After voting last week to keep $40 car tab fee, Lynnwood City Council continues discussion to eliminate it

The Lynnwood City Council again discussed the city’s $40 car tab fee at its Oct. 18 work session.

After voting last week to keep Lynnwood’s $40 car tab fee in place, the Lynnwood City Council Monday night once again weighed the pros and cons of eliminating the tax, which provides funding for street and sidewalk maintenance. 

On Oct. 11, the council voted against a proposal from Council President George Hurst to adopt an ordinance eliminating the city’s $40 car tax effective 2023. Following the vote, the council decided to revisit the topic to its Oct. 18 work session with city staff, who have said removing the tax could negatively impact the city’s already underfunded street and sidewalk maintenance programs. 

Much of the Oct. 18 discussion regarding the car tab fee was information repeated during recent council meetings. Public Works Director Bill Franz began by explaining that maintenance for Lynnwood’s roads is funded through the city’s Transportation Benefit District (TBD), which collects revenue from the city’s car tab fee and the voter-approved 0.1% sales tax. According to Franz, the city generates $1 million each year from car tab revenue and $2 million from sales tax revenue. The city also allocates approximately $1 million each year to road maintenance from the general fund.

In addition, Franz pointed out that transportation has been highlighted as a priority for many Lynnwood residents, according to data collected through surveys, phone calls and various public comments.

“There’s a lot of pressure to provide the services that we provide and there’s never quite enough revenue to do that,” he said. 

In 2019, Washington voters approved I-976, which would cap car tab fees at $30 across the state. However, the measure was overturned last year by the Washington State Supreme Court, which ruled it unconstitutional.

Still, Hurst said the council should strike the tax because I-976 was supported by 54% of Lynnwood voters. Hurst also spoke to recent survey data he said revealed that many Lynnwood residents don’t trust the city’s elected officials. Hurst said the council could send a message by eliminating the tax.

“A lot of times we just tend to say we’re going to do what we think is best,” he said. “We’re not listening to the voters, and I think the I-976 vote was a prime example that we need to listen to the residents.”

Hurst also said the city needs to incorporate road maintenance into its “budgeting for outcomes” model of budget-making, meaning budget items will be set based on creating desired outcomes and priorities. The proposal did not include an alternative funding source to fill the $1 million budget gap, but Hurst said the council would have plenty of time to figure it out because the measure would not have gone into effect until 2023.

Councilmember Christine Frizzell — who voted against the measure — agreed the council should review the budgeting process for city streets but added that she still does not support the proposal. Frizzell also pointed out that Hurst voted in 2016 to support increasing Lynnwood’s car tab fee — which was at $20 — to $40. Later that year, Lynnwood voters approved the 0.1% sales tax increase.

“I think that we resolve this through the process that we have which is (budgeting for outcomes) and a budgeting process, not through an ordinance,” she said.

In response, Hurst said his support for the car tab fee increase in 2016 was contingent on the failure of the sales tax vote later that year. Since voters approved the tax hike, Hurst said he has advocated for removing the car tab fee.

Councilmember Julieta Altamirano-Crosby asked if the city could repair roads using the $10.9 million in American Rescue Plan Act (ARPA) funds the city received from the federal government. Though the city is authorized to use the ARPA funds for road maintenance, Councilmember Shannon Sessions pointed out it was one-time money and the city shouldn’t rely on that for ongoing programs.

Council Vice President Jim Smith said he supported removing the car tab fee because it would bring relief to low-income families in Lynnwood. Smith also agreed with Hurst that the council should prioritize funding road maintenance and added that in the past, the city has been more concerned with creating new taxes.

“This council needs to be looking at what can we do to help people as opposed to what can we do to help ourselves get more money,” he said.

However, Sessions said she did not believe removing the $40 tax would greatly benefit low-income families and it was insulting to keep saying it would. She also pointed out that there were many residents who didn’t own a vehicle and who would not benefit from eliminating the tax.

Sessions also said there were several issues regarding the I-976 measure that resulted in it being ruled unconstitutional by the state supreme court.

“There’s a lot more politics behind (I-976) than what we’re talking about,” she said.

Still, Hurst said the council should listen to the community, which he said is tired of elected officials who don’t respond to them. 

“I sincerely believe that we can make a statement to our residents that we care what they think and we will figure out a way to fund the roads,” he said.

City Attorney Michelle Meyer said staff are preparing for the mid-biennium review of the city’s 2021-22 budget, which includes proposing necessary amendments. Staff will continue to discuss the budget with the council later this year and Meyer asked that the council delay making any changes that could impact the budget, including removal of the car tab fee. 

“I think we would want more time to walk the council through what that would mean for future budgets,” she said. “I feel like staff could do a better job at that point of really showing you what the impacts are, because I don’t feel like I’ve been able to grasp what that is yet.”

Ultimately, the council decided to bring the proposed ordinance back for a vote at its Oct. 25 business meeting.

In other business, the council voted to approve a contract to design the Community Recovery Center, which aims to provide emergency mental health services in Lynnwood.

The contract with Mackenzie Engineering, Inc. for $1,697,802 covers design services for the recovery center, which will be adjacent to the future Community Justice Center, located at 19321 44th Ave. W. The city also contracted with Mackenzie to construct the justice center.

Funding for the Community Recovery Center is anticipated to come from a combination of state and local funding, including $3 million from Snohomish County included in County Executive Dave Somers’proposed 2022 budget.

Also during the meeting, the council reviewed proposed changes to the council’s rules.

–By Cody Sexton

  1. Do you happen to have a signed copy of the Ordinance approving the removal of the tab fee effective 1/1/2023?

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