Car-tab gutting initiative likely to pass—and projects are already being put on pause

Update, November 7: Transit advocates and government officials appear to have accepted the passage of Initiative 976, which would close off revenue for many state and local programs, some voter-approved, with a particularly dramatic impact on transit. The initiative, which would on the surface cut all Washington State car tabs to $30 regardless of local fees, is championed by anti-tax crusader Tim Eyman, who has run similar initiatives throughout the past two decades.

The measure continued to lead in ballot returns late Wednesday. While it’s not impossible to close the lead, it’s extremely unlikely—and the opposition has started taking its passage as a done deal. What’s left, advocates and government officials say, are next steps.

Jay Inslee announced Wednesday evening that he has directed the Washington State Department of Transportation to “postpone projects not yet underway.” The Washington State Patrol and Department of Licensing—which also receive car-tab funds—have been asked to defer “non-essential spending” while the state investigates the fallout.

“At this point in the count, there is a clear gap between yes and no voters,” reads a No on I-976 campaign statement delivered Wednesday evening. “There are about a half million votes left to count, and half of those are in King County, where voters are rejecting I-976. However, we do not believe that advantage will be enough to close the gap. The indication right now is that I-976 will pass.”

King County Executive Dow Constantine announced Wednesday that he’s working with the King County Prosecuting Attorney to mount a legal challenge to the initiative. Eyman’s initiatives have a tendency to be at least partially struck down in court—both his 1999 and 2002 $30 car tab measures ended up allowing for broad exceptions.

“The passage of I-976 underscores the ongoing need for comprehensive state tax reform, but in the short term we must clean up another mess that Tim Eyman has created for our state, our region, and our economy,” says Constantine in a statement.

In the shorter-term, programs and projects that relied on revenue wiped out by the initiative have some planning to do. Sound Transit, which is in the middle of a massive light-rail expansion largely funded by car-tab fees, will know more about its situation after a board meeting on November 21: “The Board will consider Sound Transit’s obligations to taxpayers who want their motor vehicle excise taxes reduced, as well as how to realize voters’ earlier direction to dramatically expand high capacity transit throughout the Puget Sound region,” reads a Sound Transit statement delivered Tuesday night.

The agency wasn’t the only one to acknowledge Washington’s regressive tax structure—which places a higher burden on low- and middle-income communities—as a factor in both the measure’s popularity and the need for additional revenue.

“Our state’s tax system is inefficient, unfair, volatile, inadequate, and bad for business,” says Constantine. “Local governments have few tools at their disposal to provide all of the infrastructure and services on which successful communities and a thriving economy depend. Today, our economy is generating unprecedented prosperity, while at the same time governments are forced to cobble together transit and road systems from antiquated, inadequate, and unpopular funding sources. We can and must do better.”

Original article, November 6:

The 2019 general election ended Tuesday night, and results are starting to come in for 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.

In the first batch of election results, the initiative is leading by more than 10 points and 100,000 votes.

If it’s ultimately passed, the initiative would eliminate funding for local projects, like Seattle’s Transportation Benefit District (STBD), in addition to state taxes. The STBD generates more than $45 million for Seattle-area transportation costs, including paratransit and responsive shuttles for riders with limited transit access.

It would also complicate funding for Sound Transit’s expansion, which is currently underway, although just how much would depend on how bond obligations shake out.

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. State voters approved Eyman’s first $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.

Although the Seattle area has some of the highest vehicle registration costs between the STBD and Sound Transit fees, current results show that King County is rejecting the measure even more dramatically as the state is approving it.

Few funding options

Tax fatigue is a driving political force in Washington State. Our 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, vehicle-licensing fees.

A long history of public distrust and court precedents have led to a complicated web of transit funding, meaning that it can’t come from just anywhere in state or local budgets. This is how both the state and local communities have come to get so much funding from this one source.

According to data from the state’s Office of Financial Management 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.

OFM estimates the loss to Sound Transit could be more than $300 million per year.

It’s not just urban locales like Seattle that fund transit and roads projects through vehicle registration fees, either. Communities from Bainbridge Island to Zillah pay anywhere from $20 to $80 each year to a transportation benefit district.

While other funding options are available, fatigue is about as high for sales tax and property taxes—and it leaves fewer state funds to fund projects in local communities. The Seattle Times’s Heidi Groover called the prospect a “Hunger Games-style competition.”

Washington Secretary of State

It’s not over yet

While the initiative has a strong lead, the results are still coming in, many of them from Eyman-rejecting areas.

Since Washington State is vote by mail, election results can vary as late ballots are counted. In the last odd-year general election—that’s November 7, 2017—Washington State had a 37.1 percent voter turnout, with nearly 1.6 million votes counted. Currently, the state is looking at a 23 percent voter turnout, and estimates more than 300,000 left to count.

And in King County, which has a strong history of rejecting similar initiatives, it seems likely there are plenty of ballots left to go. The immediate Seattle area votes often and votes left, with a 43 percent turnout in 2017. That year, just 279,000 of 463,000 ballots were counted by election night. 2019 general turnout in King County is wavering at just 23.5 percent in early results.

In short: Although it looks bad for roads and transit funding, nothing’s set in stone.