We have exciting news that we have been waiting months to be able to share!
Earlier this year, our agency reached out and engaged the State Treasurer’s Office regarding the calculation methodology for Motor Vehicle Fuel Tax (MVFT) funds that are distributed to the counties for the maintenance, preservation, improvement and administration of the county road system. Of specific concern was an amount being withheld from the counties and being deposited into the Puget Sound Ferry Operations Account (PSFOA). After discussion and review, they concurred with our analysis and are working to rectify the issue.
the Washington State House of
Representatives Group Photo in
1923 (credit)
We are pleased to announce that the State Treasurer’s Office has corrected how the MVFT distribution is calculated, will no longer be taking funds for the PSFOA from the counties, and will be returning $9,638,704 to the counties in their January distribution.
So, what happened?
Early in the 1913 legislative session, Dr. Victor Capron, a House Representative from San Juan County, introduced a bill that would later come to be known as the CAPRON Act. Throughout the state, citizens paid gasoline taxes and auto license fees that were placed in a fund to support the state highway system. But Dr. Capron noted that San Juan County had no state highways and drew up legislation stating that those taxes and fees should be returned to counties that were composed solely of islands. The legislation eventually passed and has since been codified as RCW 46.68.080, requiring the refunds to San Juan and Island Counties be taken from the counties' portion of the MVFT
In 2006, the Legislature adopted ESSB 6839, which amended the CAPRON Act by a) clarifying that the refund applied to the first 23 cents per gallon of the MVFT revenue and b) required that a portion of the MVFT tax collected in excess of the 23 cents per gallon be deposited into the PSFOA.
However, since the adoption of ESSB 6839, the State Treasurer’s Office has erroneously handled the PSFOA deposit the same way as it has CAPRON – incorrectly taking the money from the counties’ portion of the MVFT.
What does this mean?
Two things:
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The error has been fixed by the State Treasurer’s Office going forward. Starting with the December 2024 distribution, the calculation methodology has been corrected and the PSFOA deposit will be taken “off the top” and no longer be taken from the counties. The amount varies month by month but, in November 2024, it represented a bit over $950,000.
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A refund will be issued to counties in January. The State Treasurer will return the funds taken in error in the 2023-2025 biennium and will be distributed out county-by-county according to our board-approved MVFT allocation factors for each year. Amounts will range from $56,000 to $758,000 and we will be providing a detailed breakdown to each County Engineer in late December.
What should you keep in mind?
The good news is that the estimated MVFT distributions to counties will increase under the corrected calculation, restoring counties to what they should have been receiving. The bad news is the increase will be tempered by the significant decrease in MVFT revenues. As you may imagine, the combination and complexity of these two issues will impact each county uniquely, and will likely result in a limited net change for many.
Additionally, during the State Treasurer's review of the issue, they also became aware of a separate calculation error in the CAPRON and PSFOA amounts. As a result, San Juan and Island Counties will receive $1,278,779 and $1,873,962, respectively, in addition to the PSFOA correction in January.
But all in all, this is a great holiday gift and we are happy that we could get this issue resolved for the future. We would also like to thank the State Treasurer's staff for their work and assistance correcting this issue. They were open and transparent throughout the process and great to work with. If you have any questions or concerns about the changes, please do not hesitate to reach out to our staff.
