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How Is the Monorail Project Funded?

The monorail plan approved by the voters in the November 2002 election funds construction of the monorail with a tax on licensing of motor vehicles. This is the only tax imposed to pay for the project.

The tax is known under Washington State law as a motor vehicle excise tax (MVET), and is added to the fees paid by vehicle owners at the time they renew their automobile licenses each year. The MVET authorized in the monorail plan is 1.4% of the vehicle value, although for the first year the tax rate is .85%. For a vehicle with a value of $10,000, the tax this year is $85, but beginning next year it will be $140.

The tax applies to motor vehicles owned by people living within the city limits of Seattle, and does not apply to the initial licensing of new cars nor to cars licensed the first year after being brought into the city from out of state.

What’s Wrong With This Tax?

The tax is not spread fairly over the population: The only people that are taxed for building the monorail are Seattle vehicle owners, unless they cheat and give an address outside the city.

Many people will benefit from the monorail: The monorail will directly benefit all who choose to ride it, no matter whether or not they live within the city of Seattle. Many people who now drive will find that they can save time and money by using the monorail, so there will be some reduction in auto traffic. Reducing traffic congestion will benefit many who will still drive. Many of these people will live outside of Seattle but travel into Seattle.

The tax burden should be spread more equitiably across a wider range of people: Instead of just one tax, there should be a wider variety of taxes that will collect money from virtually everyone that lives in Seattle and most of those who travel into Seattle from other areas.

Now that the state is collecting the monorail tax with auto license renewals, the Monorail Project has discovered that revenues are about 30% less than expected. It turns out that there were some errors in methods used to make the estimates, including inaccurate data bases, inclusion of vehicles outside of the city limits, and other errors. In addition, some Seattle residents are using addresses outside of the city in order to evade the tax.

The reasons I disagree with the current method of taxation is that it taxes only vehicle owners, even though the monorail system will benefit virtually everyone within the city. The monorail also benefits many people commuting into Seattle and visitors to Seattle, but they are not helping pay for it. I think a more fair tax system would include a lower tax on vehicles and impose other taxes that would spread the tax burden across everyone living in Seattle and those that use the city’s streets and facilities.

Now that tax revenues are less than expected, the reaction of the Seattle Monorail Project is to look for ways to cut costs so that the Project can still be completed with the reduced revenues.

I think that this is the wrong approach. When the voters approved the monorail project, they did so knowing that the estimated cost was $1.75 billion. In other words, the citizens have already approved spending $1.75 billion, so rather than cutting corners on the project, adjustments should be made to raise the $1.75 billion to build the project correctly and as approved by the voters.

Another factor is that the Monorail Project has been authorized to begin planning on the next monorail route. This will also take some financing to pay for the planning, and then another tax plan to fund construction. There is already a lot of opposition to the MVET. I think it would be rediculous to try to increase it further to pay for the next project, so we really need a more equitable and broader-based tax package.

I believe that the solution is to come up with a new tax package and submit it to the voters for approval.

These are my ideas for a new tax package to pay for construction of the Green Line and to plan for the next project of the monorail system. The tax package should be such that it can be increased to provide funding for the next project.

First of all, I think the MVET should be sharply reduced, and that the MVET should also apply to sales of new vehicles and to newly-licensed out-of-state vehicles. A lower MVET will reduce much of the opposition to the Monorail Project, and previous opposition to taxing new car sales will be reduced if the MVET is substantially lower.

There should be small taxes on tourism-related industries, such as hotels, car rentals, local tours, conventions, etc. as many people using these facilities will benefit from the monorail system.

There should be monorail taxes on parking in the Downtown area, including public parking lots and a higher parking meter rate, as this will collect some revenue from people who drive downtown, no matter whether or not they live in Seattle. A small tax on private parking spaces (employee and customer parking for business, etc.) would also collect some revenue from people driving downtown.

There should be taxes on event parking where such parking is near a monorail station, such as at Safeco Field, Seahawks Stadium, and the Seattle Center.

Most property owners near monorail stations will benefit from the station. Business owners should see more business. Apartment building owners should be able to collect higher rents. Therefore, there could be a small property tax on income-producing real estate near a station, with the tax rate highest close to the station and increasingly lower with increasing distance from the station up to perhaps 1000 feet from the station, beyond which there would be no tax.

A general sales tax of 0.1% or less would collect revenue not only from everybody in the city, but also from visitors from out of town that make purchases in Seattle.

I am sure other taxes could be applied, but at least I gave some suggestions. Note that my suggested taxes will more broadly spread the burden across most people in the city and many of the people coming into Seattle that can benefit from the monorail. Some of the tax burden would fall on those who drive into town and contribute to the traffic problems that the monorail would help alleviate. And with this broad tax base, it will be easier to increase some taxes in the future to help fund expansion of the monorail system.

NOTE: Several months ago I wrote another page pertaining to taxation to fund the monorail. It is similar in many ways to this page, but offers some different perspectives. I plan to merge the two pages into one, but this will be difficult and will take some time. In the meantime, you can click here to view the older page on taxation.