SENATE BILL REPORT
SB 6303
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
As of January 25, 2018
Title: An act relating to establishing a vehicle valuation method for a regional transit authority collecting a motor vehicle excise tax that is based on Kelley blue book or national automobile dealers association values.
Brief Description: Establishing a vehicle valuation method for a regional transit authority collecting a motor vehicle excise tax that is based on Kelley blue book or national automobile dealers association values.
Sponsors: Senators O'Ban and Sheldon.
Brief History:
Committee Activity: Transportation: 1/24/18.
Brief Summary of Bill |
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SENATE COMMITTEE ON TRANSPORTATION |
Staff: Hayley Gamble (786-7452)
Background: RTAs. An RTA is authorized to use its tax revenues to plan, construct, and operate high-capacity transportation, such as express bus service and light rail. There is currently one RTA—Sound Transit—which operates light rail, commuter rail, and express bus service in Puget Sound. Sound Transit currently imposes the following voter-approved taxes:
1.4 percent sales and use tax;
1.1 percent MVET;
an annual $0.25 per $1,000 of assessed value property tax; and
a rental car sales tax of 0.8 percent.
MVET. A MVET is a tax paid on the value of a motor vehicle. Voter-approved Initiative 695 (2000) and Initiative 776 (2003) repealed statewide and local MVETs. Both initiatives were eventually ruled unconstitutional in whole or in part, however the Legislature repealed the statewide MVET in 2000. Certain local MVETs were retained: Sound Transit and the Seattle Monorail. Sound Transit is the only local agency currently imposing an MVET to develop and operate a high capacity transit system.
Until 1990, vehicle valuation was determined by agency rules. In 1990, the Legislature adopted statutory valuation schedules to simplify MVET administration. Under the 1990 change, the tax base is the manufacturer's base suggested retail price when the vehicle is first offered for sale, multiplied by a depreciation schedule.
The following vehicle valuation schedule for passenger cars and trucks is currently used by DOL and Sound Transit:
MVET Valuation Schedule Currently in Use
Year | Schedule 1* | Schedule 2** |
1 | 100% | 100% |
2 | 95% | 90% |
3 | 89% | 83% |
4 | 83% | 75% |
5 | 74% | 67% |
6 | 65% | 59% |
7 | 57% | 52% |
8 | 48% | 44% |
9 | 40% | 36% |
10 | 31% | 28% |
11 | 22% | 21% |
12 | 14% | 13% |
13 or older | 10% | 10% |
*Schedule 1: Passenger vehicles, motorcycles, light-duty trucks, and small trailers. Base manufacturer's suggested retail price (MSRP) is used in the valuation.
**Schedule 2: Certain trucks with scale weight of over 6001 pounds.
The 2005 Transportation Budget directed the Joint Transportation Committee (JTC) to study the feasibility of developing a uniform MVET depreciation schedule that would more accurately reflect vehicle value and not hinder existing debt obligations. As a result of the study, the Legislature passed SSB 6247 (2006) which enacted a new valuation schedule. This vehicle valuation schedule is currently provided in statute.
2006 Valuation Schedule
Year | Schedule A* | Schedule B** |
1 | 100% | 100% |
2 | 81% | 81% |
3 | 67% | 72% |
4 | 55% | 63% |
5 | 45% | 55% |
6 | 37% | 47% |
7 | 30% | 41% |
8 | 25% | 36% |
9 | 20% | 32% |
10 | 16% | 27% |
11 | 13% | 26% |
12 | 11% | 24% |
13 | 9% | 23% |
14 | 7% | 21% |
15 | 3% | 16% |
16 or older | 0% | 10% |
Base vehicle valuation is defined at 85 percent of MSRP for all taxable vehicle use classes other than heavy and medium trucks. Base value for heavy and medium trucks is defined by latest purchase price (Schedule A).
*Schedule A: Heavy and medium trucks whose empty scale weights exceed 6000 pounds, including commercial and log use trucks. Valuation represents the average, annual national market depreciation for all vehicles in the class. The same method as provided in Schedule 2, MVET Valuation Schedule Currently in Use, is used.
** Schedule B: All other vehicles. The valuation represents average, annual western-region market depreciation for passenger vehicles and light trucks.
Current RTA MVET. In 2015, the Legislature passed an omnibus transportation revenue bill that included authority for an RTA to increase their MVET collection by 0.8 percent with voter approval. The MVET authority provided in the revenue bill specified that the vehicle valuation method for collection of the 0.8 percent MVET would be the MVET schedule as it was listed in statute in January 1996, until bonds issued against the original 0.3 percent MVET have been paid off. Bonds issued against the original 0.3 percent MVET are currently anticipated to be paid off in 2028, at which point the 0.3 percent MVET will cease being collected. MVET that is collected after December 31 in the year the 0.3 percent MVET bond debt is retired must use the valuation schedule enacted in 2006.
DOL. Before beginning collection of an MVET, a local government, which includes Sound Transit, must contract with DOL for the collection of the tax. DOL may charge a reasonable amount for administration costs.
Summary of Bill: MVAP. Requires an RTA to implement a market value adjustment program by December 31, 2018, under which a credit is allowed against total MVET due in an amount equal to the tax due under current law, less the tax due assuming a rate of 0.5 percent and based on vehicle valuation through Kelley Blue Book or NADA—whichever is lower, if the net result is positive. The program must provide credit retroactive to the date the 0.8 MVET was first collected. An RTA must implement the program in a manner that allows the delivery of the system and financing plan approved by the RTA's voters, to the extent practicable.
Except for the property tax authorized in RCW 81.104.175 and project schedule adjustments, the MVAP may be funded by any resources available to the authority.
Contracting for Collection of MVET. An RTA may only contract with DOL for the collection of an MVET if the RTA has implemented a MVAP. Any contract to collect an MVET must provide DOL sufficient funding to fully cover current and future costs associated with the tax collection process, including customer service, information technology, and public announcements.
Other Elements. Until the system and financing plan adopted by the RTA voters in 2016 is completed, the RTA must submit an annual report to the transportation committees of the Legislature on the status of the delivery of the plan. This act is to be construed to preclude an RTA from defeasing bonds.
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: The bill contains an emergency clause and takes effect immediately.
Staff Summary of Public Testimony: PRO: This bill would reduce card tabs by approximately 55 percent. The only way to provide real tax relief is to deal with the rate and reduce it. Taxpayers are demanding this change. There is no remedy to appeal current valuation methods. Everyone is familiar with using NADA and Kelley Blue Book. There is a lot of agreement between the various credit bills.
CON: This legislation would undermine the voter approved projects and create a $12 billion fiscal impact. This bill goes too far and undermines the will of the voters.
OTHER: DOL has concerns about delaying the DRIVES bill to avoid a $2 million per month delay. DOL is happy to work on bill details to avoid this cost. SB 6303 is a stronger and fairer credit program. The bill effectively gives taxpayers the tax break they want. People have asked their representatives for tax relief for families and this should be a greater priority than protecting transit.
Persons Testifying: PRO: Senator Steve O'Ban, Prime Sponsor; Ryan Ottele, citizen. CON: Abigail Doerr, Transportation Choices Coalition. OTHER: Mariya Frost, Washington Policy Center; Beau Perschbacher, DOL.
Persons Signed In To Testify But Not Testifying: No one.