Washington State

Office of the Attorney General

Attorney General

Bob Ferguson


OLYMPIA -- Attorney General Christine Gregoire today said her office will continue to vigorously defend Initiative 776 against constitutional challenges, but in a manner that will not leave taxpayers liable if the courts ultimately declare the initiative unconstitutional.

The Attorney General's Office currently is defending the constitutionality I-776 in a King County lawsuit that challenges the initiative. In a separate case, the office also is defending a decision by the state Department of Licensing (DOL) to continue collecting a motor-vehicle excise tax (MVET) within the boundaries of Sound Transit. The proceeds of DOL's tax collection are pledged to repay bonds issued by Sound Transit in 1999.

Failure to collect this tax would be a high-risk move that would subject taxpayers to potential monetary damages based on a constitutional claim that the failure to collect impaired the contract of the bondholders, Gregoire said.

"I understand that people want the initiative they supported to take effect immediately," Gregoire said. "But until the courts rule on the constitutional issues, failure to collect the tax within the Sound Transit boundaries could potentially have serious legal consequences for all taxpayers."

In the King County case challenging the constitutionality of I-776, a judge last month ordered DOL to continue collecting a $15 motor-vehicle licensing fee in King and Pierce counties pending resolution of the constitutional challenge. The judge ordered that the money not be spent and that it be returned to registered vehicle owners if I-776 is upheld.

Except for the Sound Transit taxes pledged for bond repayment and the fees required to be collected by King County court order, I-776's requirement for $30 annual vehicle-license fees has been implemented in all other parts of the state.

In the latest development in the I-776 litigation, the state today filed an answer in the suit filed by three Snohomish County residents who claim they will be adversely affected by continued collection of the MVET from registered vehicle owners living in parts of Snohomish County that are within the Sound Transit district.

The state contends that on behalf of taxpayers, DOL will continue to collect Sound Transit's MVET tax because the money was pledged to pay off previously issued bonds until the court relieves the state of liability.

The answer also contends that DOL only collects-but does not levy-the tax. That means a ruling against DOL would not prevent continued collection of the tax by some other entity, such as Sound Transit.

The separate suit raising constitutional challenges to I-776 was filed in King County Superior Court by Pierce and King counties, the City of Tacoma, Sound Transit and two citizens.