State Supreme Court upholds $30 car tabs

By Mike Lindblom
Seattle Times staff reporter

	ALAN BERNER / THE SEATTLE TIMES King County Executive Ron Sims, left, listens to a discussion about the court decision as Sound Transit Executive Director Joni Earl and spokesman Lee Somerstein confer.
	E-mail this article Print this article Search archive Related stories Initiative 776 questions and answers Other links Ruling on the case in favor of I-776 Dissenting opinion in the I-776 decision Sound Transit's statement on the ruling

However, a senior official from the state Attorney General's Office questioned Sound Transit's position.

Initiative 776, sponsored by tax rebel Tim Eyman and approved by voters last year, sought to reduce car-tab taxes to $30 statewide. If fully implemented, the initiative would repeal a Sound Transit tax that provides one-fifth of the funds the agency uses for bus, commuter rail and light-rail programs.

I-776 also eliminates some road taxes in King and Pierce counties.

Sound Transit officials say they believe they can keep collecting car-tab taxes because yesterday's ruling did not order them to stop.

Sound Transit chief counsel Desmond Brown said the agency will sell more bonds backed by the taxes.

Sound Transit has pledged the car-tab tax would continue until bonds were paid off in 2028. As long as bonds remain outstanding and the tax exists, additional bonds can be sold, Brown said.

But Jim Pharris, senior assistant attorney general, cast doubt on that idea.

"I would find that a pretty surprising proposition, to think they could issue more bonds," Pharris said. "I'm really skeptical on that point."

"Whether they can collect the full amount of tax for the full amount of time, that's where we need to study the facts and the case law," he said. "We're interested in finding out how to fully protect bondholders, and if we can do that without collecting the full amount of tax for the full period of time, we'd like to see if there's a way to do that."

Both the Washington Constitution and the U.S. Constitution bar repealing taxes that are pledged to repay bonds. I-776 contained language calling for the agency to repay bonds with other money, but that language isn't binding.

"The question is if the bondholders had a right to expect that this tax would be collected," Pharris said. If the court rules that the tax is necessary to back the bonds, it could be levied for decades until they are all paid off. That issue could be determined in King County Superior Court by Judge Mary Yu, whose original decision was overturned by the high court yesterday. The state Supreme Court did not specify whether or by how much the Sound Transit tax should be reduced to comply with I-776.

Sound Transit and state attorneys are meeting next week.

In February, Yu ruled I-776 unconstitutional, finding that it combined two subjects — $30 license tabs and a stated intent to force a revote on Sound Transit's light rail. Yu also ruled that it impaired contracts with bondholders who invested in local projects.

	ALAN BERNER / THE SEATTLE TIMES Tim Eyman beams as he talks with a friend on a cellphone about his state Supreme Court victory on the Initiative 776 appeal.

But yesterday's Supreme Court ruling, which split the justices 6-3, found that the initiative did not violate the law that requires initiatives be restricted to a single subject and that it did not impair King County's contractual relationship with bondholders. The court ruled that although the preamble to I-776 expressed a wish for a revote on transportation plans, the initiative itself only required that the license-tab fees be cut.

"Because I-776's 'rule of action' was $30 license tabs and because its policy statements were 'no part of the law,' I-776 did not embrace two unrelated laws or enactments," Justice Susan Owens wrote for the majority. "Policy expressions in a bill or initiative measure do not contribute additional 'subjects' ... "

The Supreme Court also ruled that the car-tab tax repeal did not illegally violate bond contracts in King County. The justices said because King County told bondholders it had other sources of revenue to meet its bond obligations if I-776 were to be upheld, it can't conclude that the initiative "substantially impaired" King County's contractual relationship with those holding the bonds.

What the Supreme Court didn't decide, Pharris said, is to what extent the implementation of I-776 will impair Sound Transit's bond holders. That goes back to Yu to decide.

As for appeals, Pharris said there won't be one for the constitutional single-subject question because the state Supreme Court has the final say.

Besides Justice Owens, others in the majority were Barbara Madsen, Charles Johnson, Gerry Alexander, Richard Sanders and Mary Fairhurst.

Dissenting were Faith Ireland, Bobbe Bridge and Tom Chambers, who believed I-776 did violate the two-subject rule.

Eyman, the author of I-776, said, "The majority of the court moved closer to the voters. Voters have twice approved $30 vehicle tabs but have faced years of obstacles imposed by politicians who refused to listen."

Sound Transit Executive Director Joni Earl and Chairman Ron Sims said the I-776 ruling will not affect the agency's ability to keep its promises to deliver light rail, Sounder commuter rail and express-bus services.

Earl said she has no hesitation about beginning light-rail construction within two weeks. The project is expected to employ 4,200 workers and be completed in mid-2009.

A financial "stress test," compiled this year by Sound Transit to satisfy federal inspectors showed that even after an I-776 loss there would be enough money to build the first 14 miles of light rail, without raiding surplus transit money from the Eastside.

Sound Transit's news conference yesterday turned into a brief shouting match between Eyman and Sims.

"I tell my children not to interrupt, not be rude," Sims said after Eyman mocked Sound Transit's position on continuing bond sales.

Eyman replied that Sound Transit was "interrupting the voters."

State Transportation Secretary Doug MacDonald said the ruling will make him think twice about recommending a regional transportation plan, mostly for highways, to Puget Sound-area voters.

"If a statewide initiative can repeal a local tax, we now have got to look at the question of whether the (regional) tax can be attacked," MacDonald said. "Now, everything becomes more complicated."

Information from The Associated Press was used in this report. Mike Lindblom: 206-515-5631 or mlindblom@seattletimes.com

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