Ref 49 and Ref 51

REFERENDUM BILL NO. 49

Chapter 321, Laws of 1998 (Shall motor vehicle excise taxes be reduced and state revenues reallocated; $1.9 billion in bonds for state and local highways approved; and spending limits modified?) The measure was submitted to the voters at the November 3, 1998 state general election and was approved by the following vote: For – 1,056,786 Against – 792,783.

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REFERENDUM BILL NO. 51

Chapter 202, Laws of 2002 (The Legislature has passed House Bill No. 2969, financing transportation improvements through transportation fees and taxes. This bill would increase highway capacity, public transportation, passenger and freight rail, and transportation financing accountability through increased fuel excise taxes, sales taxes on vehicles, and weight fees on trucks and large vehicles.) The measure was submitted to the voters at the November 5, 2002 state general election and was rejected by the following vote: Approved – 674,724 Rejected – 1,081,580.

I-695 cuts licence tabs to $30 - passed in 1999

Keeping tabs on reality
There's no such thing as a free lunch: feel good tax cut would gore all our oxes

Sunday, October 10, 1999
By THOMAS SHAPLEY
P-I EDITORIAL BOARD

Almost every workday morning brings transportation headaches on I-5 and I-405. But November could deliver a transportation migraine called I-695.

Just last November, with Referendum 49, Washington voters elected to dedicate a big chunk of their license tab tax money to fund a long-term, multi-billion dollar program for highway construction, rail, freight mobility and ferry construction. This November, Washington voters are being asked to approve Initiative 695, which would essentially toss out the license tab money altogether.

Shifting hundreds of millions of dollars in Motor Vehicle Excise Tax out of the state general fund and into the state transportation fund with Referendum 49 last year and then slashing the MVET through I-695 this year is like taking out a car loan and then quitting your job before you make the first payment.

Then, in a strange non sequitur, the initiative would also have us put to a public referendum every increase in tax or fee our duly elected officials deem necessary.

An anti-tax, less-is-more mythology has grown up around this ill-conceived proposal. The only antidote to this self-inflicted misery is a dose of reality before Election Day on Nov. 2.

Here, then, are some of the myths -- and attendant realities -- of Initiative 695.

The role of the Motor Vehicle Excise Tax

Myth: The MVET isn't doing the job it was created to do in the first place, which was to build and maintain the road system.

Reality: The MVET was first imposed in 1937, in lieu of a property tax on automobiles. Its revenues were not initially intended to be used for transportation. The MVET was no more established to pay for the roads that carried the vehicles it taxed than the property tax on real estate is confined to paying for the sidewalks in front of the property upon which it is assessed.

Over the years, however, more and more MVET money has been transferred out of the state general fund and into the state transportation fund. The most recent such transfer came with voter approval of Referendum 49 last year.

R-49 moved roughly $469 million out of the two-year general fund budget and into the separate state transportation budget. The R-49 money tapped the general fund budget surplus, in large measure, to float billions of dollars worth of bonds to finance long-overdue transportation improvements around the state.

I-695 would gut that effort. Those tempted to support I-695 on the argument that it is wrong to not spend all the vehicle license tax on transportation might ask themselves how it can now suddenly be right to spend almost none of it on transportation.

Who benefits

Myth: Dropping the MVET to a flat $30 per vehicle will help the "little guy," the average, working-hard-to-make-ends-meet person.

Reality: This is a boon to the big guys with newer, more expensive cars and motor homes. The progressiveness of the existing formula -- the more you have the more you pay, and, just as important, the less you have the less you pay -- is overturned in favor of a flat price for everyone.

The MVET is already applied at a flat rate of 2.2 percent on all vehicles. Dropping to a flat amount of $30 per vehicle gives a hugely disproportionate break to the owners of expensive vehicles.

Under current law, the yearly tax on a $40,000 Mercedes is $880. At a flat assessment of $30, that Mercedes would be taxed the same amount as an old Chevy worth $1,360. The Mercedes owner chocks up an $850 tax cut. The owner of the old Chevy, meanwhile, gets no break at all.

Another example: The owner of a middle-aged Ford valued at $4,000 now pays $88 a year for her tabs. Her big I-695 tax break? Fifty-eight dollars. Whoopeee!

The serious partying will take place in the $100,000 motor home, whose owner gets a $2,170 cut.

But even the license tab tax break I-695 would give the "big guys" would be diluted on April 15. The MVET is a federal income tax deduction, and as such reduces the owners' federal tax obligation. No state MVET; no tax deduction. Vehicle owner's will end up sending less money to Washington state and more to Washington, D.C.

Saved by the "surpluses"

Myth: We've got plenty of money, at both the state and local level, to make up for this lost revenue. I-695 proponents cite the nearly $1 billion state budget "surplus" and the $3 billion local government investment pool as evidence that government can do without the MVET money.

Surplus Reality Part 1: The state Department of Transportation estimates it will take a huge hit if I-695 passes. It will lose about $558 million in direct tax revenue in the next two years. (Beyond that, the transportation department would lose out on another $686 million in borrowed money secured by R-49 bonds.)

That represents a cut of about one-third of the departments $3.3 billion in transportation expenditures planned over the next two years. Over the next six years -- the period in which we are supposed to do all those R-49 projects --

I-695 would cost the state transportation budget $7 billion.

Surplus Reality Part 2: The lion's share of the state budget "surplus" is really a reserve, designed to guard the state against unforseen problems, including a downturn in the economy.

This "surplus" is very hard to spend -- thanks to voters' approval of Initiative 601. That law sets strict limits on how much the state can spend each year out of the general fund budget. The current two-year general fund budget is just $78 million under that limit. Going over that spending limit requires -- guess what? -- approval by the voters.

So, under I-601, using any more than $78 million of the "surplus" to replace the MVET revenue loss would require a majority of voters agreeing to raid the state's savings account.

Surplus Reality Part 3: The $3 billion local government investment pool is a short-term holding place for various government funds moving through the system at any given time. These are committed funds. Saying we could tap this fund is like saying you've got money for a Caribbean cruise because the check for the house payment hasnt yet cleared the bank.

The extent of the damage

Myth: I-695 affects only state transportation funding.

Reality: While the transportation budget and the proposed R-49 projects take a big hit, there would also be substantial losses to local government, cutting funding for criminal justice and public health.

Included in the $1.2 billion that would be lost throughout the state over the next two years is $345 million in local transit funding, $62.8 million in local criminal justice money and $215.5 million in other local government funding, including more than $52 million in public health money.

Adams County, for instance, stands to lose more than a half-million dollars next year alone, including $33,400 for public health, $83,800 for city police and fire protection and $302,700 for criminal justice. Ritzville, hometown of Republican state Sen. Larry Sheahan, would take a $20,500 hit, including $18,000 in city police and fire protection and $1,877 in criminal justice.

Garfield County stands to lose as much as 40 percent of its operating budget.

Jurisdictions within King County, meanwhile, face losses of $139.5 million, including $9.5 million in public health, $13.5 million in city police and fire protection, $7.4 million in criminal justice funds and more than $100 million in public transit support.

Opponents, including Mike Patrick, executive director of the Washington State Council of Police and Sheriffs, say the passage of I-695 could result in the loss of 1,000 police officers and firefighters.

While it's difficult, if not impossible, to predict just what budget-cutting measures local jurisdictions might take, it's certain that criminal justice costs soak up large portions of county budgets, especially in rural areas. Local tax bases are not equipped to fill the void.

Holding the line on taxes

Myth: Tax increases are out of control and subjecting all tax and fee increases to public votes will bring taxes under control.

Reality: There are already several mechanisms in state law that restrict tax increases. Two of those are the recently approved limitations contained in I-601 and Referendum 47.

Under I-601, raising taxes requires approval by a super majority (two-thirds) of the Legislature. And as a guard against profligate tax increases, I-601 limits the amount legislators can spend, no matter how much they take in.

State law had long limited taxing jurisdictions to no more than a 6 percent increase in annual expenditures without a vote of the people. Referendum 47, approved by the voters in 1997, limited the automatic increase to the rate of inflation (in no case to exceed 6 percent) without approval of two-thirds of the members of the governing body.

For those opposed to excessive government spending, it shouldn't make much sense to require that every increase in taxes or fees be subject to the public expense of a referendum.

Is it wise policy to hold an election every time the public library needs to raise the cost of a library card or parks and recreation needs to increase the admission price to the public pool?

The only alternative to multiple elections allowed by I-695 would be annual plebiscites covering a gaggle of money issues for the already under-informed public to bone up on.

The reality is that Washington is run by a representative democracy, in which we elect people to make informed decisions on a myriad of matters, including taxes.

I-695 backers have made no convincing case for overthrowing our traditional form of government.

Origins of I-695

Myth: Initiative 695 was crafted by a group of concerned, committed citizens to express a broad grassroots ideology.

Reality: I-695 founder Tim Eyman seems more off on a lark than a crusade. A mail-order salesman, Eyman decided to try pedaling public policy like he does watches. He had been a co-sponsor of Washington's Initiative 200, which effectively ended affirmative action here, but little thanks to Eyman. His effort fizzled and I-200 was rescued by talk-show host John Carlson. Eyman first tried to get the $30 license tab measure on the ballot last year but came up short on signatures.

Eyman apparently doesn't claim to be one of the "little guys" for whom he says he's doing all this -- unless he defines the "little guy" as one who, like himself, recently bought a $433,000 home and pays $900 a year in car tabs on his '98 Saab.

Taxpayers will get just what they deserve from billions less in taxes -- billions less in government services. And who usually gets the short end of the stick with fewer government services? Ah, yes, the little guy.

For one thing, there are more little guys out there, so they're more likely to feel the effect of cuts in police, fire, public health, public transit and road improvements. The little guys often live in little places, such as the rural counties whose budgets are in for such a beating from I-695.

Delivering on the promise

Myth: The passage of I-695 will be a victory for the downtrodden taxpayer over the free-spending politicians by not only shutting down billions of tax-funded transportation projects but by hog-tying local elected officials who won't dare take the political risk of putting tax and fee increases up for a vote.

Reality: The grim reality for the no-taxniks is that it's just bad public policy to allow basic services to go unfunded.

Responsible elected officials will find a way to fund them. The logical solution to the suddenly unfunded transportation need would be obvious if ironic: a gas tax increase.

Republican legislators generated R-49 last year as an alternative to Gov. Gary Locke's proposal to raise the gas tax and index future increases to inflation.

The gas tax is the truly intuitive way to fund transportation. Indeed, the 18th Amendment to the Washington State Constitution mandates that gas tax money only be used for "highway purposes," including ferries, State Patrol and the Department of Licensing.

Initiative 695 may not even result in removing hefty taxes from vehicles.

At the 1937 inception of the MVET, the Legislature tempered the tax by exempting vehicles from city and county property taxes.

Initiative 695 would eliminate that exemption. So it's quite possible that, with the passage of I-695, and without even the necessity of a vote of the Legislature (let alone a public vote), county assessors would have no choice but to assess vehicles as personal property.

Because automobiles were subject to personal property tax before the 1937 exemption and because I-695 would toss out that exemption, says King County Assessor Scott Noble, it would not be a new tax and therefore would not require I-695's voter approval. Assessors are obligated to assess and collect taxes in accordance with the law.

And then there is the income tax. The passage of this initiative might be what it takes to finally force serious consideration of an income tax.

Perhaps the biggest myth of all is that we can get something for nothing, or that government is something that somebody else should pay for, or that it's always right for someone else to get less so that we can get more.

Reality bites. But a myth can swallow you whole.

Referendum 49 - passed in 1998 - dedicate licence tabs to road improvement

Referendum 49 0ct 98
Shall motor vehicle excise taxes be reduced and state revenues reallocated; $1.9 billion in bonds for state and local highways approved; and spending limits modified?

Impartial Analysis from the State Attorney General
The Law As It Presently Exists

The State levies a motor vehicle excise tax on the privilege of using a motor vehicle in the state. The tax is payable each year and is based on the value of the vehicle. For passenger vehicles, motorcycles, and trucks weighing up to 6000 pounds, the value is based on the manufacturer's suggested retail price, gradually depreciated over the life of the vehicle according to a schedule set forth in statute.

The law provides a percentage formula for the distribution of revenue from the motor vehicle excise tax to various state funds and accounts. These funds and accounts include: the motor vehicle fund; the Puget Sound capital construction and the Puget Sound ferry operations account in the motor vehicle fund; county and municipal sales tax equalization accounts; the state general fund; the transportation fund; county and municipal criminal justice assistance accounts; and the county public health account. There is also a distribution to cities and towns for police and fire protection. The law sets maximum amounts that may be deposited in the criminal justice assistance accounts, with any excess revenue deposited in the violence reduction and drug enforcement account.

Initiative 601, enacted by the voters in the 1993 general election, created a state expenditure limit and, with certain exceptions, requires that revenues received in excess of the limit be placed in reserve accounts and not spent. One provision of Initiative 601, codified as RCW 43.135.035, would require the expenditure limit to be lowered to reflect any transfer of money from the general fund to other funds or accounts. Another provision of Initiative 601, codified as RCW 43.135.060, provides that local governments shall be fully reimbursed by specific appropriation by the state for the costs of responsibilities imposed on local governments for new programs or for increases in service levels under existing programs.

Certain municipalities that operate transit agencies may levy a local motor vehicle excise tax which is credited against the state tax. To obtain a distribution from the revenues generated, these municipalities must match the distribution with other revenues. Local sales taxes specifically imposed to support public transportation systems may not currently be used as matching funds.

The Effect Of The Measure If Approved Into Law

The measure would reduce the motor vehicle excise tax; reallocate the revenue from this tax and other revenues; provide for the issuance of $1.9 billion in state general obligation bonds to finance state and local highway improvements; and make other changes in state and local government funding provisions.

The motor vehicle excise tax would be reduced by a $30 credit against the tax for each personal-use motor vehicle, truck weighing up to 6000 pounds, or motorcycle. In addition, the statutory depreciation schedule would be changed so that the taxable value of a vehicle would be lowered in the second and third years of its use.

The distribution of revenues from the motor vehicle excise tax to various state funds would be changed in a number of ways. The allocation to the state general fund would be reduced from 57.644% to 13.573% through June 30, 1999, and after that date would be entirely eliminated. The portion allocated to the transportation fund would be increased from 5% to 43.605% through June 30, 1999, and then to 51.203%. The motor vehicle excise tax revenue allocated and distributed to other funds would be increased or decreased by varying amounts. The measure would require transfers from the general fund into two of these funds, the county criminal justice assistance account and the municipal criminal justice assistance account. Beginning with Fiscal Year 2000, the limits on distributions into these accounts would be removed. Part of the reallocated motor vehicle excise tax revenue would be distributed to economically distressed counties through a new account in the treasury.

The measure provides for the issuance and sale of up to $1.9 billion of general obligation bonds to pay for the location, design, right of way, and construction of state and local highway improvements. No bonds could be offered for sale without additional legislative action. The measure provides that the bonds shall pledge the full faith and credit of the state for payment of the principal and interest when due. The proceeds from the sale of the bonds would be deposited in the motor vehicle fund, and the principal and interest on the bonds would be first payable from revenues from the motor vehicle fuel and special fuel excise taxes.

The measure would modify Initiative 601 (RCW 43.135.035) to provide that the transfer of moneys from the general fund to other funds or accounts as authorized in this measure would not reduce the state expenditure limit. The measure would also modify Initiative 601 (RCW 43.135.060) to allow the state to reimburse local governments for the costs of new programs or increased service levels through increases in state distributions of revenue to local governments.

The measure would authorize certain cities owning and operating municipal public transportation systems to use local public transportation sales tax revenues to match their local motor vehicle excise tax revenues. This authorization would be implemented over a four year period beginning July 1, 1999. After July 1, 2002, 100% of the revenues generated from the local motor vehicle excise tax could be matched by local public transportation sales tax revenues.


Arguments For Referendum 49
Please join us in voting yes on Referendum 49 to reform our state's auto license tab system and to move ahead on critical transportation projects.

A yes vote is a vote for less congestion on our roads, less taxes on our cars and more dollars to fight crime in our communities.

VOTE YES TO REDUCE YOUR LICENSE TAB FEES AND TAXES BY $30 PER CAR.

Referendum 49 will reduce the license tab fee on each auto by $30. Your car will no longer be taxed at 100% of new value in your second year of ownership.

VOTE YES TO ALLOCATE MORE OF YOUR LICENSE TAB FEES TO TRANSPORTATION IMPROVEMENTS.

Only about one-half of your license tab fees now support transportation projects. R-49 will dedicate most of your license tab fees to transportation - where they belong.

VOTE YES TO PROVIDE MOST OF THE FINANCING FOR A $2.4 BILLION PLAN TO REDUCE TRAFFIC CONGESTION, MAKE OUR HIGHWAYS SAFER AND MOVE WASHINGTON GOODS TO MARKET.

By dedicating more of our license tab revenues - part of the $800 million budget surplus - to transportation, $2.4 billion will be available for transportation improvements. No new taxes are needed to provide these funds.

VOTE YES TO HELP COMMUNITIES FIGHT CRIME AND CREATE JOBS.

Local governments face rapidly rising costs for courts and jails. R-49 provides substantial surplus funds to communities for criminal justice. It also provides new funds to counties with high unemployment to help them with transportation and other economic development needs.

Vote yes because we need transportation solutions now to get our state moving again. Our freeways are dangerously congested. Traffic congestion is so bad, we can't wait any longer. R-49 will get us moving again.

Rebuttal to Arguments Above
Referendum 49 is risky, irresponsible government at its worst!

* It demands a blank check without saying how it will be spent.
* It takes money that could be spent on schools.
* It will make congestion worse by cutting funds for transit.

Don't be fooled by a politically crafty plan filled with false promises to relieve traffic congestion, fund local criminal justice and provide a tax cut without harming other programs.

Vote no on Referendum 49!

Arguments In Favor Submitted By
KAREN SCHMIDT, State Representative, Chairman, Legislative Transportation Committee; JEANNETTE WOOD, State Senator, Chair, Senate Higher Education Committee; MICHAEL PATRICK, Executive Director, Washington Council of Police and Sheriffs.

Advisory Committee: ED HANSEN, Mayor, City of Everett; MIC DINSMORE, Executive Director, Port of Seattle; LOWELL LANCASTER, Chair, Washington State Horticulture Assn.; KEN SMITH, President, WaferTech; ROB HIGGINS, Executive Vice President, Spokane Association of Realtors.
Referendum 49 is credit card government at its worst. It doesn't solve our transportation crisis, doesn't list the road projects it might finance, and takes money that should go to schools.


*****************************************************************************
Arguments Against Referendum 49
VOTE NO ON 25 YEARS OF DEBT FOR 5 YEARS OF PROJECTS

Referendum 49 will plunge the state into the deepest debt in history - credit card debt that will take a generation to pay off. Taxpayers will pay billions of dollars in interest that should be spent on roads and transit! In fact, transit spending will be cut by millions. Burdening taxpayers with decades of interest payments for only five years of projects makes no sense.

VOTE NO ON MONEY WITHOUT A PLAN

Referendum 49 says nothing about the projects the money will be spent on. No one knows what projects future legislatures, governors, and the Transportation Commission will approve.

VOTE NO ON A PLAN THAT WON'T FIX YOUR STREET'S POTHOLES

Referendum 49 won't ease congestion. It provides only pennies to fix potholes on your city streets and county roads! It cuts transit funding now and in the future.

VOTE NO ON JEOPARDIZING OUR CHILDREN'S FUTURE

This plan endangers our schools and colleges. If the economy slows, we'll need the state's budget surplus to pay for education. Referendum 49 means that surplus will pay the interest on our road debt instead.

Referendum 49 makes false promises to relieve traffic congestion, fund local criminal justice and provide a tax cut without harming other programs. Don't believe it! We cannot risk our future with a plan that is too expensive, hurts schools and doesn't fix the problem.

Vote no on Referendum 49.

Rebuttal to Arguments Above
Under R-49, Washington will have projected reserves more than $700 million above the voter-approved spending limit. Therefore, education cannot be affected. Not one bit. R-49 will improve transportation and provide healthy rainy-day reserves.

Like R-49, other options would use traditional, low-interest bonds to finance transportation projects. Instead of raising taxes, R-49 simply directs more license tab revenue toward transportation.

R-49 will fund a bipartisan plan to relieve congestion, increase safety, and get Washington moving again!

Arguments Against Submitted By
GARY LOCKE, Governor; MARY MARGARET HAUGEN, State Senator; RUTH FISHER, State Representative.

Advisory Committee: PAUL SCHELL, Mayor, Seattle; ELIZABETH PIERINI, President, League of Women Voters, Washington State Chapter; VALORIA LOVELAND, State Senator; DR. TERRY BERGESON, Superintendent of Public Instruction; DALE NUSSBAUM, President, Amalgamated Transit Union Legislative Council, Spokane.

History of Eyman Initiatives

Summary of Tim Eyman Initiatives (wiki)

Eyman launched his first initiative, Initiative 200, in 1997, which attempted to prohibit affirmative action in state higher education and government hiring and contracting. At first, Eyman had difficulty collecting enough signatures to place the initiative on the ballot (8% of the votes cast in the last gubernatorial election), so he sought help from local talk show host John Carlson. After Carlson took over, the initiative received enough signatures to earn placement on the ballot. In November of 1998, voters approved the initiative.

In 1998, Eyman failed to gather enough signatures for a new initiative which would have eliminated Washington's relatively high (though steeply progressive) motor vehicle excise tax, or MVET. Eyman sought to reduce public taxation by eliminating the MVET.

In 1999 Eyman tried again, with Initiative 695, which proposed replacing the old MVET with a flat $30 fee for yearly car registration fees, called "car tabs", while simultaneously requiring voter approval for any tax or fee increases at the state or local level. It was supported by the public but opposed by state officials.

Enlisting a number of volunteers from different regions of the state, and working with fellow activists Monte Benham and Jack Fagan, Eyman succeeded in getting I-695 on the ballot. It passed, despite opposition from a broad coalition—including some businesses, some labor groups, environmentalists, civic groups, and other organizations—who argued that the loss of revenue would wreak havoc on state government. Some major newspapers in Washington called for its rejection, and some cities, including officials in Seattle, passed resolutions opposing the initiative.

After I-695 was passed, opponents contested the initiative in court. The initiative was declared unconstitutional by the Washington State Supreme Court because it had two subjects. Fearing voter backlash, the Legislature, with the cooperation of Governor Gary Locke, quickly acted to maintain the lower car tabs.

After I-695, Eyman formed a political committee known as Permanent Offense. He began working on Initiative 722, which was designed to cap property taxes at 2%. With the support of groups such as the state asphalt pavers' union, he also sponsored Initiative 745, which would have mandated that 90% of all transportation funding go to roads (interpreted by some as an attack on mass transit spending).

Unlike I-695, I-722 and I-745 were placed on the ballot largely through the use of paid signature gatherers. While there was some initial concern by his opponents, the courts have ruled that paid signature gathering is protected by the First Amendment.

I-722 and I-745 both appeared on the November 2000 ballot. I-722 passed, but I-745 was rejected by voters. Political opponents contested I-722 in court, and it was overturned on the same grounds as I-695: that it was unconstitutional because it contained two subjects. The initiative had tried to reduce existing property taxes and enact a 2% cap on future property tax growth.

Eyman came back in 2001 with Initiative 747, which imposed a 1% cap on property tax growth in Washington. Like earlier initiatives, I-747 got on the ballot thanks to the use of paid signature gatherers. The public voted for and I-747 passed despite well-funded and visible opposition from many of the same political interests which had opposed Eyman's previous initiatives. Opponents argued that it passed because voters didn't realize or comprehend that public services would actually be cut. Supporters contended that those same services and costs were unnecessary and could not be justified. In Nov. 2007 I-747 was ruled unconstitutional. On November 29th, the state legislature entered a special session to consider reinstating the 1% cap.

Opponents then attacked Eyman claiming he had received help from the Code Revisor's Office in drafting the initiative and sued to force disclosure of the work the code revisor did. They won that battle in May 2002. The initiative went into effect, as the public had voted, shortly after passing. On June 13, 2006, King County Judge Mary Roberts threw out the measure, arguing that "The voters were incorrectly led to believe they were voting to amend I-722. The voters were misled as to the nature and content of the law to be amended, and the effect of the amendment upon it. The (state) constitution forbids this." (see [1]).

After the November 2001 election, Eyman began work on his next initiative, Initiative 776, which he called the "son of 695". Its aim was to cut local car tabs fees which I-695 and the Legislature had failed to remove earlier. The local car tab fees funded regional transportation in four Washington counties, including Sound Transit, a multi-county transportation agency in the Puget Sound area.

Opponents complained that the initiative asked voters statewide to vote on an issue which only affected four counties. Opponents questioned the constitutionality of allowing voters across Washington to vote on fees they were not paying nor seeing the benefit of. But supporters feared that similar fees would eventually be charged statewide.

In 2007, Eyman spearheaded Initiative 960, intending to make it harder for the Legislature to raise taxes and fees. This initiative is currently passing but election results have not been finalized yet.

[edit] List of initiatives and outcomes

* I-200 (1998) - Prohibit affirmative action in public employment, education and contracting.
o Passed by voters.
* I-695 (1999) - Cut the state motor vehicle excise tax and required voter approval for all tax increases.
o Passed by voters but declared unconstitutional.
* I-722 (2000) - Cut state and local property taxes, which fund public services.
o Passed by voters but declared unconstitutional.
* I-745 (2000) - Required 90% of transportation funding to be spent on road building.
o Defeated by voters.
* I-747 (2001) - Cut state and local property taxes
o Passed by voters but declared unconstitutional in Superior Court and Supreme Court.[1]
o Passed by a special session of the Democratically controlled legislature in 2007.
* I-776 (2002) - Cut local motor vehicle excise taxes.
o Passed by voters
* I-267 (2002) - Divert money from the general fund for road building.
o Failed to qualify for ballot.
* I-807 (2003) - Require a supermajority vote for all tax increases.
o Failed to qualify for ballot.
* I-864 (2003) - Cut property taxes by 25%.
o Failed to qualify for ballot.
* I-892 (2004) - Legalize slot machines.
o Defeated by voters.
* I-900 (2004) - Give state auditor ability to conduct performance audits.
o Passed by voters.
* Referendum 65 (2006) - Repeal ESHB 2661 legalizing sexual orientation discrimination.
o Failed to qualify for ballot.
* I-917 (2006) - Cap motor vehicle registration charge at $30 a year.
o Failed to qualify for ballot.
* I-960 (2007) - Require 2/3 majority in state Legislature to raise taxes and fees.
o Passed by voters.

Eyman's Finances under the microscope

Eyman e-mail reveals inner workings

By David Postman

Seattle Times political reporter 2/20/02

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OLYMPIA — After investigators with the Public Disclosure Commission finished taking sworn testimony in the case against Tim Eyman, they received copies of e-mail between the initiative sponsor and his campaign workers — messages that spelled out concern for keeping his salary secret, questions about expenses and a falling-out that eventually led to the investigation.

On Tuesday the commission will consider a staff recommendation that the case be referred to Attorney General Christine Gregoire, who has the power to levy much higher fines than the commission could.

The PDC staff will ask the commissioners to find "apparent violations" of campaign-finance laws against Eyman; his former treasurer, Suzanne Karr; and his political-action committee, Permanent Offense.

The PDC says Eyman used campaign money for personal and private business purposes and concealed $50,000 in salary he took from Permanent Offense Inc., a consulting firm he created that was paid more than $200,000 by his political committee.

Eyman disputes the PDC charges, although he admitted in February that he had lied repeatedly about taking the salary.

Eyman said then that he didn't want anyone to know he took the money because it would have spoiled his image as a citizen crusader. He is the author of several anti-tax initiatives approved by voters, including 1999's I-695, which eliminated the state motor-vehicle excise tax.

Karr told reporters in February that Eyman had lied about taking a salary, a tip that was followed by news stories, Eyman's confession and the PDC investigation. Karr stopped working with Eyman in late 2000.

The earliest e-mail in a report released Friday by the PDC came on Dec. 16, 1999, when Karr sent a message to Eyman about a conversation she had had with gun-rights activist Alan Gottlieb about how best to find a way that Eyman could be paid for his political work.

"He thinks we should run all the money though the PDC and just pay 'Permanent Offense' to manage the campaign like [political-consulting ] the Rockey Group and Madison does. We would not have to disclose how much ever went to you directly. (except that IRS form I have filed for non-profits do require you to disclose in detail the salaries and expenses of all the principals — so once again I am back to preferring that we be a for-profit company). We could not avoid disclosure of the money coming in, but could keep the detail of the money that we pay to participants under wraps."

Here are excerpts from some of the other e-mail that helped investigators piece together the inside workings of Eyman's campaigns and business:

FROM: Suzanne Karr

TO: Tim Eyman

DATE: Jan. 2, 2000

On the issue of Permanent Offense (the company), I guess it is accurate to say that even as a legal entity, there really won't be much there, at least not at this point. You and our bank account are our major assets. There are so many holes in the rules for accounting for PAC's it is really difficult to sort out some of the issues....

As far as control of the bank account. ... there is the question of how much control we really have over it. If it were total, we could use it to buy anything we wanted, but that is really not the case. However, once again PDC rules do not state specifically what we can or cannot do with the money. To an extent it's a donor beware policy.

As you said, the company will exist as an accounting entity to transfer funds to you. (it will cover us with the IRS)....

FROM: Eyman

TO: Karr

DATE: Jan. 30, 2000

On to another big topic: I'd like to begin the official "payment to Permanent Offense" by both initiatives so that my "salary" will begin.

My goal is from January 1, 2000 to December 31, 2000, that Permanent Offense will distribute to Tim a total of $100,000 over and above expense reimbursement. Fact is, I'm doing more and more with Permanent Offense and less with Insignia Corp. [his fraternity watch company] and sales on our watches showed it in 1999.

I get ootsie even typing in the number but given the fundraising trajectory and the potential, it's the salary I want to try for. We can keep the disbursements steady throughout or start out smaller and spike it after the signatures are submitted, whatever keeps our reserves adequate to accomplish our goals.

do you have thoughts on this? are you uncomfortable with it? or do you think it's no big deal and don't care? always been a touchy subject with me but want to make sure that you are OK with this.

FROM: Karr

TO: Eyman

DATE: March 10, 2000

This is our first [state campaign finance report] with the Permanent Offense payments, so we will see if we get any flack about it. I have to create some invoices to give to myself to file. I charged 25% of Rev and 8% of expense and then the acctg fees. If you get questioned you can continue to refer them to me. I plan to say that we just got too big to be able to operate on a volunteer basis. We have to create some kind of professional organization if we plan to continue to operate the way we have & that requires money.

FROM: Eyman

TO: Karr

DATE: Dec. 28, 2000

don't spend so much effort trying to get me to respond to your good faith efforts at resolving our conflict — i will be much more inclined after you are gone to think good of the past times.

karen [his wife] will be taking over the treasurer work and so will ask you again to simply send the expense report and the receipts back to me so we can handle it with help from the PDC and [accountant] dave hawthorne.

FROM: Karr

TO: Eyman

DATE: Dec. 28, 2000

Looking through your receipts I realized that I have just scratched the surface of the problem here & have opened an entire can of worms. I found that you charged your parking for when you went to your watch convention & postage to England. I am afraid I will have to do a complete audit of all prior reports & file some amended returns.

FROM: Eyman

TO: Karr

DATE: Feb. 1, 2001

i am about to reimburse myself for expenses from 11/21/2000 until present. if you insist on going back over past reports, when can i expect that to be completed? but more importantly (and something i am hopeful of) if you are willing to not do that, please let me know right away so that I will hold off on reimbursing myself on these new expenses until the old ones are taken care of.

please let me know.

tim eyman

FROM: Karr

TO: Eyman

DATE: Feb. 1, 2001

If you just reimburse yourself for expenses beginning 12/1, that would be fine. I would be out of it & Karen can take the s — for paying your bogus stuff. I have no problem with that. It's none of my business what you or she do after the point that I am no longer responsible.

FROM: Eyman

TO: Karr

DATE: Feb. 1, 2001

what about the 08/22 — 11/26 expenses that you have the report and receipts on?

FROM: Karr

TO: Eyman

DATE: Feb. 1, 2001

I will reconcile everything & I think I can get back to you in a week. I have lots of other stuff to do right now. Since you have control of the treasury now, I don't understand your concern. You can turn in just about anything, get all the money you want & I assume Karen will sign the reports. You must have lots of Insignia expenses for December you can use. As long as my ass is not on the line, go for it, if that's what you want.

FROM: Eyman accountant David Hawthorne

TO: Eyman

Date: Dec. 5, 2001

Unfortunately the Corp. can't pay for your taxes — not without the payment being considered personal compensation to you (or paid on your behalf).

So, in effect, the corporation would be paying this for you and you would get no paycheck, the only trace of compensation paid you would be the W-2 you would receive from the corp. But there would be no check in the checkbook written directly to you for payroll, only to the IRS. This may accomplish what you are thinking only in a roundabout way....

And this period is between elections so your opposition won't be looking so closely for a while. And, if so, we will be into 2002 during the next election season and your 2001 compensation will be outside of the current year accounting period and may be overlooked.

FROM: Hawthorne

TO: Eyman

DATE: Jan. 3, 2002

Hi Tim -

We have done some preliminary income tax estimates for you based on the 2001 PO, [Permanent Offense] Inc. and Insignia accounts and you may be facing an income tax liability of about $40,000 to $45,000 on total income of about $205,000....

FROM: Eyman

TO: Campaign worker Kelly Parke

DATE: Feb. 14, 2002

... the $1200 is fine [on an invoice] but you need to drop all references to insignia corporation and only reference I-747, I-776, Permanent Offense. keep the bill at $1200 but remove all the references to Insignia.

thanks, tim

FROM: Parke

TO: Eyman

DATE: Feb. 18, 2002

I cannot honestly bill the PAC account when you and I both know that about half of what I billed was for you. I don't appreciate being taken advantage of Tim.

I guess now is the time to get someone else to help with your Insignia stuff. I only volunteer for Permanent Offense, the political action committee.

FROM: Eyman

TO: Parke

DATE: Feb. 20, 2002

I apologize if I was unclear.

You've done volunteer work for the initiatives and for me at Insignia Corporation. We've never had a formal financial arrangement until I contacted you recently to get billed for your services.

You sent a bill that had both the initiative stuff and the Insignia stuff combined. I said that the $1,200 was fine but that you needed to drop stuff from the bill for Insignia. That was so the PAC would be billed properly.

FROM: Parke

TO: Eyman

DATE: Feb. 20, 2002

Thank you for the clarification Tim. I appreciate it. I did misunderstand your intention with my faxed statement, my apologies for that....

To be honest, I'm not so concerned about the amount as I am with accountability. I want to be clear on what services I volunteer.... It was when you started asking for more and more (free) help with Insignia — which I did let you know how I felt, at which point you stopped....

Even with everything that has happened since your announcement, I still have faith in you. My admiration for the work you have done in this state dictates my loyalty.

Eyman's car-tab measure I-776 violates state constitution

Tuesday, February 11, 2003

Initiative 776 overturned
Eyman's car-tab measure violates state constitution, judge rules

By NEIL MODIE
SEATTLE POST-INTELLIGENCER REPORTER

A judge yesterday declared car-tax-cutting Initiative 776 unconstitutional and unenforceable -- finding, in effect, that sponsor Tim Eyman still hasn't learned how to write an anti-tax initiative without overreaching.

Passed by voters in November to lower vehicle license-tab fees to $30, I-776 was the third tax-limiting initiative sponsored by the Mukilteo watch salesman to be bounced by the courts for embracing more than one subject, a violation of the state constitution.

In a decision almost certain to be appealed to the state Supreme Court, King County Superior Court Judge Mary Yu said the initiative "seeks to achieve two unrelated purposes" -- to set license fees at $30 and to encourage a public revote on Sound Transit's light rail program.

"By tying the proposals together," Yu said. "I-776 forced voters into a Hobson's choice of having to vote for both or against both. . . .The practical effect is that . . . this initiative was able to combine the votes of voters who favored $30 tab fees with the votes of those who oppose Sound Transit's light rail project."

She said I-776 was also unconstitutional in two others ways: by failing in its ballot title to disclose all the subjects of the initiative, and by impairing an existing contract in which King County pledged to bondholders to repay $38.5 million in road improvement bonds with revenue that the initiative eliminated. The county sold the bonds last October.

Violation of the single-subject rule also voided Eyman's Initiative 695, passed by voters in 1999 to replace the vehicle excise tax with a flat $30 fee, and I-722, passed in 2000 to limit property tax growth. Both were declared unconstitutional by the state Supreme Court; the Legislature later lowered car-tab fees, although not to $30.

Passed with 51.5 percent of the statewide vote last fall, I-776's car-tab rollback eliminated a $15 road improvement fee in King and Pierce counties and erased Sound Transit's 0.3 percent motor vehicle excise tax in parts of King, Pierce and Snohomish counties. Snohomish County also had the road fee but repealed it after I-776 passed.

The road surcharge is expected to raise $18.5 million for King County and cities within it and $7.9 million in Pierce County this year.

Yu's decision was a huge relief for officials of Sound Transit, the two counties and other local governments that sued to overturn the initiative. Had it been upheld, it would have erased 20 percent of Sound Transit's revenue as well as money spent on road safety and improvement projects by King and Pierce counties and cities within them.

"We're relieved," Sound Transit Executive Director Joni Earl said after hearing of Yu's decision. Although I-776 wouldn't have affected $350 million in existing bonds sold by Sound Transit in 1998, "it would have impacted us long term" in future bond sales necessary to finance the construction of a light rail line and other agency projects, she said.

Reading aloud portions of a 33-page written decision, Yu seemingly sought to rebut Eyman's frequent complaint that "politicians" thwart the will of the voters by suing to overturn voter-passed initiatives.

"A bedrock principle of American democracy is that our laws must comply with the constitution, whether that law was enacted by the Legislature or directly by the people through an initiative process," she said.

King County Executive Ron Sims, who is chairman of Sound Transit, sounded a similar note after the ruling, saying of Eyman: "I don't know why a person persists in running initiatives that are unconstitutional and then berating the institutions that are protecting the constitution.

"I don't believe that anyone is entitled to violate the Constitution of this country or this state because they feel like it."

Eyman, however, refused to blame his drafting of the initiative for its rejection, saying, "We were incredibly careful (in writing it), knowing we would have this additional scrutiny" by the courts.

Attorneys for Eyman's Permanent Offense committee and the state Attorney General's Office, which is charged with defending voter-approved ballot measures, had argued in court that telling voters that I-695 would ensure a revote on light rail wasn't an impermissible second subject. The reason, they said, was that it was merely "precatory" -- expressing a wish -- and not mandatory.

Yu said, "Voters should not have to guess whether a section is precatory or mandatory when voting for or against an initiative," but rather should be able to assume the initiative language "serves a legitimate and necessary purpose for effectuating the legislation."

In an e-mail to his supporters and news media last night, Eyman scorned the suggestion that the voters might have been confused by the wording, saying: "It is patently absurd. Voters are smart enough to understand what our initiatives do and have consistently approved of our taxpayer-protection initiatives for the past four years."

Yu, however, said in her decision: "The ultimate issue is not about the intelligence of the voter in understanding the initiative. Rather, the crucial question at issue is whether the ballot title and text of the initiative adequately disclosed to the voters what I-776 was really about" as required by the constitution.

She said the title failed to disclose that the initiative encouraged a revote on light rail and repealed the "authority for local citizens to tax themselves for their own roads and/or transit programs."

Tom Ahearne, a Seattle attorney who represented the victorious King and Pierce counties and Tacoma, cemented his standing as Eyman's chief courtroom nightmare. Ahearne also won the lawsuits that knocked out I-695 and I-722.

Ahearne praised Yu's "response to voters who think the voters get what the majority wants" regardless of whether it is constitutional.

"If the majority got what it wanted all the time, Al Gore would be president," he said, for winning the popular vote in 2000.

Jim Pharris, a state assistant attorney general who defended I-695 on behalf of the state, said Yu's ruling is likely to be appealed to the Supreme Court but said his office would have to study the decision before deciding.

Eyman said he was certain of an appeal. He said last week that if the initiative is invalidated, he will run yet another initiative to lower car tabs to $30 as intended by both I-695 and I-776.

Pierce County Executive John Ladenburg welcomed Yu's decision and said he expects the Supreme Court to uphold it later this year.

Yu, in finding that I-776 illegally eliminated revenue pledged by King County to repay bonds, rejected the argument of attorneys defending the initiative that the county sold the bonds after it already knew they might be imperiled by passage of the measure.

Sims reiterated yesterday that the bond sale was the culmination of a program begun in 2000 -- two years before I-776 qualified for the ballot -- to accelerate the construction of badly needed road projects in King County by financing them with bonds instead of waiting for the road-fee revenue to come in.

Regardless, Yu ruled, "there was no violation of the law (by King County). This court declines to interfere with political choices made by the executive branch on the timing of the bond issue."

The almost certain appeal of Yu's ruling might put on ice a separate, I-776-related lawsuit financed by Eyman in Snohomish County Superior Court to bar the state Department of Licensing from continuing to collect the Sound Transit vehicle tax.

I-776'S PURPOSE

The initiative aimed to eliminate a $15 road improvement fee in King, Pierce, Snohomish and Douglas counties. It also was intended to kill Sound Transit's motor-vehicle tax in parts of King, Snohomish and Pierce counties.

Background to Initiative 917 inc History of Wa Road Taxes

P O L I C Y
b r i e f
Washington Research Council
PB 06-12 March 15, 2006
Initiative Targets

BRIEFLY
The 2005 transportation funding package was
passed to secure at-risk facilities, implement
road safety improve-
ments, support local
transportation
maintenance, and
relieve congestion.
Initiative 917 would
repeal many recently
enacted funding sources in order to return
Washington to $30 car tabs.








Transportation Fees

In 2005, lawmakers enacted a comprehensive transportation funding package to secure at-risk facilities, implement road safety improvements, support local transportation maintenance, and relieve congestion.
The major revenue contributor to these projects, a fuel tax increase, was upheld by voters last November. But a movement is now underway to remove the fee portion of this package. The Transportation Revenue
Forecast Council estimates that, if Initiative 917 qualifies for the ballot
and gets passed by voters, state revenue would be reduced by $2.7 billion
over the next 16 years.1 The initiative would also reduce local revenues
and restrict funding options.

INFRASTRUCTURE UNDERFUNDED

While road use continues to grow in Washington, transportation revenue
has historically failed to keep pace with the cost of needed transportation
investments. In 2000, the Blue Ribbon Commission on Transportation
found that existing revenue sources would only provide $55 billion of the $150 billion needed between 2001 and 2020. Governor Locke’s 2002 Competitiveness Council reached similar conclusions, finding that “Washington’s currently overwhelmed transportation system threatens jobs and economic vitality, wastes people’s time and money, diminishes quality of life, and degrades our environment” (WCC, 2002, p. 1).

CURRENT FUNDING

The Legislature responded to transportation funding shortages in 2003
with the "Nickel Funding Package." ESHB 2231, the first major trans-
portation investment package in 13 years, increased the gas and special
fuel tax by five cents per gallon and raised selected fees.
Then in 2005 lawmakers passed the Transportation Partnership Package.
ESSB 6103 phased in a 9.5 cent state fuel tax increase. The bill also en-
acted a vehicle weight fee on passenger cars and light trucks, created a
new motor home fee, increased fees for various drivers’ license services,
and raised license plate charges (WSDOT, 2005). In total, the funding
package will collect an estimated $7.37 billion in revenue over the next



1
Note: The fiscal analysis was for I-915, an earlier version of the initiative. However, their impact on revenue is identical.


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Washington Research Council

Figure 1. Overview of I-917
Changes to Transportation Funding

• Calculate vehicle taxes and fees using a depreciation schedule
based on purchase price and not on manufacturer’s base sug-
gested retail price
• Set license tab fees at $30 per year for vehicles weighing 20,000
pounds or less
• Repeal the $1 a year fee for each truck, motor truck, truck trac-
tor, road tractor, tractor, bus, auto stage, for hire vehicle with
seating capacity of more than six, trailer, semitrailer and pole
trailer
• Repeal the vehicle weight fee for motor vehicles, excluding mo-
tor homes
• Repeal the $75 a year vehicle weight fee for motor homes
• Remove the motor vehicle sales tax increase that became effec-
tive on July 1, 2003
• Lower the license plate retention fee from $20 to $0.50, the re-
flectorized license plate fee from $2 to $0.50, and the application for a new vehicle license number plate fee from $10 to $0.50
• Repeal select local and RTID motor vehicle taxes and fees authorized for voter approval
• Retire or defease bonds that have pledged the motor vehicle ex-
cise tax

16 years.
Because ESSB 6103 allows for bond-
ing, transportation investment will in-
crease by $8.475 billion by 2021. Of
this total, $7.1 billion funds 274 pro-
jects identified in the Transportation
Partnership Project List. The two largest
areas of project funding are choke point
and congestion relief (69 projects) and
at-risk structures (30 projects). The
package also includes funding for safety
investments, ferries, multi-modal im-
provements, environmental concerns,
and freight mobility.
In addition to state administered pro-
jects, a portion of the Transportation
Partnership Package revenue is allo-
cated directly to cities and counties.
Local governments can also enact addi-
tional fees and taxes to fund regional
projects. In 2002, the Legislature estab-
lished the Regional Transportation In-
vestment District (RTID) to allow resi-
dents of King, Pierce and Snohomish
Counties to fund transportation invest-
ments through local taxes. To move for-
ward, the 2006 Legislature created a re-
gional transportation commission to
propose a new governing entity and

transportation finance plan. The results of the study will be submitted to the Legislature by January 1, 2007, after which the commission will be dissolved. Governor Christine Gregoire is expected to sign ESHB 2871 in the following weeks. A local revenue proposal should be on the ballot for residents’ approval in 2007.
The 18th amendment to the state Constitution requires that certain funds (including fuel taxes) be dedicated exclusively for highway purposes. Other revenue sources, including many fees, can be spent on a much broader range of transportation related projects.

INITIATIVE 917
Initiative 917 was filed on January 9th and, if it receives sufficient signa-
tures to qualify, will appear on the ballot this November. The initiative
makes a number of changes to current transportation funding policies, in-
cluding repealing and amending parts of the 2003 and 2005 transportation
legislation. If enacted, the measure would lower motor vehicle registration

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charges, repeal or reduce a number of fees, change the vehicle valuation
method for tax and fee purposes, and retire several outstanding bonds. See Figure 1 for details.




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Washington Research Council
$30 car tabs. Before the 2005 Transportation Partnership Package, passen-
ger cars were charged a $30 license fee. Now, in addition to this charge,
drivers pay a vehicle weight fee. Opponents of this increase argue that
lawmakers should respect Washington voters’ twice expressed desire for
$30 car tabs.
I-695, passed by voters in 1999, eliminated the state motor vehicle excise tax (MVET) effective January 1, 2000 and established a $30 state license tab fee. After the initiative was found to be unconstitutional for violating the “single subject” rule, the Legislature enacted portions of the initiative during the 2000 session. However, the legislation did not repeal the au-
thority to impose a voter-approved MVET or the authority to impose a local option vehicle license fee.
In 2002, voters passed a second transportation funding initiative. I-776
capped motor vehicle (including light truck) license tab fees at $30, re-
pealed state laws governing how vehicles are valued for the purpose of excise taxation, eliminated the authorization for a voter-approved local option MVET, and repealed the local option vehicle license fee.
In 2005, lawmakers effectively removed the $30 cap by imposing a
weight-based surcharge. Still, according to the Washington State Department of Transportation (WSDOT), 84 percent of passenger vehicles are only charged an additional $10 a year (2005).
Many motorists also pay additional charges to fund local mass-transit projects such as Sound Transit.
In total, WSDOT estimates that the average spending per passenger car is approximately $309 a year. (This estimate includes spending on the state gas tax, the federal gas tax, and the state license tab fees.)
Restricting Revenue. In addition to eliminating the vehicle weight fee, Initiative 917 removes authorization for the local option vehicle license fee and the local motor vehicle excise tax. Both of these revenue sources are currently authorized for voter approval.
Since the initiative was filed, several changes have been made to the taxes and fees authorized for regional transportation purposes. ESHB 2871, passed by the Legislature on March 8th and currently awaiting the Governor’s signature, lowers the maximum optional regional sales and use tax from 0.5 percent to 0.1 percent and raises the maximum regional transportation investment district MVET to 0.8 percent.
Lowering Fees. Initiative 917 lowers the license plate retention fee from
$20 to $0.50, the reflectorized license plate fee from $2.00 to $0.50, and
the application for a new vehicle license number plate fee from $10.00 to
$0.50.
The license plate retention fee was established in 2003 under ESHB 2231.
In 2005, ESSB 6103 raised the reflectorized license plate fee from $0.50 to
$2.00 and increased the application for a new vehicle license number plate

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fee from $3.00 to $10.00.
Retiring Bonds. Sound Transit continues to levy an MVET, claiming that Initiative 776 did not eliminate its MVET because the proceeds are




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Washington Research Council

Figure 2. Summary of I-917
Impact on State Revenue, 2005 - 2021
$ in million

Trailer License Fee ($30) (140.71)
Truck License Fee (650.12)
Passenger Vehicle Weight Fees (885.85)
Motor Home Weight Fees (111.45)
Plate Reflectivity (68.06)
Plate Replacement Fees (197.83)
Retail Sales Tax on Motor Vehicles (672.54)
Motor Vehicle Filing Fees (0.52)
Plate Number Retention Fee (5.53)
Total (2,732.60)

Source: Transportation Revenue Forecast Council

pledged to service outstanding bonds. This interpretation is
currently under consideration by the court. Initiative 917 mandates retirement or defeasance of these Sound Transit bonds. (Defeasance is a process in which the borrower sets aside cash or bonds sufficient enough to service the debt, thereby effectively voiding the obligation.)
Sales Tax. The Nickel Funding Package imposed an additional retail sales tax of three-tenths of one percent of the selling price of a motor vehicle. Initiative 917 would remove this tax.
Vehicle Valuation. The initiative would also change the
calculation method for vehicle taxes and fees from the
manufacturer’s base suggested retail price to a depreciation
schedule based on the purchase price. The current calcula-
tion method has been criticized for overvaluing vehicles.
Since the initiative was proposed, the 2006 Legislature has
taken steps to bring vehicle valuations more in line with
actual values. SSB 6247, passed by the Legislature and de-
livered to the Governor on March 8th, establishes a stan-
dard administrative structure for the calculation of any fu-

ture, locally imposed MVET. The locally imposed MVET for a truck-type power or trailing unit will be based on the latest purchase price. For all other vehicles, calculations continue to be based off of the manufacturer’s suggested retail price. But the tax is now calculated at 85 percent of the manufacturer’s base suggested retail price multiplied by a depreciation schedule based off of a vehicle’s years of service.
Infrastructure. If passed, Initiative 917 would reduce state and local transportation revenue. Unless alternate funding is secured, some transportation projects could be placed on hold or cancelled. This, in turn, would slow economic development in Washington. “Roadways, airports, ferries, ports, and railways are all necessary for a strong economy, providing access to businesses, jobs, and world markets, as well as moving freight, commerce and commuters” (WHD, 2005, p. 12). See Figure 2.
Flexibility. In addition to reducing revenues, I-917 would reduce transportation spending flexibility by repealing several of the more open-ended
funding sources. The initiative would also limit local government’s and
the RTID’s funding options by removing some of the taxes and fees authorized for voter approval.

DISCUSSION
The recently enacted - and voter approved - taxes and fees were in response to longstanding concerns regarding Washington’s transportation and competitiveness. If Initiative 917 qualifies for the ballot and passes, transportation funding will be reduced.
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Research Council publications by e-mail
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Washington Research Council
REFERENCES

The Blue Ribbon Commission on Transportation (2000). Transportation
Action: final recommendations to the governor and legislature.
Transportation Revenue Forecast Council (2006, January 30). Preliminary
Estimate of Impacts. Initiative Measure No. 915: AN ACT Relating to
limiting government-imposed charges relating to motor vehicles.
Washington Competitiveness Council (2002). Phase I Documents:
Competitiveness Council Executive Summary.
Washington House Democrats (2005). The Transportation Partnership Act
of 2005: Saving Lives, Moving People, Delivering Goods.
Washington Research Council (2005). Road Block: Initiative 912. Policy
Brief PB 05-09.
Washington State Department of Transportation (2005). 2005
Transportation Tax Package. In Project Funding.

Sound Transit Exaggerates Benefits

Sound Transit Sounds Off
After Years of Taking The Stranger's Abuse, Sound Transit's Spokesman Fights Back
3/16/03
by Josh Fe
.

Sound Transit's chief communications officer, Ric Ilgenfritz, sent me an e-mail last week titled "Cuppa Joe?" He was fed up with the bad press we'd been heaping on his agency, and wanted to chat. I was suspicious, but agreed to meet at King Street Station. The conversation led to a full-fledged interview two days later at The Stranger's offices.

[Tim Eyman's Initiative 776 got overturned], but you're still fending off a lawsuit that says Sound Transit's 14-mile, $2.4 billion plan--scheduled to open between 2009 and 2011 and serve 42,000 daily riders--is not what voters approved. The plaintiffs have a point. Voters approved a 21-mile, $2.1 billion plan scheduled to open in 2006 and serve 127,600 daily riders. How do you sit at a bar with a voter and say, "We're asking for more money for a shorter line that will open five years later and serve one-third of the original ridership, but we're still doing what you asked for"?

I reject the premise of the question. The question is not: "You're paying more to go less far and carry fewer people." Read the Sound Move plan. It contemplates that we will build a 21-mile system in two segments--the first one from downtown going south, then north to the University District. The [current] 14-mile segment is the southern segment, and will capture the same ridership that was envisioned in that segment of the plan. The other two-thirds of it is in the north. We're still committed to doing it. The southern segment is not a stand-in for the 21 miles. It's building the first part of the plan.

We're doing an [environmental impact study] to find a cheaper way to get north. This is going to play out beyond 2006, and that's a legitimate question, to the extent that the plan was billed as a 10-year plan. But the question to the voters in '96 was: "Do you want to levy these taxes for the purposes of building a regional transit system?" The question was obviously answered in the affirmative, overwhelmingly. [Voters] constituted the board, giving it the authority to build the system. So that's where we find ourselves. It's going to cost more than originally thought. It's going to take longer than originally thought. But the ability to deliver the project as originally defined is still within our grasp and on our table.

So your position is: Phase One was approved and Sound Transit's taxing authority exists to get us from the U-District to the airport, even though it will cost more than the dollar amount approved in 1996. What check do voters have? Would you be willing to put a cap on the taxes? I'm a little nervous because in King County Superior Court you argued that you could levy the tax in perpetuity.

The judge did a thorough reading of the law. We're obligated to stop building at the end of Phase One. If we're going to build new projects, we have to ask the voters whether they want to keep going and approve additional taxes. The real question is, are we ever in this region going to decide that it's time to do something about the transportation problem? This is the best opportunity we've had in 30 years to add meaningful capacity to the regional transportation system, and the board isn't going to backtrack on that opportunity.

Can you give us a sense of what the northern route will cost?

We have sifted through multiple routes, looking for the ones that have cost savings. But until the technical and ridership [data] is put together, I'm not going to speculate. By May, we'll have three alternatives, one of which is the original plan. That will trigger a process including public outreach; we'll identify a preferred alternative sometime in the summer, and work toward a formal route adoption and finance plan.

The original plan went across Portage Bay. The new ones are right under I-5 to the west, and under the Montlake Cut to the east. So back to your guy sitting on the barstool. He has every right to be pissed that it's going to cost more and take longer. [But] that's the situation we find ourselves in. Show me a major capital project that doesn't have similar problems. The fact is, we're building what was described in the plan.

Where's the money to get to the airport? You have about $21 million left, according to Sound Transit's 2002 financial plan.

We're not going to put out any cost estimates on any part of our project until we know those are numbers we can stand behind.

Could it be less than $21 million?

I think it'll be more than that. As the design process goes forward, we'll be able to develop a reliable cost estimate. At that point, the board will decide how they're going to do it. We have a number of tools. We've got financial revenues from that sub-area, and there are other pots of federal funding. The Port has other pots of local and federal funding. We're looking to cost-share on the alignment.

This highlights Eastside King County Council Member Rob McKenna's question about sub-area equity. He's afraid that Sound Transit will violate its governing principle of sub-area equity by borrowing revenues from his district [East King County] to pay for things like the airport extension in South King County. He's got a point. When you look at Sound Transit's 2002 financial plan and the federal grant application, Eastside bonding capacity is held up as proof of Sound Transit's ability to cover the federal loan. The feds think, "Okay, Sound Transit has the money." Based on that, Sound Transit could be contractually obligated to the feds for money it doesn't have.

If you look at the East King sub-area, it's piling up money. It's the richest sub-area, and nobody foresaw that in 1996. But their project list won't come close to spending the amount of money they have. Sub-area borrowing occurs. If people are worried about getting their money back, it's a legitimate worry when they're doing some loaning. But there's no movement afoot or support on the board to violate the principal of sub-area equity. If they were going to change the policy, it would require a supermajority.

Sub-area borrowing enables us to manage our cash flow in the most efficient way possible to fund our projects in the order we're sequencing them. We have to square the books at the end of every year. So if there's a project under development in South King and there's a loan to that project from North King, they have to pay that back at the end of every year. If they need it again next year, they borrow it again. But there's a check every year. At the end of the project, all the books have to square--that's a statutory requirement, as opposed to just a policy of the board.

The Seattle Popular Monorail Authority's 14-mile, above-grade monorail plan is penciling in cheaper per mile than Sound Transit's at-grade, 14-mile line. Shouldn't we just go with one system that offers a more efficient rapid technology?

Monorail is an intermediate-capacity transit system that works very effectively in a dense urban environment. Light rail is a high-capacity system more appropriate for moving large numbers of people within a regional context. [Our] trains can carry 600 people at two-minute headways. They're designing their system, their platforms, and their stations for trains that are going to carry 150-200 people.

And light rail is not just an at-grade system. We have at-grade construction, tunnel construction, and elevated construction. We're going to be running 55 mph in our grade-separated alignments. At [Martin Luther King Way], we're running at the posted speed limits, but our trains [will] have the ability to jump signals. So the aggregate average speed is about 28 mph, which is probably a mile or two an hour faster than [monorail]. When you say, "It's cheaper, it's faster, it's more efficient," I don't think the facts bear that out.

There's a bill in Olympia to have an elected Sound Transit board. What do you think?

We're required to go to every jurisdiction we cross and get permits. The theory behind our board [structure] is that we have people who represent the jurisdictions we're in, and they're in a position to facilitate the permit process. If we didn't have that, we'd be in a very adversarial posture with every jurisdiction we came through.

Five hundred million dollars in federal money is assumed in the current 14-mile plan. Where is that money?

The president's budget, released this week, proposes $75 million--our third draw on the total $500 million. That clearly tips the administration's hand on what they think about this project. The final decision on the full grant will be made in early summer.