A King County judge has largely upheld Initiative 976, the voter-approved measure to cut car-tab taxes, in a rebuke to Seattle, King County and others who argued the measure was unconstitutional.
But drivers expecting a tax cut should be prepared to keep waiting. The measure will remain on hold for now and the judge's decision on Wednesday is expected to be appealed.
The legal fight over I-976 has kept car-tab tax cuts and transportation budget hits in limbo across Washington. If I-976 is upheld, it could deal a significant blow to transportation spending across the state, including in Seattle, where car-tab fees pay for road improvements and bus service.
The initiative passed with about 53% of the vote statewide in November. The latest effort by longtime anti-tax activist Tim Eyman, I-976 would lower some state vehicle-registration fees, strip local governments' authority to impose their own car-tab fees and attempt to repeal or reduce Sound Transit taxes (the agency disputes how the measure's effects would play out).
State and local governments use car-tab taxes to fund road and transit projects. In the Puget Sound region, an increase in Sound Transit taxes and the inflated formula Sound Transit uses to calculate them generated new anger over car-tab costs in recent years that appeared to fuel support for I-976.
After the initiative passed, a coalition of groups including the Garfield County Transportation Authority, Seattle and King County quickly sued, claiming it was unconstitutional and that the ballot title voters saw misled them about what the initiative would do.
Eyman said voters were well aware of what they were voting for and criticized the defense of I-976 from the state Attorney General's Office. Eyman and the attorney general are engaged in two other legal battles, one alleging Eyman violated campaign-finance laws and another about his bankruptcy.
Pierce County also joined the state's defense of I-976.
In his written order, King County Superior Court Judge Marshall Ferguson rejected most of the arguments that I-976 was unconstitutional, including claims that it contained too many subjects, wrongly rolled back local taxes with a statewide vote and misled voters with the ballot title.
However, Ferguson did not rule on two other claims, one about the initiative's directive that the state use the private company Kelley Blue Book to calculate car-tab taxes and another dealing with the city of Burien, which has sold bonds to be paid back with car-tab tax revenue it collects.
Because his ruling "does not dispose of all" the claims by opponents, the initiative will remain on hold, he wrote. Ferguson had previously stopped the initiative from taking effect while the legal fight played out. Arguments may continue on those two issues, and the case is expected to reach the state Supreme Court.
The state continues to collect car-tab taxes as usual and will determine a refund process if a court orders it to do so, Department of Licensing spokesman Rob Wieman said.
"We're waiting like everyone else to see what the courts say, and we'll act on whatever directives that come along when that happens," Wieman said. The state says drivers should continue to renew and pay their vehicle registrations on time.
Dan Nolte, a spokesman for the Seattle City Attorney's Office, said the city was "disappointed in the judge's decision. We're assessing the order and evaluating options for next steps."
State Attorney General Bob Ferguson, whose office defended I-976, praised the decision and used the opportunity to take a shot at Eyman, who in an earlier court hearing attempted to address the judge directly from the audience.
"It's worth noting that the hearing in which Tim Eyman had an outburst, we lost, and the hearing in which Eyman remained silent, we won," the attorney general said in a statement. "My office will continue working to uphold the will of the voters every step of the way."
Eyman said he was "thrilled" the judge "no longer thinks voters were confused -- we never were."
Voters' will "should be implemented immediately," Eyman said in an email. Eyman said the ruling happened "in spite of" the attorney general.
King County and other I-976 opponents had a "heavy burden" for proving a voter-approved measure should be struck down, the judge noted in his order.
"A court may not strike down an initiative simply because it dislikes it or disagrees with its policies," he wrote. But to allow an unconstitutional measure to stand would be to "shirk" the duty of the court, he added.
Much of the argument from King County and other opponents hinged on the I-976 ballot title language voters saw, which they claimed misled voters regarding which fees would be repealed and by how much.
In initially putting I-976 temporarily on hold, Ferguson said opponents were "likely to prevail" on their ballot-title argument. But on further review, he was not convinced.
The ballot title said the initiative would "repeal, reduce, or remove authority to impose certain vehicle taxes and fees; limit annual motor-vehicle-license fees to $30, except voter-approved charges; and base vehicle taxes on Kelley Blue Book value."
In Seattle, voters approved a $60 car-tab fee to fund bus service, but I-976 would repeal the city's authority to charge that type of fee. So, Seattle and others argued the language about "voter-approved charges" misled voters.
In rejecting that argument, Ferguson said voters could approve future fees through the initiative process or a path created in the future by the state Legislature. Since that is "possible" after I-976, the reference to voter-approved charges was not misleading, the judge wrote.
Opponents also said I-976 violated a requirement that initiatives deal with a single subject, but the judge found the initiative's various tax cuts and details "operate in a coordinated, conjunctive way."
The two outstanding issues deal with Kelley Blue Book and Burien's bonds.
By requiring the state to use the private company Kelley Blue Book to estimate vehicle values, King County and others argued, the initiative illegally required the state to enter a single-source contract with Kelley Blue Book.
In Burien, the city said it marketed bonds based in part on a promise to use money from a $10 vehicle license fee to pay them back. By repealing cities' authority to implement those fees, the measure illegally impaired Burien's bond contracts, opponents argued.
On both issues, the state and other defendants said they needed time to gather more facts, so the judge did not decide on the merits of those arguments. Either side can bring these issues back for more argument, the judge wrote.
In past years, two other car-tab initiatives sponsored by Eyman have been partially or fully struck down in court. Uncertain of the legal outcome for I-976, state lawmakers say they plan to budget transportation spending this year as if the tax cuts will be upheld.