Ruling: Sound Transit can continue collecting vehicle tax

By Eric Pryne
Seattle Times staff reporter

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Related stories New I-776 court fight puts state in odd spot

Sound Transit can continue to collect its motor-vehicle excise tax, even though the tax was repealed by Initiative 776 two years ago, a judge ruled today.

King County Superior Court Judge Mary Yu agreed with Sound Transit's argument that ending the tax now would unconstitutionally interfere with a contract it signed with purchasers of agency bonds in 1999.

In that contract, Sound Transit promised to keep collecting the 0.3 percent tax until the bonds are paid off. That isn't scheduled to occur until 2028, and over the next 24 years the tax will generate far more revenue than the $350 million the agency owes the bond holders.

But "this court has no authority to order early retirement of the bonds, nor the power to direct how Sound Transit spends the (excise tax) funds," Yu wrote.

I-776 sponsor Tim Eyman has indicated Yu's ruling will be appealed to the state Supreme Court.

Initiative 776, approved by state voters in 2002, repealed two other vehicle taxes in addition to Sound Transit's levy of $30 on each $10,000 of vehicle value. The state Supreme Court upheld the measure's constitutionality a year ago; the other two taxes are no longer collected.

But the high court didn't rule on the initiative's impact on Sound Transit, referring that question to Yu.

The judge also rejected arguments by Eyman's Permanent Offense organization and other I-776 supporters that Sound Transit's formation violated state law, meaning the agency never had the authority to sign contracts.

The motor-vehicle excise tax accounts for about 20 percent of Sound Transit's tax revenue. The agency has said loss of that money would probably mean cuts in transit service and capital projects, but would not affect construction of its Seattle light-rail line, as Eyman had claimed during the I-776 campaign.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com

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