Blanche makes the catch: Transit agencies can charge a “Head Tax”

Thanks to commenter Blanche at the Dubois (if that is your real name) I have a really interesting update to my last post. This comes as a surprise to me and it should keep the folks at the Downtown Seattle Association just a little bit nervous. Sound Transit does have access to an “employer tax” to fund its operations. Here’s the full section from RCW 81.104.130:

Employer tax.

(1) A county with a population of one million or more, or a county with a population of from two hundred ten thousand to less than one million that is adjoining a county with a population of one million or more, and having within its boundaries existing or planned high occupancy vehicle lanes on the state highway system, or a regional transportation investment district for capital improvements, but only to the extent that the tax has not already been imposed by the county, may, with voter approval impose an excise tax of up to two dollars per employee per month on all employers or any class or classes of employers, public and private, including the state located in the agency’s jurisdiction, measured by the number of full-time equivalent employees. In no event may the total taxes imposed under this section exceed two dollars per employee per month for any single employer. The county or investment district imposing the tax authorized in this section may provide for exemptions from the tax to such educational, cultural, health, charitable, or religious organizations as it deems appropriate.

Cities are specifically called out in RCW 81.104.150:

Cities that operate transit systems, county transportation authorities, metropolitan municipal corporations, public transportation benefit areas, high capacity transportation corridor areas, and regional transit authorities may submit an authorizing proposition to the voters and if approved may impose an excise tax of up to two dollars per month per employee on all employers located within the applicable jurisdiction, measured by the number of full-time equivalent employees, solely for the purpose of providing high capacity transportation service. The rate of tax shall be approved by the voters. This tax may not be imposed by: (1) A transit agency or high capacity transportation corridor area when the county within which it is located is imposing an excise tax pursuant to RCW 81.100.030; or (2) a regional transit authority when any county within the authority’s boundaries is imposing an excise tax pursuant to RCW 81.100.030. The agency or high capacity transportation corridor area imposing the tax authorized in this section may provide for exemptions from the tax to such educational, cultural, health, charitable, or religious organizations as it deems appropriate.

[2009 c 280 § 3; 1992 c 101 § 26; 1990 c 43 § 41.]

This gives us something to work with that aligns with what TriMet in Oregon has. It requires voter approval and there would be some question about who should impose the tax, the city or the county.

Seattle operates the South Lake Union Trolley, although it contracts the work out to Metro. It also has formed a Transportation Benefit District.  King County at least could impose the tax county wide. If my reading of the BLS is correct, there are about 1.7 million employed people in the Seattle-Bellevue-Tacoma area. That’s about $40 million per year in money for transit. The number of FTEs might be lower, but still, that’s a decent chunk of change.

It’s also important to note that RCW 81.104.140(10) allows that

Funds may be used for any purpose relating to planning, construction, and operation of high capacity transportation systems and commuter rail systems, personal rapid transit, busways, bus sets, and entrained and linked buses.

That’s not exactly a mandate that allows for this tax to be used to pay for TOD, but it’s close.

Right now it’s a political impossibility that the legislature would change the law to allow Sound Transit or cities to impose this transit or TOD “head tax” without a vote. But maybe they should consider it. Those cities or counties could take the heat and balance it against the benefits of the additional revenue.  Or it could be part of the TOD agency I wrote about earlier.

In spite of the limitation, the fact that this already exists in the RCW is a positive thing. Now we need to figure out how to use it.

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3 Responses to Blanche makes the catch: Transit agencies can charge a “Head Tax”

  1. FYI, Blanche DuBois is the main protagonist of “Streetcar Named Desire.” Clever! 🙂
    In any case, a head tax (also called a poll tax, or a per capita tax) would essentially tax a great swathe of people who do not use the transit benefit. It would be cumbersome and costly to administer, as well as not popular. the connection to benefits conferred does not jibe closely with funding responsibility. It may be easier in the legal sense, which is of course an issue in tax-averse WA.

    I’d still try and do what must be done to use value capture strategies, so as not to have a funding stream that hampers the very economic growth that is meant to be encouraged by TOD. A great overview of the value capture options are studied here: http://www.cts.umn.edu/Publications/ResearchReports/reportdetail.html?id=1800

  2. Pingback: You Want a Resolution? How About a Payroll Tax for Transit - Seattle Transit Blog

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