City considers a Transportation Benefit District, $20 car tab fee

Though a public hearing was canceled for Monday, August 4, City Council and staff have been studying a Transportation Benefit District (TBD), to fund the six-year Transportation Improvement Plan (TIP). Even after postponing the resurfacing of Island Crest Way until 2016, the Street Fund budget is expected to go negative in 2017.

The 2015-2020 TIP also faces financial struggles, with a negative Street Fund balance of as much as $1.7 million by 2020. Council directed staff at a May 19 meeting to study the implications of creating a TBD and implementing a $20 car tab fee.

State law allows cities to establish TBDs, which function as tax districts to fund transportation improvements, so long as they are consistent with existing plans and are required by growing congestion.

In the case of Mercer Island, staff are considering a $20 car tab fee that would go into effect six months after being authorized, as early as spring of 2015. TBDs can pull from four separate sources of revenue: Property taxes, a percentage of sales and use tax, vehicle tolls or vehicle fees. Voter approval is not required for car tab fees of $20 or less and because a $20 vehicle charge levied by King County expired in May, Islanders wouldn’t see any extra charges.

Money would be collected when car owners renewed their vehicle. If enacted the tax could net $350,000 a year. According to the Department of Licensing, there are 17,687 registered vehicles on the Island.

But some worry that extra taxes would hurt the chances of passing a transportation package in the Legislature. They point to the recent failure of Proposition 1, which 52 percent of Islanders voted down. Prop. 1 included a $60 car tab, though most of the fee would have gone toward restoring regional bus service.

Other cities have considered similar options. Fifty-five cities in Washington state now have benefit districts, many of which implement similar fees of $20.

Council would likely adopt the fee ordinance in either September or December. A car tab would go into effect six months later.


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