and shortened drivers’ rest breaks.
Without voter approval, the County Council approved a property tax that’s currently $7.50 per $100,000 of value. Leaders were quick to say it was not a tax increase because they replaced a property tax to expand a water-taxi fleet. This property tax pays for added Highway 520 bus service and for RapidRide routes.
Metro recovers 29 percent of operating costs from fares, close to the national average for large bus agencies, and higher than the pre-recession rate of 20 percent.
Paylor argues, “Vancouver, B.C., gets 52 percent farebox recovery. Why can’t we?” Vancouver has more transit riders, many of whom ride automated trains that reduce labor costs.
The politics of taxes
County Executive Dow Constantine tried for two years to gain other taxing authority from the Legislature, including a progressive car-tab tax that increases with the value of vehicles.
But lawmakers haven’t agreed on a highways-and-transit package to send to statewide voters, or even a smaller plan for urban areas.
Passage of Proposition 1, says the Democratic chairwoman of the House Transportation Committee, would further harm efforts to pass a statewide plan.
“I am not supporting it,” said Judy Clibborn, D-Mercer Island.
While a win would satisfy King County transit partisans, taxpayers would be paying more, making voters less inclined to support a state plan, she said.
Clibborn said she’s concerned less about sales-tax rates than about how local taxes for parks, a new seawall and other causes are quickly adding up.
“I do think that we’re getting to the point where we will see a backlash. We’re getting so high here,” Clibborn said.
Wilson, of the Transit Riders Union, says it’s a mistake to vote ‘no’ in hopes of forcing a better funding system. Any cuts will fall very quickly on the riding public, long before legislators would deal with the crisis, she said.
Other pro-transit thinkers, such as Todd Litman of the Victoria Transport Policy Institute, point out that riders save thousands of dollars in automobile costs, and that transit reduces congestion and pollution — so the gains far outweigh the tax costs, he said.
Local officials still curse Tim Eyman’s I-695, when voters in 1999 approved slashing a lucrative car-tab tax to $30. I-695 was ruled unconstitutional because it dealt with two subjects, but lawmakers enacted the tax-cut provision anyway. Since then, a series of car fees and sales taxes have trickled in.
“This is not the first time that Metro has to be saved from the cliff by a regressive measure,” said Seattle City Councilmember Kshama Sawant. “It will not be the last.”
Yet she supports it, partly because of a $20 car-tab rebate for low-income drivers and a scheduled low-income fare next year of $1.50 (to be lowered to $1.25 if Prop. 1 passes.)
Looking ahead, a better tool would be extending the transit sales tax to gasoline, said Clark Williams-Derry, deputy director of the Sightline Institute, an environmental policy group. A 1.9 percent sales tax translates to 6.7 cents on a $3.50 gallon of gas. Seattle could also look at tolls or congestion pricing to enter the city, he said.
Litman would tax private parking stalls $20 or $30 a year. Employers and shopping centers then have an incentive to pave less and provide workers transit passes or shuttles, he said.
Sawant calls for “fundamental transformation.” She challenges politicians to look beyond what’s possible in current state law. She recommends a fee on developers and corporations to support transit demand that growth creates. Business leaders pressured Seattle to repeal a head tax for city streets a few years ago, however, and say they worry about losing competitiveness.
Mike Lindblom: 206-515-5631 or email@example.com.
On Twitter @mikelindblom