Joel Ard, representing taxpayers in the Sound Transit class action lawsuit which is now before the state Supreme Court, has presented a settlement offer to Sound Transit. Taxpayers, represented by Ard, have made the case that the statute authorizing Sound Transit to collect an additional 0.8% car tab tax (in Sound Transit 3, which passed in 2016), was drafted unconstitutionally. Read more about the case here and here. 

There are three key terms of the settlement:

1. Sound Transit can continue to levy its full 1.1% motor vehicle excise tax (MVET), which is comprised of the Sound Move MVET of 0.3% and the Sound Transit 3 MVET of 0.8%. However, Sound Transit must use the new vehicle depreciation schedule in state law as of 2006, which is much more modest and more closely aligned with fair market values of vehicles.
2. Sound Transit must refund taxpayers a total of $125 million, which represents the difference between total MVET the public has paid since March 2017 less the amount that the public should have paid were they not overcharged by the agency.
3. A statutory correction must be made to the language authorizing Sound Transit to impose both the Sound Move and Sound Transit 3 car tab taxes, to ensure it is constitutional and that Sound Transit values vehicles according to the newer 2006 depreciation schedule.

The lawsuit being considered by the Supreme Court threatens Sound Transit’s entire Sound Transit 3 MVET of 0.8%. This settlement offers a solution that lets Sound Transit keep its car tab tax, while correcting statute and making taxpayers whole by discontinuing the unfair overvaluation of their cars for maximum revenue. This would cost Sound Transit approximately $1 billion in revenue, which is less than 6% of the revenue that Sound Transit told the Supreme Court they could lose in this lawsuit ($18 billion).

It’s also less than the $7 billion Sound Transit officials have said they would lose in tax revenue through 2041 if Initiative 976 is approved – as the initiative seeks to eliminate Sound Transit’s entire 1.1% MVET.

You can read the settlement offer below: