In a Booming State, Lawmakers Face a Looming Transportation Cut

UPDATE: A Washington state judge on Wednesday temporarily halted implementation of a ballot initiative that would cap vehicle registration fees while he considers a legal challenge to the new law. 

OLYMPIA, Wash. — Voters threw state lawmakers here a curveball earlier this month when they approved a ballot initiative that promises to chop hundreds of millions of dollars in anticipated revenues from Washington’s transportation budget.

The measure calls for a cap on vehicle registration fees, known locally as “car tabs,” which help to cover a range of transportation costs.

State legislators are now trying to chart a course forward as they head toward a 60-day legislative session that will begin on Jan. 13.

Top Democrats and Republicans on the House and Senate transportation committees offer different ideas on the best way to proceed. But there seems to be at least some sense of agreement across party lines that this fast-growing state faces significant infrastructure costs in the years ahead.

Those costs include major projects, like replacing an interstate bridge that crosses over the Columbia River, and upgrading hundreds of culverts to comply with a federal court ruling concerning fish habitat.

“We need more money, not less,” state Rep. Jake Fey, a Tacoma-area Democrat, who chairs the House Transportation Committee, said as he discussed the state’s transportation budget. 

The situation in Washington illustrates how even in a state with relatively healthy finances and a thriving economy, policymakers can face challenges in figuring out how to pay for transportation programs—especially when unexpected drops in revenue occur.

Washington has seen economic growth that has outpaced the national growth rate in each of the past five years, as the tech sector and real estate market in and around Seattle boomed. The state’s population grew to 7.5 million people in 2018, from 6.7 million in 2010. 

But around one million people, or 53% of voters in this month’s election, supported Initiative 976, aimed at restricting the price of the car tab fees motorists pay annually. Championed by an anti-tax activist, I-976 is designed to largely limit the fees to $30 each year.

The initiative would not only affect state funds. It also targeted car tab revenue collected by local governments and Sound Transit, an agency that operates the light rail line that runs through Seattle. 

Currently, car tab fees can vary widely depending on where a person lives in Washington.

The basic renewal cost for most passengers vehicles is $30, with an additional fee based on vehicle weight that ranges from $25 to $72. Local governments are allowed to create special districts, which can levy car tab fees of their own up to $50 without voter approval.

Sound transit, meanwhile, also collects registration fees in the region were it operates. These include an annual “motor vehicle excise tax” that can easily hit $200 to $300 for newer cars. 

Seattle and other localities have filed a lawsuit, seeking to get the measure blocked. And Sound Transit leaders have indicated the agency will, for now, go on collecting its registration fees. 

Although much of the measure is set to take effect Dec. 5, elements affecting Sound Transit are on a different timeline.

Fey said that he thinks it is likely that the ballot measure will get overturned in court. Still, he is planning for its effects. “We don’t have a whole lot of wiggle room to patch it up until the initiative is overturned,” he said. And Fey added: “I can’t gamble that it will be.”

That would be a big gamble. Washington state uses two-year budgets and during the 18 months or so left in the current spending plan, the initiative is expected to lob about $478 million from the roughly $9.8 billion earmarked for transportation.

Most of the slashed revenue goes to what’s known as the state’s “multimodal account,” a flexible pot of money that can go toward costs like transit, railroads, pedestrian infrastructure, and public transportation services for people with special needs. 

The other major transportation fund is the state’s motor vehicle account, which receives gas tax revenue. Washington has restrictions on how this gas tax revenue can be used, allowing it to only go toward areas like roads, bridges, state ferries and the state patrol.

Fey indicated that the restrictions on the gas tax dollars will likely make it difficult to make less significant cuts across a wider range of programs, forcing some tough choices. “My focus is going to be about doing the best job of spreading the pain,” he said.

But Rep. Andrew Barkis, the top Republican on the House transportation panel, suggested that the potential cuts were getting blown somewhat out of proportion.

“If you were here yesterday, it would have felt like all transportation in the state of Washington is going to come to a screeching halt, which is just not the case,” he said last week, the day after lawmakers participated in a briefing on I-976. 

“From my perspective, it puts us in a situation where we should be doing what we’re here to do. And that is prioritize,” he added. “It’s going to be tough. But it’s something we need to do.”

Barkis acknowledged that the state’s population is expanding, pressuring transportation infrastructure. But he said there’s more debate to be had about how transportation funding is used—for instance whether it’s spent on transit, roads, or bicycle paths.

“What we've had here in the state of Washington over the last several years, is it’s everything. We're funding everything,” said Barkis, whose district covers an area stretching east of Olympia.

Neither Fey, nor state Sen. Steve Hobbs, a Democrat who chairs the Senate Transportation Committee, was especially bullish on the idea that lawmakers would vote during the upcoming session on proposals to raise new tax or fee revenue to help backfill losses from I-976.

Hobbs highlighted a 10-year transportation proposal he put forward previously, which called for new funding from sources like a gas tax increase, “impact fees,” and truck weight fees.

“We could certainly attempt to dust that off,” Hobbs said. “But it’s really hard to do when it’s an election year. I’m not hopeful about it.”

Hobbs explained that because the multimodal account is flexible, some money has flowed from it to programs that are also eligible for motor vehicle account funding, like $60 million for ferries and $24 million for the state patrol. This eases some strain on the motor vehicle fund.

With I-976, the senator said, some of these expenses could end up shifted to the motor vehicle account, which could delay or curtail the sorts of road-related projects that fund generally covers.

“There’s certainly going to be cuts in the multimodal account,” Hobbs said. “I can't shift enough over.”

State Sen. Curtis King, a Republican who represents a district that covers rural areas in south central Washington, has served on the Senate Transportation Committee since 2007 and is currently the ranking member on the panel.

He said the state is probably around $5 billion behind on maintenance and preservation of existing infrastructure, and noted that the costs tied to the court-mandated culvert replacements to help salmon and other fish could total between $3 billion and $4 billion.

“Then you take the loss of revenue here with the 976,” he added, “we’ve got to make some changes.”

The senator said that he’s asked staff to look into the history of how taxes on car and truck sales started flowing to the state’s operating budget, instead of the transportation budget.

King said that given the recent growth in operating budget revenues, he thinks it’s time for the state to look at gradually redirecting those tax dollars to transportation accounts. 

“There’s much more of a nexus there,” he added. 

King says this money could total around $2.5 billion in each two-year budget cycle. He said that he believes there will be legislation proposing this change introduced in the next session.

Fey said that he plans to convene stakeholders after the session to discuss options for where new transportation revenue might come from to help pay for non-highway transportation costs. 

Asked about where else he thought the state could turn to raise new revenues like this, the lawmaker replied: “I think that’s a good question. I don’t have the answer yet to that.”