Seattle’s long history of transit funding

With 2019 general election ballots at most Seattle doorsteps by now, voters are being asked to weigh in on Initiative 976, which would cut vehicle license fees to a flat rate of $30 in most cases—but would gut funding for road and transit projects, or anything being funded by a vehicle registration fee. The measure is a project of anti-tax crusader and “serial initiative filer” Tim Eyman, who successfully ran an almost identical initiative 20 years ago.

Here’s the context: State voters approved Eyman’s $30 car tab initiative in 1999, temporarily wiping out 7 percent of the state’s tax revenues—a $750 million deficit in state’s transportation budget—before being declared unconstitutional. Still, the state ended up setting a base, flat fee of $30 for state vehicle registration, and eventually allowed local districts to approve their own fees on top of that.

If passed, the initiative would bar local communities from passing their own vehicle fees, effectively undoing two decades of voter-approved funding for local projects—and in Seattle, it largely affects public transportation.

Local and state budgets are a deep, tangled web of revenue and regulation. Here’s a primer on where our transit funding comes from, why it works that way, and how we got here.

Transportation funding under I-976

The reasons why Eyman’s initiatives are so successful and why they’re so damaging to transportation budgets are two sides of the same coin: Washington State’s tax structure is one of the most regressive in the entire United States, meaning it places a higher burden on low-income residents. With no income tax in Washington State—and with a change to the state constitution required to get one—we rely heavily on sales tax, property tax, and, occasionally, vehicle-licensing fees. It’s frustrating for tax-fatigued citizens, but it’s also a strain on state and local budgets.

In Seattle, which almost always rejects Eyman’s initiatives, I-976 would have a dramatic effect on our expanding transit system. It would eliminate state and local funding sources that boost King County Metro, including a fee passed by Seattle residents that funds bus service in and around the city, plus programs for students and low-income riders. State funding would also be at risk, including funding for improving its Access paratransit program.

The effect on Sound Transit, which operates light rail, heavy rail, and express buses throughout much of Pierce, King, and Snohomish counties, would be especially dramatic—it’s funded by a local excise tax within the service area based on vehicle value—although just how dramatic would depend on outstanding bonds. The state’s Office of Financial Management (OFM) estimates the loss could be more than $300 million per year.

According to OFM data and analysis by the Seattle Times, the measure would cost local governments $2.3 billion the state $1.9 billion over the next six years—that’s not just transit, but other road projects—with $2.7 million in one-time administrative costs.

Courtesy of the Seattle Municipal Archives, item Nos. 73108 and 73109

How we got here

To figure out how we ended up with so much funding tied up in just a few buckets—and vulnerable to one, sweeping initiative—we have to look to the past century in Seattle, the events that swayed public opinion, how we created relatively narrow budget windows for transit funding, and why we have so many capital expenses now.

1918 to 1941: Streetcars scrapped after losing public funding

Back in 1918, Seattle overspent $15 million on publicly-owned street railways. A grand jury investigation implicated the mayor, and the State Supreme Court blocked any hope of tax dollars supporting the streetcars, demanding that all the operating budget come from fare revenue. Attempts at outside revenue failed when automakers pressured bond houses out of stepping in.

In 1939, the city would acquire a $10.2 million federal loan to clean up the 1918 streetcar purchase mess, start paving over the streetcar tracks, and begin taking all the streetcars to the scrapyard. The last streetcar died in 1941 as Seattle started planning a new, trackless transit system under the purview of the Seattle Department of Engineering: appropriately, Seattle Transit System.

1944: The gas tax is only for “highway purposes”

In 1944, state legislators started eyeing Washington’s 20-year-old gas tax—implemented in 1921—as a potential source of state revenue. The legislature, and then voters, reacted by passing the 18th amendment, which restricts gas tax funds for “highway purposes.”

Meanwhile, Seattle had just switched over from streetcars to buses, and those buses had a ridership of 130 million. Although it wouldn’t restrict funding until 1969, it’s notable that the amendment doesn’t explicitly mention transit.

Courtesy of the Seattle Municipal Archives, item No. 76023

1952: A local red scare

Just a few years after Seattle’s privatized transit options by power company Stone and Weber folded, a new proposed King County charter advocates for modernizing the area’s mass transit system, among other things. It’s rejected by voters, with some critics calling it “communistic.” After another failed attempt, a county charter was finally passed in 1958, although it that version limited the newly-formed King County Metro to wastewater treatment.

1968 to 1970: Forward Thrust

In the late 60s and early 70s, in the shadow of the 1963 World’s Fair, a suite of city improvement measures were introduced by something called the Forward Thrust committee—co-founded by legendary, recently-departed planner Jim Ellis. In 1968, voters approved a few elements of the effort, including the Seattle Aquarium and what would later become the Kingdome (and, even later, rubble).

Among the committee’s capital proposals: a 47-mile, 30-station rapid rail system, with an estimated completion date in 1985. It would be run by Seattle Metro—which mostly handled wastewater at the time.

The idea polled well, but strong, vocal opposition rolled in from developers and auto companies. The plan got 50.8 percent of the vote in 1968, but not the 60 percent needed to pass. In the next round of Forward Thrust voting in 1970, voters rejected both rail and a series of transit bonds, and we lost federal transportation improvement funding to Atlanta.

In short: We don’t build a rail system while we have a chance, and Seattle doesn’t get a redo until the mid-1990s. In local urbanist circles, this is widely considered one of the biggest missed opportunities in Seattle planning.

1969: “Highways” mean “cars,” or why we can’t use the gas tax on transit

During the Forward Thrust era, Seattle was also looking for transit funding at the state level and not having a lot of luck there, either. A 1967 emergency state budget carved out $250,000 to help Seattle build a comprehensive public transportation plan. The bill text justified the funding as a measure to “to promote future savings in the construction, reconstruction, repair and betterment of public highways, county roads, bridges, and city streets.” (And, for context, the budget also gave $715,000 to the Horse Racing Commission.)

Then-Attorney General John J. O’Connell alleged the funding was unconstitutional thanks to—see back in 1944—the 18th amendment to the state constitution, which restricts gas tax revenue to “highway purposes.” The State Supreme Court ultimately agreed with him that transit isn’t a “highway purpose,” setting a sticky precedent that we’re still feeling the effects of.

In 2015, the Supreme Court would allow a hazardous substance tax to be levied on gas, and currently Washington is looking into a per-mile system instead of the gas tax.

1972: Hello, Seattle Metro (but not electric buses)

In the first voter-approved transit tax since 1918—leading to the streetcar overspending scandal—Seattle Metro finally got a voter-approved transit line, funded by a .3 percent sales tax, and took over Seattle Transportation System operations. However, voters reject a modern, electric transit system. Things work out pretty well for the next couple of decades: Ridership steadily grew and service expanded.

1995 to 1996: Sound Transit One

In 1995, voters reject a Regional Transit Authority (you know it as Sound Transit) measure for a gigantic, $6.7 billion transportation system over three counties that would’ve featured commuter rail, light rail, express buses, and expanded HOV lanes. A much-smaller, $3.9 billion plan passed in 1996.

1999 to 2002: Enter Tim Eyman and I-695

20 years ago, car licensing was one of the state’s few progressive tax options, with car owners paying 2.2 percent of a car’s value in yearly excise tax. Passed in 1999, Eyman’s first tax-busting initiative switched things up to a flat rate of $30. This decreased car tabs for anyone with a vehicle valued at more than $1500 (and raised them a bit for cars below that). 29 percent of the excise tax had gone to local transit, and the measure led to raised fees and cut services.

The initiative was partially vetoed, but the state set flat fee of $30 for state vehicle registration on its own as a kind of after-the-fact compromise, with Sound Transit’s funding grandfathered in because of bond obligations.

Eyman came back out swinging with I-776, which was very similar in scope and put Sound Transit’s funding, once again, in jeopardy. It was rejected as unconstitutional and then upheld by a higher court in 2003—but, again, bond obligations eventually got Sound Transit the green light to continue collecting funds in 2006.

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2011 to present: The Seattle Transportation Benefit District

Lawmakers passed an amendment to state statute in 2007 that allowed cities and counties to pass their own local car-tab fees again: up to $20 without a vote or $100 with a vote for up to two years.

With the Great Recession starting later that year and much of King County’s transit funding coming from sales tax, this would almost immediately come in handy.

Facing a $60 million funding deficit and a potential 17-percent service reduction, the King County Council approved a $20 “congestion reduction” fee in 2011, collected in 2012 through 2014.

But as the fee reached the end of its term—and Seattle became the fastest-growing city in the United States—Metro still faced shortfalls, and put a $60 fee with a sales-tax increase up to a vote in King County—where it was rejected. Cuts weren’t as drastic as the county had anticipated, at less than a third of a planned 16 percent, supposedly because of recovering sales-tax revenue.

In response to the countywide rejection, Seattle, which had its own $20 fee already, put an almost identical measure on the ballot for a city-only fee and tax increase—which ended up passing by about 60 percent. Currently, it raises about $45 million a year, and is in effect through 2020.

Since then, Metro service has mostly grown, and has even branched out into programs like a responsive shuttle. Last year, the Seattle City Council expanded which routes qualify for funds, allowing buses farther out into the county to benefit.

The Seattle Transportation Benefit District expires next year and will likely have some kind of replacement presented on the city or county level. County Councilmember Claudia Balducci spoke with Seattle Transit Blog earlier this year about the process.

What’s next?

Eyman’s initiatives so frequently end up in court—and there are all sorts of moving parts to local transit funding in the next few years—so it’s hard to predict the outcome whether the I-976 passes or not. But with so much of Seattle’s recent gains in public transportation tied up in car tab fees, the city could be looking at some big changes.