Pandemic, recession could have Sound Transit out of tax money by 2028
In just eight years, the double-whammy of the recession and the pandemic could leave Sound Transit without tax money to build any more tracks, or add promised bus service. That’s going to leave the board with some very difficult choices.
Sound Transit’s chief financial officer told an agency workshop Wednesday the agency could lose $7-12 billion over the next 21 years, the original life of ST3, if their current revenue projections bear out. That’s a dip of 12-18% over pre-COVID, pre-recession projections.
The hit could be at least a billion dollars over the next year as Sound Transit has seen ridership drop by 86% and sales tax revenue, which makes up more than 50% of its funding, has dried up in the pandemic. The agency could be out of cash by 2021.
Now you might ask, “what if the economy recovers quickly and the money starts flowing back in?”
CEO Peter Rogoff said the data from the great recession a few years ago shows that money will never be recovered.
“If it follows the path of ST2, we really don’t get that money back,” he said. “Even as the economy recovers from such a depressed level, even with a strong economy, you don’t necessarily get back to the revenue stream that was anticipated.”
That is going to leave the Sound Transit Board with very difficult choices. Does it cut projects promised to voters? Does it delay those projects? Does it build those projects in pieces?
Project development director Don Billen outlined potential choices to the board.
“The choices you are making don’t necessarily need to be about if we are going to do a given project,” he said. “It’s about when you’re going to do a given project.”
That means choosing winners and losers.
The board spent time discussing what those decisions might be based on. Do they build the cheaper projects sooner? Do they push off the big ticket items? For example, the light rail expansion to Ballard is expected to cost as much as $9 billion dollars because it includes the second downtown tunnel. For that amount of money, the board could build out all of the Bus Rapid Transit projects promised.
Sound Transit Board member and King County Council Chair Claudia Balducci said she doesn’t want stripped-down projects. She wants what was promised.
“I don’t want to do what we did with ST2 and lose key elements of the program just to save money,” she said.
So how will the board prioritize? That’s the first of two significant questions for the public. The second relates to whether Sound Transit will ask you, the public, for more tax revenue to fill that funding gap.
One of the many tools to get back on solid financial footing could be asking for another public vote to increase the debit limit that Sound Transit can add. It’s currently 1.5% per $1,000 of assessed value. Sound Transit might ask to raise that debt level to 5%. That would require a 60% approval of voters. This would not raise the property tax that Sound Transit can assess but only allow it to take on more debt.
Board chair and University Place Councilmember Kent Keel left the meeting with this message.
“I’m just encouraging us to keep our eyes focused on the prize,” he said. “It’s going to be tough, but if we keep our eyes on the prize, I think we can deliver what the citizens and the voters need.”