Dear Friends and Neighbors,
With just about three weeks remaining in the legislative session a lot of the focus will be on reaching an agreement on our three supplemental budgets – operating, capital and transportation. There shouldn't be much tweaking to the transportation budget or the capital budget, since we just passed a two-year capital spending plan.
The operating budget negotiations will be the focus. A big part of that debate will revolve around new revenue – or taxes. There continues to be a thirst for new tax revenue in Olympia. This session there seems to be no end to bills that raise or create new taxes.
There are proposals to raise B&O taxes, a capital gains excise tax (a form of income tax), the sugar and sweetener tax modeled after the city of Seattle's policy – but on a larger scale, a wireless device tax, and of course the one gaining the most attention – a carbon tax. Why is this needed with the new revenue report showing the largest increase in taxpayer revenue yet?
There are a few different carbon tax proposals out there, but I want to focus on the governor's plan, Senate Bill 6203. I touched on his proposal in a previous update, but I think it is imperative we continue to discuss this proposal. The governor has been in the 12th District and eastern Washington making a big push for his idea.
His plan has been modified recently – now taxing carbon emissions generated by transportation fuels and power plants starting at $10 per metric ton beginning July, 2019. It has some other changes, but what hasn't changed is who it is going to impact – those who can least afford it: lower-income and middle class families.
The governor's staff admitted that his proposal would increase the costs of fuel, natural gas and energy bills for consumers. His plan amounts to a 10-cent gas tax right out of the gate.
The governor claims private companies and corporations are coming around and many are supportive. That isn't surprising, many may fall under one of the more than 50 carve outs, or exemptions, that are built into his plan, including “aircraft fuel.” So, a person who decides to fly their jet to the Bahamas for a getaway weekend would not pay a carbon tax, but the people needing to heat their homes or commute to work will be.
Investor-owned utilities also get a free pass under the governor's proposal. Consumers will pay more, but the utilities are able to claim a credit against the carbon tax and reinvest the money back into the utility if they have a clean energy investment plan. You can understand why public utility districts like it.
Reducing carbon emissions is a reasonable idea. However, the governor's plan seems to be more about raising revenue than reducing carbon. The tax would increase by 3.5 percent each year, plus inflation. It is projected to raise about $700 million over the first two years. If it were about reducing carbon, where are the incentives in the proposal for carbon reduction? If this is about carbon and not revenue, where is the off-setting tax reduction to make it revenue neutral? These questions need to be asked.
House Republicans have an incentive-laden measure, House Bill 2283, that passed out of the House Technology and Economic Development with a strong, bipartisan vote of 13-4. It is now in the House Finance Committee.
Finally, as I have questioned before, why would the governor tax our power? Washington state has some of the cleanest power in the world. Once again, this plan does very little to reduce carbon in the 12th District. We should be concentrating on the transportation sector which is what I am doing with House Bill 2339 and House Bill 2340 – incentivizing the use of electric cars and fleets of semis. This approach is far less costly and will have much better results.
Keep in mind, as the federal government is considering a twenty-five-cent gas tax increase, the price of fuel will increase dramatically. This means our two biggest industries will be directly affected. Price inputs will accelerate on all farm and ag production. Farmers do not control prices so the small guys will be squeezed out.
Tourism will be directly affected. When fuel prices rise into the mid-$3 range people don't travel nearly as much. RV traffic will be reduced as well.
The bottom line is that the cost of the governor's proposal will be put on the backs of the citizens of Washington state – increased energy costs, higher prices for groceries, goods and services, as well as a hike in the gas tax. There are better ways to do this, but not in a manner that seems to be more about the money and less about addressing our carbon footprint.
If you have questions, comments or concerns please don't hesitate to send me an email at email@example.com or give me a call at (360) 786-7954. I look forward to hearing from you!