Sound Transit contemplating 1% property tax hike to ease $30 billion shortfall

(The Center Square) – The Sound Transit Board of Directors is exploring a 1% property tax increase for next year to address the swelling costs of the agency’s long-term capital projects.

The 1% property tax increase would raise Sound Transit’s 2026 property tax revenue by 3.8%, from $176.2 million in 2025 to $183 million. This comes as the agency faces up to $30 billion in cost overruns for its capital projects, as previously reported by The Center Square.

Sound Transit's proposed tax hike does not require a new vote because the authority for this annual increase was granted by voters in the 2016 Sound Transit 3 ballot measure. While the annual increase is capped at 1% of the previous year's levy, the total tax revenue collected will be higher. This is because the total taxable value of properties in the district grows each year from new construction and improvements, which is allowed under state law.

According to Sound Transit, this increase is necessary to address the funding shortfall and keep delayed light-rail projects on schedule.

The maximum allowable rate the agency can impose is 25 cents per $1,000 property tax, which would cost the average King County homeowner $220 annually. This year, the levy rate was 16.4 cents per $1,000.

At a Sound Transit public hearing on Thursday, no one signed up to comment on the proposed tax increase.

Stephanie Ball, Sound Transit’s director of financial planning and analysis, warned that rejecting the annual 1% property tax increase would reduce the agency's projected revenue by approximately $47 million through 2046.

“It's important to note that annual inflation that expenditures are subject to is significantly higher than 1%,” Ball said during the public hearing. She added that out of Seattleites’ total property tax bill, Sound Transit only makes up 1.8% of the total annual payment.

However, Oregon-based Thoreau Institute Senior Economist Randal O’Toole argues that Sound Transit’s approach is flawed.

“When transit agencies get taxing authority to build rail transit, they'll keep on building until the money runs out no matter how ineffective the transit turns out to be,” O’Toole emailed The Center Square.

King County Councilmember Reagan Dunn objects to the potential tax increase from Sound Transit, adding that the agency needs to prove it can get projects done in a timely and cost-effective manner.

“Sound Transit should not increase its tax in any way until it can prove to the public that it can deliver its projects on time and on budget,” Dunn said in an emailed statement to The Center Square. “It’s been missing the mark in both areas of late and that causes me significant concern.”

O’Toole is critical of Sound Transit’s light rail, which he calls a “high-cost, low-capacity system,” pointing out that light rail primarily serves downtown Seattle, where 40% of workers used transit before the COVID-19 pandemic, whereas only 5.5% of workers in the rest of the urban area commuted by transit.

With less than 13% of the region’s jobs in downtown Seattle, he argues the system neglects most workers.

Following the Sound Transit Board of Directors' discussion on the agency’s long-range financial plan, Seattle Mayor Bruce Harrell advocated for the agency to prioritize light rail extension projects focused in the city, saying they will deliver to denser neighborhoods and increase ridership on the Link light rail.

Sound Transit’s 2026 budget proposal totals $3.3 billion, with tax revenues making up 75% of total revenue for the agency. Out of planned expenditures for next year, approximately $1.9 billion is set to go toward system expansions, representing 55% of total expenditures.

Sound Transit is expected to have a cash balance of $7.2 billion at the end of this year. Expenditures are expected to exhaust cash by the 2030s when major construction starts.

Sound Transit’s total service hours will increase by 29% next year. Agency staff also found that additional operating funding will be needed for security and services during the week in which Seattle hosts FIFA World Cup matches in 2026.

The Sound Transit Board of Directors is anticipated to vote on the 2026 levy during its next meeting on Oct. 23. Afterwards, the agency will continue deliberations on next year’s budget with adoption planned for Nov. 20.