Among the bills working their way through the legislature is Senate bill 6148. That bill would give Sound Transit the ability to issue bonds with 75-year maturities. Sound Transit first sought legislative approval for the extended bond maturities last year, but no case was presented to justify the change and the legislature sensibly refused to grant the unprecedented authority.
When the request was made a year ago Sound Transit had not yet revealed their light rail plan was tens of billions of dollars over budget. As a result of that massive cost increase Sound Transit has admitted the 25-year plan presented to voters in 2016 cannot be implemented within the agency’s statutory debt limit so now they are looking for the legislature to help them out of their self-inflicted budget problem. Sound Transit is also undertaking an “enterprise initiative” intended to revise the plan and the plan’s financing, but the result of that effort won’t be known until well after the legislature has adjourned for the year.
In testimony to the State Senate Transportation Committee Sound Transit CEO Dow Constantine made it sound as though the extended bond maturities were a minor bit of financial engineering to give the agency more ability to manage its debt. What he didn’t say was that just like a thirty-year mortgage greatly increases the total interest paid compared with a fifteen-year mortgage, the 75-year bonds would increase the debt service Sound Transit would ultimately pay compared with standard 30-year bonds.
If the legislature gives the go-ahead taxpayers in the Puget Sound region will be on the hook for billions of dollars of debt service that extends many decades into the future. The extended bond maturities and extended timeline for implementation would convert the twenty-five year ST3 plan voters approved in 2016 into a much lengthier plan. And the increased debt service would make it very unlikely the Sound Transit taxes would be rolled back, at least not within the lifespan of anybody who voted in 2016.
Sound Transit has suggested the 75-year bonds would help it implement the plan approved by voters, but that claim ignores the fact the ST3 plan specified a financing plan and a 25-year time period. The longer-term bonds will significantly change the terms of the plan voters approved in 2016. If Sound Transit is genuinely interested in keeping faith with voters they should put their revised plan on the ballot in November.
Sound Transit’s presentation to the legislature gave the impression the agency’s problems were mostly financial, but that overlooks the underlying problems with the plan. The years of delay, below forecast ridership, and huge cost overruns can all be traced back to Sound Transit’s decision to base the system on light rail rather than more flexible, lower cost, and much less risky Bus Rapid Transit. Sound Transit collects over $2.5 billion per year in tax revenue and it finished 2024 with more than $5.8 billion in the bank. That is more than enough to implement region-wide transit service improvements, but apparently it isn’t enough for the extravagant light rail construction project Sound Transit continues to pursue. This is further evidence of the need for accountability, not more borrowing authority.
In the current legislative session affordability is a major issue. It isn’t hard to see why, prices for housing and just about everything else have gone up, and so have taxes. The average household in the Sound Transit district now pays over $1,700 per year to Sound Transit in sales tax, motor vehicle excise tax and property tax. Despite that high level of subsidy, Sound Transit’s light rail lines carry less than one percent of all the trips residents take around the region each day, and total transit ridership in the region is lower now than it was ten years ago. The region is paying a very high price for transit projects that accomplish very little. If the legislature is truly concerned about affordability, they should think twice before allowing Sound Transit to burden taxpayers with billions of dollars in debt that extends out to the end of the century.