(The Center Square) – The Richland City Council might eliminate a $20 “car tab” fee that funds street repairs next month to impose a new sales tax on residents without voter approval to finance that work.
The officials signaled unanimous support Tuesday to replace the vehicle license fee with a tax increase that could double its funding for the Richland Transportation Benefit District. State law allows cities to establish TBDs to fund local infrastructure projects by either passing a tax increase or a licensing fee.
The statute allows the council to impose a one-tenth of 1% sales tax increase by a majority vote, and up to three-tenths of 1% with voter approval, or the $20 fee that can increase to $50 after four years.
“Someone would have to spend $20,000 in sales tax-eligible goods in one year to be the equivalent of [a $20] car tab fee,” City Manager Jon Amundson said. “So that’s why we’re recommending to make the change; it benefits … the [TBD] as well as the residents of the city of Richland by spreading out the cost.”
Richland isn’t the only municipality in the Tri-Cities with a TBD; Kennewick also has a sales-tax-based TBD, and Pasco may also establish one soon, but the city hasn’t decided which funding option to rely on.
The $20 fee currently generates approximately $1 million annually for the TBD, which requires about $4 million from Richland each year to support preservation work. The 0.1% sales tax hike is estimated to generate around $2.25 million annually, alleviating some gap funding provided by the general fund.
Amundson said Richland has experienced healthy sales tax growth for the last few years, driven by the daytime population. He recognized that the general fund and real estate excise taxes may still have to shoulder some of the costs, but noted that the sales tax does transfer a portion onto out-of-towners.
If approved, the tax increase, which costs a penny for every $10 spent, will take effect in January.
“If you’ve got some sort of philosophical objection to paying for street maintenance, you can just go shop somewhere else and call it even,” Councilmember Kurt Maier said Tuesday. “This is a big win.”
The rest of the council followed Maier in offering support, with one member adding that they should have taken this route from the beginning. Residents who recently testified in Pasco over the proposal there made similar statements regarding the $20 fee, that they would register their cars elsewhere.
Anti-tax activist Tim Eyman traveled across the state to protest in Pasco with them. Eyman launched several citizen initiative campaigns over the years, with voters passing one of those in 2019 to prohibit cities from passing TBD “car tab” fees. It also set a $30 cap on the “car tab” fees across the state.
Nearly 53% of the state voted in favor of Initiative 976, but the Washington Supreme Court struck it down, ruling that it violated the single-subject rule. The Tri-City Herald Editorial Board wrote an article after Eyman made a scene in Pasco, telling voters not to let him decide how the city pays for its roads.
“I’m 1,000% opposed to them raising ‘car tab’ taxes, and I’m 999% opposed to them raising the sales tax,” Eyman told The Center Square when asked what option he would pick if it came down to the two.
He believes it’s about respecting the voters. Local governments already have the authority to increase taxes with voter approval, so Eyman said the council should put it on the ballot for residents to decide.
He said voters have continually approved his ballot initiatives, with three being directly related to the “car tab” fees, for decades. If residents decide that street maintenance isn’t worth their buck, the city can point back to the election results when they complain and put it on the ballot for another vote.
“If you want to avoid criticism, put it on the ballot,” Eyman told The Center Square. “You will still be a rock-ripped conservative, and no one could question that you’re acting exactly like a Seattle mayor.”
