Read executive summary here: ST-ExecSumLtrPaddenOBan

OLYMPIA – Sound Transit misled lawmakers and voters in its effort to pass a $54 billion bond issue last year, concealing truth from decision-makers and violating the state constitution in the process, a Senate investigation has concluded.

The Seattle-area rail transit agency won voter approval last November for a mammoth 25-year construction program known as “ST3.” But voters were in for a shock when they went to renew their license tabs and discovered their taxes had skyrocketed. Sound Transit never explained forthrightly that it planned to use a valuation schedule that wildly overstates car and truck values. Lawmakers were surprised as well by the agency’s $54 billion proposition: They thought they had authorized a far-more-modest $15 billion plan.

In a summary of findings and recommendations for the Legislature released Monday, the Senate Law and Justice Committee says Sound Transit didn’t play fair with lawmakers and voters. It says Sound Transit misrepresented the bill it asked the Legislature to pass, failed to disclose material facts, and disregarded laws designed to ensure full disclosure and prevent taxpayer money from being used to promote political causes. Among other things,

• Legislation granting new taxing authority to Sound Transit was unconstitutionally drafted in a way that concealed its effect,
• The transit agency misled the Legislature as to the amount of new taxing authority involved,
• Sound Transit coordinated lobbying efforts by third-party organizations, despite prohibitions on lobbying by public agencies,
• Sound Transit improperly used public resources to promote the third-party campaign for the ballot measure, and
• The agency provided misleading information to voters about the size and scope of tax increases it asked voters to approve.

“Sound Transit played fast and loose with the truth,” said Sen. Mike Padden, chair of the Senate Law and Justice Committee. “It kept key facts from the Legislature and the voters. It displayed disregard for laws designed to ensure full disclosure and prevent public resources from being used for campaigns. Sound Transit has given government at all levels a black eye.

“Sound Transit may be vulnerable to a lawsuit challenging its ballot measure on constitutional grounds, but bonds have already been issued, and it will be difficult to un-ring that bell. What is more important is what we do about it in next year’s legislative session. Our investigation shows we need to bring Sound Transit back in line, restore accountability and rebuild public trust.”

During its investigation this summer and fall, the Senate Law and Justice Committee reviewed more than 7,000 pages of internal documents, interviewed nine witnesses, and conducted two investigatory hearings in public session. The fact-finding effort revealed numerous examples of deceptive and improper tactics utilized by Sound Transit.

• Asked for an inch, took a mile. In 2015, Sound Transit asked the Legislature for permission to go to the voters for as much as $15 billion in new taxes over 15 years. In testimony and other official communications with the Legislature, Sound Transit referred repeatedly to “the full authorization of $15 billion.” Yet the bill Sound Transit presented to the Legislature did not limit the amount that could be collected – it merely specified tax sources and tax rates. After the Legislature adjourned in 2016 and could not pass corrective legislation, Sound Transit went to the ballot with a much-larger 25-year program, utilizing bonds and other revenues – and its proposal ballooned to $54 billion. Lawmakers of both parties have said the Legislature would never have granted permission for a proposition that large, had Sound Transit been forthright about its intentions.
• Concealed car-valuation schedule. Sound Transit failed to tell lawmakers that it planned to base license-tab taxes on a valuation schedule junked by the Legislature years ago after public protest. That long-repealed schedule bases values on a percentage of the manufacturer’s original list price, and has no relation to actual market values – causing it to overstate car and truck values. The bill presented to the Legislature by Sound Transit implemented the schedule with a convoluted reference to the long-repealed law, using legal language so obscure that its significance escaped lawmakers and the general public.
• Violated state constitution. Article II, Section 37 of the constitution requires legislation to restate “at full length” any laws that are revised or amended – meaning that the vehicle valuation schedule should have been included in the bill. Had Sound Transit prepared its bill in a constitutional fashion, the problem would have been apparent to lawmakers and the general public. Washington courts have overturned previous ballot measures for precisely this reason. They have called this constitutional requirement a vital protection for voters that ensures full disclosure.
• Participated in lobbying efforts. Internal documents reveal that Sound Transit worked closely with third-party transit-advocacy organizations to coordinate lobbying efforts and testimony before the Legislature. At the same time, it funneled thousands of dollars of taxpayer money to those organizations, calling the payments “membership dues.” Lobbying by public agencies is generally prohibited by state law, and their activities are restricted to providing public officials with information about how legislation may affect their agency.
• Provided public resources to the ballot-measure campaign. Sound Transit improperly provided the email addresses of 172,000 transit passholders to the third-party campaign for the ballot measure, Mass Transit Now! These addresses were used for campaign mailings. The campaign’s request for the addresses should have set off alarm bells for Sound Transit managers, many of whom were contributors to the campaign and knew the parties involved. Yet not a single Sound Transit employee was disciplined for the breach.
• Provided misleading information to voters. Sound Transit misled voters in its “Mass Transit Guide” and an “online tax calculator” posted on its website when it said car-tab taxes would be based on motor vehicle values. Voters could be expected to assume that meant marketplace values in the marketplace. Nowhere in its public-information efforts did Sound Transit disclose that it would be assigning artificially high valuations to motor vehicles. In addition, Sound Transit’s online tax calculator used figures from the previous year’s Regional Transit Authority tax and results did not reflect the actual amount voters could expect to pay.

“This was a classic bait and switch,” said Sen. Steve O’Ban, R-University Place, who led questioning during the committee’s investigative hearings. “Sound Transit promised one thing and delivered another. Now voters in my district are furious that they must pay license fees that are hundreds of dollars more than they expected.”

O’Ban observed that a recent decision by the state Public Disclosure Commission not to fine Sound Transit for campaign violations should not be viewed as an exoneration, as Sound Transit officials have claimed. Even Sound Transit has conceded the release of the email addresses was improper. Yet the PDC chose not to levy a fine based on a new interpretation of the law – it said it could not determine that Sound Transit intentionally broke the law. O’Ban noted that in the past, the PDC has fined candidates and ballot-measure campaigns regardless of intent.

Last session O’Ban offered legislation to provide relief to taxpayers in Sound Transit’s service territory and require direct election of Sound Transit board members.

“Government has no business operating this way,” O’Ban said. “We expect public agencies to behave with the highest standard of honor and integrity. We can be sure this will be a front-and-center issue in next year’s Legislature. We have a duty in the Legislature to ensure this kind of misbehavior never occurs again.”