ALAMEDA, Calif. — A year and a half after Seattle-area voters approved a sales tax hike to finance $18 billion in mass transit projects, a quarter of that amount has evaporated due to reduced economic activity.
Sound Transit now projects that the recession will shrink the amount generated from the tax hike to $14.1 billion, according to a report prepared last week for its executive committee.
“We are in the same boat as other public agencies that rely on sales tax revenues,” chief executive Joni Earl said in a statement.
Sound Transit, formally known as the Central Puget Sound Regional Transit Authority, was formed in 1993 to plan and operate a regional transit network linking the three counties in the Seattle region.
The agency finances its capital program mostly through bonds backed by revenue from sales taxes and motor vehicle excise taxes, which have been hurt by the recession.
In 1996, the authority secured voter approval for a sales tax and a motor vehicle excise tax.
Voters approved a “Sound Transit 2” ballot measure in November 2008, raising the local sales tax by 0.5%, to finance light-rail extensions and expand commuter rail and regional express bus service. Sound Transit priced $400 million of revenue bonds in September 2009.
The agency’s long-term financial plan forecasts the sale of as much as $7.5 billion of additional debt, according to an internal report.
Officials estimated last fall that long-term revenue levels would shrink by about 20%, or $3.1 billion, through 2023.
The latest estimate, revealed last week, comes from updated forecasts the agency received showing an additional $767 million shortfall.
The original 20% downturn in the forecast did not result in any changes to the list of projects Sound Transit aims to deliver. The agency accounted for the $3.1 billion reduction by reducing cost estimates by $2.1 billion, lowering its inflation contingency, reducing its planned coverage and paring back estimated administration costs.
Earl said it’s too early to say what will happen now that estimated revenues are down even more.
She said the agency’s board will review its short- and long-term spending priorities this fall during its normal budget-setting process.
The board may opt to reduce the scope of projects, delay projects, and reduce operating and administrative costs.
Earl said the new forecast will not affect projects already under construction. That group includes Sound Transit’s current flagship project: the extension of its light-rail system from downtown Seattle north to the University of Washington.