The Washington Supreme Court struck down Initiative 976 to reduce car-tab taxes, nearly a year after statewide voters approved the tax-cutting measure.
The measure is unconstitutional because it “contains more than one subject, and its subject is not accurately expressed in its title,” the court ruled.
Longtime anti-tax activist Tim Eyman sponsored I-976, which passed with about 53% of the vote statewide. Soon after, Seattle, King County and others sued, arguing the measure violated the state Constitution by involving more than one subject and misleading voters.
The ruling Thursday comes as Seattle officials attempt to plug a revenue hole due to the pandemic and the state faces a projected shortfall of about $4.2 billion through 2023.
State and local governments use car-tab fees to fund road and transit projects.
In the Puget Sound region, Sound Transit also collects car-tab taxes based on the value of a vehicle. Those fees drew new outrage in recent years because Sound Transit’s formula, based on state laws, inflates vehicle values compared to the commonly used Kelley Blue Book.
I-976 attempted to lower many state vehicle registration fees to $30, repeal local car-tab taxes and roll back Sound Transit’s car-tab taxes. But Sound Transit kept collecting its car-tab taxes to pay off bonds, arguing I-976 didn’t set a deadline for the agency to pay off debt.
After I-976 passed, the state set aside its portion of car-tab tax money in case the measure was upheld, according to Gov. Jay Inslee’s office. Seattle “continued collecting, but did not spend” its car-tab revenue, said Dawn Schellenberg, spokesperson for the Seattle Department of Transportation.
In February, a King County Superior Court judge largely upheld I-976, but kept the measure on hold until the high court ruled. The state supreme court heard arguments in June. Throughout, car-tab fees have remained in place for vehicle owners.
Among the legal issues was whether a phrase in the measure’s ballot title saying fees would drop to $30 “except voter-approved charges” misled voters. In Seattle, voters approved a $60 car-tab fee to fund bus service, but the initiative stripped cities of their authority to impose that type of local car-tab tax.
Lawyers also debated whether the measure was “logrolling” too many different subjects and whether the state could really base vehicle values off the private company Kelley Blue Book, as called for in the initiative.
Eyman twice before led successful car-tab-cutting initiatives, only to have them fully or partially struck down in court later. He also ran an unsuccessful campaign for governor this year and is mired in a long-running campaign finance lawsuit.
A Thurston County Superior Court judge ruled in February that Eyman was in violation of state campaign finance laws for at least seven years and concealed nearly $800,000 in political contributions. A trial on the full case against Eyman was is expected this fall.
Last year, I-976 drew an opposition campaign that raised more than $5 million as politicians warned about dire consequences and “Hunger Games-style” fights for transportation funding. Before the local coronavirus outbreak, state lawmakers patched funding holes without dire cuts, leaving bigger fights for the next legislative session.
Seattle’s $60 car-tab fee for bus service is set to expire this year. City leaders are asking voters to renew a sales tax, but not the car-tab fee, citing uncertainty about I-976. Some council members said they would support passing a new city car-tab fee if I-976 was thrown out in court.