Citizen’s Guide to Initiative 976: to reduce how much drivers pay in yearly vehicle fees and taxes

By MARIYA FROST  | 
POLICY NOTES
|
Sep 27, 2019

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Key Findings

  1. Initiative 976 would lower annual vehicle registration renewals to $30 a year.
  2. Drivers pay additional car tab taxes and fees, many of which Initiative 976 would reduce or repeal entirely.
  3. Transportation Benefit Districts (TBDs) would no longer have the authority to impose vehicle fees.
  4. Sound Transit’s entire 1.1 percent motor vehicle excise tax (MVET) would be conditionally repealed. If Sound Transit does not comply, the total MVET would be reduced to 0.5 percent. 
  5. The initiative would primarily reduce the money drivers pay for public transportation at the state and local levels. 
  6. Of the approximate $4.2 billion fiscal impact to state and local revenues over six years, 35 percent would come out of the state Multimodal Account, which largely funds public transportation, and 46 percent would affect Sound Transit. Eight percent would come out of the state Motor Vehicle Fund, which exclusively funds roads and bridges.

Background

Voters enact $30 car tabs

Before 1999, Washington state had been charging car owners a tax of 2.2 percent of a vehicle’s value added to their annual car tab fees. This motor vehicle excise tax (MVET) was not based on a car’s fair market value, but on a vehicle depreciation schedule that inflated the value of vehicles. Both the state tax and the valuation method were considered by many people as arbitrary and unfair. 

In response, voters passed Initiative 695 in 1999. The popular measure passed with 56 percent support and repealed the state MVET as well as the inflated depreciation schedule. The initiative imposed a flat $30 annual car tab fee and required any future tax increases to be voter-approved.  Despite support from voters, the Supreme Court ruled in early 2000 that Initiative 695 was invalid. 

Governor Gary Locke and both parties in the state legislature subsequently preserved $30 car tabs in an effort to “remove any uncertainty in the minds of the citizens of the state of Washington, to make it very clear that we will carry out Initiative 695” and enact the tax cut voters approved. Lawmakers also repealed the state MVET and inflated depreciation schedule, effectively passing Initiative 695 by changing the original statute.

Download the full Policy Note