Dear Friends and Neighbors,
Why does it cost nearly twice as much in Washington to build a highway, a bridge or ferry than in other comparable states? This is a question we need to ask FIRST before asking citizens for more of their hard-earned dollars for transportation.
One reason our transportation projects cost more than other states is because of a quirky system in which Washington charges itself sales taxes. That’s right — the state charges itself sales taxes on transportation projects! And those taxes are transferred from the state’s transportation budget into the state’s general fund to pay for operating expenses that have nothing to do with transportation.
The 18th Amendment to the Washington State Constitution requires motor vehicle license fees and state gas taxes to be used exclusively for highway projects and nothing else.
How does the state get around this amendment? By charging itself sales taxes on transportation projects.
This means valuable transportation revenue (paid by drivers) is funneled out of the transportation budget and into the state’s general fund, and then used to pay for non-highway projects like social services, education and general government.
How significant is this? In the most recent budget cycle, $413 million in transportation funds was paid in sales tax to the general fund. The Washington State Department of Transportation estimates that project delivery costs could be reduced up to 8.5 percent if their projects were exempt from state sales taxes.
This ridiculous practice drives up the costs of projects. And remember, many transportation projects are bonded up to 25 or 30 years. In other words, the state borrows money over time to pay for transportation projects, including the cost of the sales taxes, which it then pays itself to the general fund. And you, the taxpayer, end up paying not only the principal and interest on the cost of the project, but also the interest on the money borrowed to pay the sales taxes to the state.
Before we ask citizens for more money for transportation, my House Republican colleagues and I believe reforms should be enacted first. We have proposed a series of “Fix it BEFORE you fund it” reforms (Go here to read our entire plan). Those reforms include House Bill 1985, which would exempt transportation projects from sales tax.
It’s an absurd practice for the state to charge itself sales tax on transportation projects. Ultimately, in my view, it’s a fleecing of the motoring public to bypass state constitutional requirements so that the general fund can take in more money. It’s time to end this practice. Fix it BEFORE you fund it!
In your service,