2019: Initiative 976 | Overview
Summary: I-976 is a Tim Eyman initiative that seeks to wipe out bipartisan and voter approved transportation investments at three levels: state, regional, and local. It would eliminate funding for freight mobility projects, light rail expansion, bus service, sidewalks, and essential road maintenance. NPI’s Permanent Defense and Keep Washington Rolling — a broad and diverse coalition of businesses, labor unions, environmental groups, and civic organizations — are opposing the initiative.
On the ballot
|Ballot Title:||Initiative Measure No. 976 concerns motor vehicle taxes and fees. This measure would repeal, reduce, or remove authority to impose certain vehicle taxes and fees; limit annual motor-vehicle-license fees to $30, except voter-approved charges; and base vehicle taxes on Kelley Blue Book value. Should this measure be enacted into law?|
|Filed on:||March 19th, 2018|
|Before Voters In:||November of 2019|
|Fate:||To be determined|
|Election Results:||Yes: To be determined||No: To be determined|
|Election Turnout:||To be determined|
|Complete Text:||Available (PDF)|
|Ballot Summary:||This measure would repeal or remove authority to impose certain vehicle taxes and fees; limit state and local license fees to $30 for motor vehicles weighing 10,000 pounds or less, except charges approved by voters after the measure’s effective date; base vehicle taxes on Kelley Blue Book value; require regional transit authorities to retire bonds early where allowed; and either reduce or repeal taxes pledged to bonds depending on whether bonds are retired by 2020.|
The following is the explanatory statement prepared by the Attorney General’s office for I-976 in advance of the November 2019 general election.
The Law as It Presently Exists
A. Motor Vehicle Registration and License Fees
Owners of motor vehicles pay state and local license fees and excise taxes when they register vehicles and obtain license tabs each year. The total, combined amount depends on the type and weight of the vehicle, as well as where the vehicle is registered.
The base annual license fee ranges from $30 to $93 for most passenger vehicles, such as cars, motorcycles, and light-duty trucks. An additional fee is then added depending on the vehicle’s weight. The vehicle weight fee can range from $25 to $65 for most passenger vehicles. Funds from the license and vehicle weight fee are used to pay for a variety of state transportation purposes, including road and highway repairs.
Owners of snowmobiles pay an annual license fee of $50. The snowmobile license fee helps pay for snowmobile facilities and snowmobile safety, enforcement, and education programs throughout the state. Owners of commercial trailers pay $34 for initial registration and $30 for each annual renewal. These license fees also pay for state transportation purposes.
Additional taxes and fees may be added depending on the city and county where the vehicle is registered. These taxes and fees help pay for local transportation improvement projects, passenger-only ferries, and other transportation purposes. Some residents of King, Pierce, and Snohomish County also pay voter-approved, annual motor vehicle excise taxes (MVET) that help pay for mass transit projects run by Sound Transit. The MVET is calculated based on a vehicle valuation and depreciation schedule that is set in state law. The total rate of the current MVET is one and one tenths percent (1.1%) of the value of the vehicle as determined by the statutory formula. Future approved MVET’s cannot exceed eight-tenths of one percent (0.8%) of the value of the vehicle.
Finally, other fees may be included in the total amount, such as for county filing and service fees, fees for special license plates, or fees for certain types of vehicles. For example, owners of electric vehicles currently pay a $150 fee that goes toward paying for transportation feasibility studies and other transportation purposes. An additional $75 transportation electrification fee will go into effect for electric vehicles on August 1, 2019. This fee will be used to support green transportation projects.
B. Taxes on Selling, Leasing, or Renting a Motor Vehicle
Each retail sale or lease of a motor vehicle is subject to an additional state excise tax known as the “motor vehicle sales/lease tax.” This tax, which is in addition to general sales and use taxes, is set at three-tenths of one percent (0.3%) of the selling price of every motor vehicle in the state. Off-road vehicles, snowmobiles, and other non-highway vehicles are not subject to the tax. Farm tractors and vehicles are also not subject to the tax so long as the vehicles are not used for marijuana production. Funds from the motor vehicle sales/lease tax pay for transportation services in the state.
Regional transit authorities in King, Pierce, and Snohomish counties may also impose additional sales and use tax on car rentals. The rate of the tax may not exceed 2.172 percent (2.172%) of the selling price of the rental. Funds from this tax are used to provide mass transit services run by Sound Transit.
C. Sound Transit Funding
State law authorizes Sound Transit to collect multiple types of taxes from some King, Pierce, and Snohomish County residents to help pay for mass transportation projects. These taxes include the MVET and the additional sales and use tax on rental cars previously described, as well as a local property tax and a local sales and use tax on purchases made within the district. Sound Transit also uses federal grants, transit fares, interest earnings, and other revenue to pay for its transportation projects.
Since 1999, Sound Transit has issued and sold public bonds to finance its transportation projects. Sound Transit uses the revenue from the MVET and other taxes to pay the principal and interest on the bonds. It promised its bondholders that it would continue to collect the taxes until the bonds are retired. In 2006, the Washington Supreme Court held that state law could not change the terms of any existing Sound Transit bond contracts while the bonds are still outstanding. This means that Sound Transit must continue to use the tax rate and valuation formula that were in effect at the time the bond was issued, even if state law later changes the rate or formula, until the bonds are retired, defeased, or refinanced under different contract terms.
The Effect of the Proposed Measure if Approved
This measure would reduce funding for state and local transportation projects by repealing, reducing, or removing state and local authority to impose certain vehicle taxes and fees. The measure would limit annual state and local license fees for motor vehicles weighing 10,000 pounds or less to $30, unless the fee is approved by voters. License fees, such as the motor vehicle weight fee and transportation benefit district fees, would be eliminated. The electric vehicle license fee would be lowered to $30. The transportation electrification fee would remain the same. The license fee for snowmobiles and commercial trailers would be lowered to $30. Other fees, such as service and filing fees, would remain the same. The measure would also eliminate the state motor vehicle sales/lease tax and eliminate authority to impose a local motor vehicle excise tax that supports passenger-only ferries.
Any regional transit authority, such as Sound Transit, that has issued bonds financed by a motor vehicle excise tax would be required to defease, refinance, or retire the bonds early, if the bond contracts allow such action. Once the bonds have been defeased, refinanced, or retired, the authority to impose the MVET and the additional sales and use tax on rental cars would be repealed automatically. If the regional transit authority is not able to completely defease, refinance, or retire the bonds by March 31, 2020, any existing voter-approved MVETs would remain unchanged, and the maximum rate of future voter-approved MVETs would be reduced from 0.8% to 0.2%.
The measure would also require that any future vehicle taxes, including voter-approved MVETs, be determined by using a vehicle’s base model Kelley Blue Book value. The base value would not include any applicable federal excise taxes, state and local sales and use taxes, transportation or shipping costs, and preparatory and delivery costs. The measure would require the Department of Licensing to use a vehicle’s base model Kelley Blue Book value for any appeal of the valuation of the vehicle.
Fiscal impact statement
The following is the fiscal impact statement prepared by the Office of Financial Management in advance of the November 2019 general election.
FISCAL IMPACT SUMMARY
Initiative 976 changes vehicle taxes and fees by lowering motor vehicle and light duty truck weight fees to $30; eliminating the 0.3 percent sales tax on vehicle purchases; lowering electric vehicle and snowmobile fees; modifying and reducing Sound Transit motor vehicle excise tax provisions; and removing authority for transportation benefit districts to impose a vehicle fee. Total revenue loss to the state in the next six years is $1,921,901,238. Total revenue loss to local governments in the next 6 years is $2,317,121,034. The departments of Licensing and Revenue have estimated implementation costs of $2,846,800 in the 2019—21 biennium.
- Except as otherwise provided, the effective date of the initiative, if approved by voters, is December 5, 2019. Section 10 and 11 take effect on the date that the regional transit authority complies with section 12 of this act. Section 13 takes effect on April 1, 2020, if sections 10 and 11 have not taken effect by March 31, 2020.
- The provisions of the initiative apply prospectively, not retroactively.
- Fiscal estimates use the state’s fiscal year of July 1 through June 30. Fiscal year 2020 is July 1, 2019, to June 30, 2020.
- State revenues are based on the June 2019 transportation revenue forecast.
- Local revenues are based on the most recent actual figures and are not forecasted.
- Transportation benefit districts (TBDs) have the authority to collect vehicle fees, and sales and use tax. This initiative repeals only the authority to collect vehicle fees, so TBDs could continue to collect sales and use tax.
- Section 5(1) erroneously states that the electric vehicle fee is $130 total. RCW 46.17.323 includes two fees. $100 in section (1) and $50 in section (4)(a). The current electric vehicle fee is $150 total. Calculations for the impact of the fee reduction are based on the correct fee. Chapter 287, Laws 2019 establishes the transportation electrification fee of $75. I-976 would lower the $100 in section (1) to $30 and eliminate the $50 in section (4)(a). It does not affect the new $75 fee.
The initiative reduces license fees for vehicles under 10,000 lbs. to $30. The additional 0.3 percent sales and use tax on motor vehicle sales is eliminated. The snowmobile license fee is reduced from $50 to $30. Commercial trailer fees are reduced from $34 to $30. The electric vehicle fee in Section 5(1) is reduced from $100 to $30. An additional electric vehicle fee in Section 5(4)(a) of $50 is eliminated.
Potential Revenue Impact by Fund Distribution Beginning Dec. 5, 2019 Registration Fees: FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Total Snowmobile Account (01M) ($240,300) ($447,200) ($448,500) ($449,900) ($451,200) ($453,000) ($2,490,100) WSP Highway Account (081) ($9,916,900) ($15,661,000) ($15,692,400) ($15,723,900) ($15,755,400) ($15,823,800) ($88,573,400) Transportation Partnership Account (09H) ($5,115,000) ($8,077,700) ($8,094,000) ($8,110,100) ($8,126,400) ($8,161,700) ($45,684,900) Rural Arterial Trust Account (102) ($202,163) ($539,700) ($714,975) ($928,725) ($1,176,675) ($1,451,700) ($5,013,938) Motor Vehicle Account (108) ($28,223,075) ($45,210,500) ($46,151,950) ($47,278,650) ($48,576,750) ($50,112,500) ($265,553,425) Puget Sound Ferry Operations (109) ($609,800) ($963,000) ($965,000) ($966,900) ($968,900) ($973,100) ($5,446,700) Transportation Improvement Account (144) ($202,163) ($539,700) ($714,975) ($928,725) ($1,176,675) ($1,451,700) ($4,272,075) Multimodal Account (218) ($128,650,600) ($227,504,000) ($231,592,800) ($294,399,500) ($298,790,300) ($303,184,500) ($1,484,121,700) Nickel Account (550) ($2,322,700) ($3,668,000) ($3,675,400) ($3,682,700) ($3,690,100) ($3,706,100) ($20,745,000) Total ($175,280,538) ($302,071,100) ($308,050,000) ($372,469,100) ($378,712,400) ($385,318,100) ($1,921,901,238)
Description of affected accounts
- The Snowmobile Account funds administration, acquisition, development, operation and maintenance of snowmobile facilities and the implementation of snowmobile safety, enforcement and education programs.
- The State Patrol Highway Account funds activities of the Washington State Patrol, including traffic enforcement (and associated criminal investigations), commercial vehicle enforcement and ferry vessel and terminal security.
- The Transportation Partnership Account funds projects and improvements from the 2005 Transportation Partnership Omnibus Transportation Appropriations Act.
- The Rural Arterial Trust Account funds construction and improvement of county roads and bridges.
- The Motor Vehicle Account is the main source of funds for highway construction, maintenance, ferries and support services. A portion of motor fuel tax revenues is distributed to cities and counties for road programs.
- The Puget Sound Ferry Operations Account funds ferry operations and maintenance.
- The Transportation Improvement Account funds administration of the Transportation Improvement Board and grants for local government transportation projects that address congestion.
- The Multimodal Transportation Account funds all modes of transportation projects, including public transportation, rail and bicycle/pedestrian projects.
- The Transportation 2003 Account funds debt service on bonds and Washington State Department of Transportation operating and capital highway programs.
This initiative repeals local authority to impose a TBD vehicle fee. TBD vehicle fees are used by 62 municipalities across the state to fund local improvements such as road repair and maintenance, transit systems and sidewalks. In fiscal year 2018, TBDs using a vehicle fee across the state collected $58,186,839. This revenue would be eliminated beginning on the effective date of this initiative.
Sections 10 and 11 would reduce the motor vehicle excise tax (MVET) that funds the Central Puget Sound Regional Transit Authority (RTA) commonly known as Sound Transit. MVET rates are reduced from .8% to .2% and will be calculated based on Kelley Blue Book vehicle value instead of the manufacturer’s suggested retail price.
This tax rate would be repealed when the RTA is able to refund, refinance or defease, or terminate, outstanding bonds that have been issued against this tax. It is unknown if this is possible. If the bonds are not able to be defeased, the MVET will remain unchanged to pay off the bonds previously issued that are pledged to the revenue source. If the bonds are able to be defeased, Sound Transit’s revenue would be reduced by $328,000,000 per fiscal year based on 2018 revenue. For new bonds issued, the MVET will decrease from .8% to .2%.
This initiative repeals local authority to impose a passenger-only ferry tax. Currently there are no passenger-only ferry districts using the MVET authority to fund their ferries, although they would no longer have the option.
Tax/Fee Fiscal year 2018 revenue impact TBD Fee ($58,186,839) RTA MVET ($328,000,000) Passenger-only ferry MVET 0
State Government Expenditures
Temporary higher administrative costs at Department of Licensing and Department of Revenue
The Department of Licensing (DOL) would have temporary, higher administrative and computer costs to implement this initiative. If Sound Transit is able to defease or refinance its bonds and the MVET is reduced, DOL will issue refunds to customers who register their vehicles prior to their annual vehicle registration date. The DOL will also have costs for computer updates, temporary staffing costs for additional calls to their call center, and accounting services to issue refunds. Biennial administrative costs for the agency are $2,740,900 in the 2019–21 biennium.
The Department of Revenue (DOR) will experience temporary, higher administrative costs to implement this initiative. The DOR will have costs for computer updates and administrative costs for rule making, accounting services to issue refunds and developing new forms. Biennial costs for the agency are $105,900 for computer updates and administrative items in the 2019–21 biennium.
Local Government Expenditures
Voter’s pamphlet argument against I-976
The following is the text of the argument that appeared in the 2019 voter’s pamphlet urging a no vote on I-976, including the rebuttal.
Tim Eyman’s latest misguided, deceptive initiative would irresponsibly slash state and local transportation funding by more than $4.2 billion over the next six years, undermining our ability to address critical safety and traffic problems. Vote NO on 976!
976 Threatens Transportation Safety
Washington has over 160 bridges and overpasses in “poor” condition. 976 jeopardizes public safety, delaying projects to fix dilapidated bridges, overpasses, and tunnels that do not meet earthquake safety standards. The Washington State Troopers Association says, “We oppose this dangerous measure because it would stop thousands of needed road safety repair projects across the state, putting driver and pedestrian safety at greater risk.”
976 Will Harm Your Local Community
This measure eliminates important local transportation funding in 62 cities throughout Washington. As a result, cities from Seattle to Spokane, from Anacortes to Zillah, would lose nearly $60 million a year in funding needed for bus service, to repair potholes, upgrade safety, provide transit to seniors and people with disabilities, and reduce congestion.
976 Will Devastate Public Transit
Public transit connects people to jobs, education, health care, and each other. Many in our communities rely on public transportation as their primary way to get around. This measure would gut voter-approved light rail expansion and eliminate hundreds of thousands of bus trips each year for commuters, people with disabilities, teenage and elderly riders.
Public safety and transportation experts, business, labor and environmental groups all oppose Eyman’s latest flawed and deceptive money-making scheme. Vote NO on 976!
Steve Mullin, President, Washington Roundtable
Larry Brown, President, Washington State Labor Council, AFL-CIO
Alex Hudson, Executive Director, Transportation Choices Coalition
Jeff Merrill, President, Washington State Patrol Troopers Association
Paula J. Hammond, P.E., Former State Transportation Secretary
Tim Archer, President, Spokane Firefighters Local 29
Rebuttal of Argument For
Eyman’s 976 might sound good, but in reality it slashes transit and transportation funding by billions, harming our ability to maintain and improve our roads, bridges, ferries, buses and light rail. And 976 isn’t fair. It will give huge tax breaks to owners of brand-new luxury cars, and almost nothing to someone who drives a 10-year-old Corolla – while leaving all of us stuck in traffic. Vote NO on 976!