How will ST3 be funded?
ST3’s $53.8 billion in investments would be enabled by: (1) a sales tax of 0.5 percent ($.50 on a $100 purchase) in addition to the 0.9 percent currently collected; (2) a motor vehicle excise tax (MVET) of 0.8 percent ($80 annually per $10,000 of vehicle value) in addition to the 0.3 percent MVET Sound Transit is collecting through 2028; and (3) a property tax of 25 cents for each $1,000 of assessed valuation. Learn more on the ST3 Funding factsheet.
How were these tax methods selected?
In summer 2015 the Washington State Legislature and Governor granted Sound Transit authority to ask regional voters to approve new local revenue sources that within 15 years can generate up to $15 billion in funding for mass transit expansions, using sales tax, property tax and motor vehicle excise taxes. The Sound Transit Board responded to strong public support for broader mass transit investments by proposing a 25-year plan. This extended timeframe would generate $28 billion in new taxes. Federal grants, existing taxes, bonding and fares increase available funding to $53.8 billion. Learn more on the ST3 Funding factsheet.
What is the average cost per adult for the ST3 plan?
The estimated cost to a typical adult living in the Sound Transit District would be approximately $169 more annually, or about $14 more per month. These new taxes are combined with federal grants, existing Sound Transit taxes, fares and bonds, to finance the next generation of mass transit, providing fast, reliable travel times for riders throughout the region.
If ST3 passes, when will new taxes take effect, and how long will taxes last?
Property tax takes effect January 1, 2017; MVET increases begin for new and renewal vehicle registration starting March 1, 2017; and increased Sales and Use tax starts April 1, 2017. The Sound Transit 3 Plan obligates the Board to roll back taxes to the level required for permanent operations and maintenance following completion of transit projects, unless a future ballot measure directs otherwise. Within seven years of completing ST3, Sound Transit and an independent advisor, Piper Jaffray & Co., have calculated that the entire ST3 tax increase could be eliminated, along with approximately 11 percent of the sales taxes currently supporting ST2 and Sound Move. This or an alternate mix of tax reductions could cut total agency tax collections in half.
How was the typical annual cost calculated?
Here’s how the $169 per typical adult breaks down. The calculations for all three of the proposed new taxes use median values, or the amounts at which 50 percent of people would pay more and 50 percent would pay less.
- Motor vehicle excise tax: A typical adult would pay $43 more annually based on the $5,333 median value of vehicles in the Sound Transit District. MVET taxes are determined by a state of Washington depreciation schedule for a specific vehicle’s model and production year.
- Property tax: The typical adult would pay $47 more based on the median $360,658 assessed value for homes in the Sound Transit District. For renters, this conservatively assumes $47 as the median cost passed on by a landlord.
- Sales tax: An adult at the median income level would pay an additional $79 per year in sales and use taxes if ST3 were passed. This is based on a median household income level of $73,359 according to 2015 data from the Washington State Office of Financial Management (OFM) for Snohomish, King and Pierce counties.