Could Sound Transit push a head tax to make up deficit?
Sound Transit is staring down a more than $11 billion budget shortfall, thanks to the global pandemic and resulting recession. The board is looking at every option to find the money, including a potential employer head tax.
I will get to that head tax in a moment because it’s most likely the final option for the board, but let me set the stage for you. Sound Transit is hurting for financing, despite the $54 billion approved under ST3.
The pandemic has dried up its tax revenue and fare collection. The board is in the process of deciding what to do. Will it delay projects? Will the projects be built in phases? Will Sound Transit cut back on what was promised to voters? This is a repeat of what the agency saw coming out of the Great Recession a decade ago.
CEO Peter Rogoff has met with the new transportation department heads in Washington, D.C., to ask for more money. Our Congressional delegation is doing the same thing. Sound Transit is pushing for more direct funding from Olympia under the transportation budgets being proposed.
It is also mulling local options, like asking voters in the taxing district to allow it to take on more debt. Board member and King County Council Chair Claudia Balducci said it’s unrealistic for them to make these huge decisions without having all the revenue information.
“There’s a lot of unknowns here, and I’m not going to be super comfortable as a board member buying a particular painful course of action until we deal with those unknowns,” Balducci told the board last week.
Going back to the voters with hat in hand doesn’t sound great to Balducci either.
“It’s very concerning to me to hear all of this talk of going to other levels of government or to the voters with batches of more revenue to build what they already voted for when we still haven’t got our own ducks in as good of a row as we ought to,” she said.
Under certain scenarios with no new funding, projects like the West Seattle extension could be delayed by another seven years, or Ballard could be delayed by another two years. The board is looking at eight criteria to make these tough choices. Board member and Pierce County Executive Bruce Dammeier says it’s going to be difficult.
“I love criteria, with weighting, and run the math and let the number roll out at the bottom,” he said. “But I’m smart enough to know that the number that rolls out at the bottom, just because the numbers say it, doesn’t always make it the right choice.”
And now to the employer head tax. Sound Transit always has the authority to ask voters to impose a per employee tax for every business in King, Snohomish, and Pierce counties. It would be $2 a month, or $24 a year, per full-time employee. Sound Transit CFO Tracy Butler told the board it could raise $685 million through 2041.
Raise your hand if you knew that Sound Transit had this ability — that’s probably not many of us. Even board member Dammeier didn’t know about it. He asked Butler to explain.
“Is this where Sound Transit employees vote to tax themselves?,” he asked. “Is this a vote of the people of King County?”
Butler confirmed it would be a vote inside the Regional Taxing Authority.
State law, passed in 1990 for transit agencies or authorities, gives Sound Transit the ability to go to voters with this plan. Sound Transit has never used it because the agency knows how controversial it is, and it doesn’t want to lose the support of businesses, which have traditionally supported Sound Transit measures.
It’s not likely that Sound Transit would go with the head tax because it only raises $685 million and the deficit is much larger than that. That’s no real bang for the buck, especially if it were to lose business support in the process.
By the way, Sound Transit doesn’t call this $11.5 billion problem a deficit or shortfall. It’s now officially called an “affordability gap.”
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