Article by Erik Smith. Published on Tuesday, February 15, 2011 EST.

Bill Would Raise Gas Prices, Make Oil and Ag Pay for Puget Sound Cleanup — Fee-Versus-Tax Issue is a Killer, and No Vote-Count Breakthrough in Sight

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, Feb. 15.—An old favorite of Washington state’s green groups has finally resurfaced in this year’s legislative session, but this year’s effort to make oil and ag pay for Puget Sound cleanup may be doomed from the start.

            It has to do with a three-letter word.

            Is it a fee or is it a tax?

            That question is one reason this year’s stormwater bill doesn’t seem to have the juice it once did. For the third year in a row, green groups are pushing a bill that would make oil refiners and agriculture pay for costly stormwater drainage projects, primarily in the Puget Sound area. It’s one of the Legislature’s biggies, a battle that involves seemingly half the leading interest groups in Olympia – environmentalists, business groups, local governments, labor unions and the asphalt lobby.

            And of course, every motorist in the state of Washington has a stake, because it would drive up the price of gas at the pump.

            It’s been a top priority for environmental groups since 2009, which fell just short last year, but there are some signs this time out that it’s not the front-and-center issue for the Legislature that it has been in the past. The main reason is that Washington voters last year passed Initiative 1053, which requires a two-thirds vote of the Legislature for any tax increase. That’s just not going to happen. There also aren’t as many Democratic votes as there used to be. And if green groups couldn’t do it last year, when they didn’t have those disadvantages, it’s hard to see how they can win this time. In a year when lawmakers are struggling with a $5 billion shortfall, it’s a fight few lawmakers seem eager to take on.

“It looks tough to me, given the debate over fee-versus-tax and the lineup of opposition,” said Senate Majority Leader Lisa Brown, D-Spokane, one of the biggest supporters of the measure last year. Might make more sense to put it to the voters as part of a transportation-tax measure, she said – maybe this year or next. “It’s not going to go away,” she said.

            Big Differences From Last Year

The measure has been filed in the Senate as SB 5604 and in the House as HB 1735, and it got a hearing last week in the Senate Ways and Means Committee. Another is set for Tuesday in the House.

The gist of it is this. A new “assessment” – which might be the least-loaded way to put it – would be charged on petroleum products, pesticides and herbicides when they are sold in the state of Washington. The charge would be 1 percent of wholesale value. Refiners would pay the bulk of it, somewhere around 84 percent, and it would raise $345 million every two years, to be used for stormwater drainage projects. Stormwater is considered one of the leading causes of pollution in Puget Sound and other state waterways.

There are some big differences between the bill this year and the one that came within a hairsbreadth of a vote on the Senate floor in 2010. The last version would have tripled the state’s Model Toxics Control Act tax, a environmental cleanup tax that has been applied to users of hazardous substances since 1988, mainly oil and ag. But the bugaboo about taxes nixed that approach this year.

Instead its proponents are calling it a “fee,” placing it in the same category as the amount you pay to renew your driver’s license or reserve a campsite in a state park – basically a charge that has some sort of direct relationship to the service provided or privilege obtained. If it’s a fee, it only requires a majority vote and Democrats in the Legislature could pass it without Republican help.

Opponents call the argument a stretch. “We believe this is a gas tax,” said Greg Hanon, lobbyist for the Western States Petroleum Association. And even if the bill makes it past Lt. Gov. Brad Owen, who will certainly be asked for a ruling if it comes to the Senate floor, a court challenge is assured.

             An Old Friend

There are some other points worth noting as well. One is that this year’s bill appears to provide permanent funding for the state’s environmental establishment, governmental and otherwise. The Department of Ecology would keep four percent for “administrative costs” – some $14 million a year. And the bill would earmark $3 million a year for non-profit organizations that develop stormwater treatment technology and assist business and government – presumably meaning environmental groups themselves.

Another notable development is the shrinking list of sponsors. Last time, in the Senate, it had 24; this time, just 11. In the House, it had 35 last year and 26 this time.

The fact that the bill has returned really isn’t a surprise to anyone. Even the top environmental lobbyist on the issue, Clifford Traisman of the Washington Conservation Voters and the Washington Environmental Council, joked at last week’s hearing:

“This bill is like an old friend that is back for a holiday dinner, and this year, hopefully we are invited.”

            Going Through the Motions

In coming weeks watch for old ties to be renewed, old coalitions to be revived and old arguments to be aired once again. It’s not as though anything new will be said. The only real question is whether any more votes can be found than last time.

In case you’re new to this one, here’s the pitch: Local governments are facing huge expenses as they comply with increasingly stringent federal regulations for stormwater runoff. No one knows exactly how much those projects will cost, but it seems a googol is involved. Best guesses run between $4 billion and $7 billion. “The need is stark,” Traisman said. “Stormwater runoff is the number one pollution problem for Puget Sound and other water bodies in the state.”

And the state’s biggest labor-union organizations are on their side, because the bill would mean huge numbers of construction jobs at generous prevailing-wage rates.

            Three Cents a Gallon

On the other side you have the oil industry, with all its various players, from service station owners to refiners. They point out that the state already has an environmental cleanup tax, and within 10 years or so all the hazardous waste sites identified by the state will be cleaned up. So there’s plenty of money. The only problem is that the state has regularly been raiding the account – $250 million since 2009 – to prop up the state general fund. That’s not their problem, they say, it’s the state’s.

And they point out that studies of petroleum’s contribution to Puget Sound pollution are pretty sketchy.

Then you have agriculture and all its various trade associations. They say they should never have been lumped in there in the first place. It’s not as if farms create stormwater runoff. “The rain soaks in on our land,” said Heather Hansen of Washington Friends of Farms and Forests.

            You have business groups, which fear the impact of higher gas prices on the economy in general. “This bill is like a bad dream, déjà vu all over again,” said Grant Nelson of the Association of Washington Business.

And finally you have the state’s transportation lobby, which fears that any increase in gas prices will make it harder to pass a much-needed gas tax increase for road construction sometime in the near future. That’s what really killed the bill last year – transportation-minded Democrats stood up and said no.          

The bill would amount to a three-cent-a-gallon gas tax increase, Nelson said. It should be noted that the environmental groups believe oil companies would take the hit, and would simply accept lower profits. They seem to be the only ones who believe that.

Not Much Enthusiasm

So far, with no vote-count breakthrough in sight, this year’s proposal doesn’t seem to have anyone’s enthusiasm – or even attention.

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