Article by Erik Smith. Published on Friday, February 04, 2012 EST.
Wheels Fall Off Transportation Proposal – Meanwhile a Constitutional Amendment Would Block Green Efforts to Tax Oil for Puget Sound Cleanup
Senate Transportation Chair Mary Margaret Haugen, D-Camano Island.
By Erik Smith
Staff writer/ Washington State Wire
OLYMPIA, Feb. 3.—Gov. Christine Gregoire’s proposal for a $1.50 tax on oil-by-the-barrel to pay for road construction and environmental projects is looking like it has a dead battery, as three key senators say the governor’s plan just isn’t clicking.
Meanwhile, a pair of transportation-minded lawmakers have introduced a constitutional amendment that would block the green lobby’s perennial efforts to impose the tax to pay for Puget Sound cleanup. That might appear to kill the idea once and for all. Just one thing – it wouldn’t keep a different sort of idea from roaring back to life eventually. Oil taxes still could be levied, as long as they go for roads.
But at least as far as the governor’s plan is concerned, Senate Majority Leader Lisa Brown, Senate Minority Leader Mike Hewitt, and perhaps the most influential senator of all on the issue, Senate Transportation Chairwoman Mary Margaret Haugen, D-Camano Island, are all saying it’s time to stuff it in the barrel – the one marked trash – and move on.
The big trouble? Even though the governor calls the oil-barrel tax a “fee,” she seems to be in the minority on that one. It’s a way to get around rules that require a two-thirds vote of the House and Senate on tax increases. But it’s hard to see it as anything but a tax, Haugen says, and there just aren’t the votes for a tax increase.
There’s another big problem that became clear last week as the governor’s $3.7 billion transportation proposal got hearings in the House and the Senate. Normally it takes an enormous push by every interest involved in transportation in order to raise taxes for road projects – business, labor and local-government agencies, not to mention Republicans and Democrats in the Legislature. Gregoire’s decision to seek an oil-barrel tax rather than a gas-tax increase proved so divisive that most of the big players declared their opposition.
“I think the barrel fee has rolled away,” Brown said Thursday in a meeting with reporters. “I don’t see the barrel fee getting any momentum. I have talked about this with Sen. Haugen, the chair of our transportation committee. She would like to see us be able to move forward at least on preservation and maintenance, if not the bigger picture of transportation infrastructure in our state.
“To do the big picture, we’ve got to have bipartisan support. I don’t see the barrel fee having any momentum at this point.”
Gas Tax Not on Table
Gregoire stunned the Legislature on the second day of this year’s session when she outlined a transportation plan that didn’t include a gas-tax increase. For months her “Connecting Washington” task force had been hammering out a plan for new highway construction and preservation, winnowing a list of $50 billion in projects down to $21 billion. That would have required an 11-cent gas-tax increase, and almost certainly the Legislature wouldn’t have passed it on its own. The measure would instead go to the ballot.
Trouble is, the governor already is asking lawmakers to send another tax increase to the ballot – a half-cent sales tax increase that would raise a half-billion dollars to bail out the ailing state budget. A second tax proposal might have been too much for voters to accept. So the governor instead borrowed an idea that has been touted by the green lobby for years, for a tax on oil refined in the state of Washington. By calling it a “fee,” the Legislature could pass it with a simple majority vote. The idea is that the oil refiners might see some benefit, however distantly it might be construed, and so therefore it might be called a fee and the tactic might be seen as legit.
It’s Owen’s Call
There were big legal problems with the idea – so big that lawmakers aren’t even willing to bother. Even if oil refiners might be said to get some sort of indirect benefit from improved Washington-state highways, the governor’s proposal would have applied to all forms of fuel, including aviation and marine fuels, and fuel that is consumed for off-road purposes such as farming. At the same time it would have applied to fuel that is refined here and exported out of state.
Haugen, a fierce defender of transportation interests, has long taken the position that fuel taxes are protected by the 18th amendment to the state constitution, a 1944 provision that says fuel taxes must be reserved for highway purposes. In previous years, she has opposed the environmental community’s efforts to use the oil tax to fund stormwater cleanup efforts on Puget Sound. Under the governor’s plan, some of the total $3.7 billion raised would have gone for that purpose.
Haugen noted that the tax-versus-fee question really isn’t her call. If the proposal were to come up on the floor of the Senate, Lt. Gov. Brad Owen would be asked to rule whether the oil-barrel charge is a fee or a tax. But by the definitions he has offered in the past whenever the question has come up, it’s clear that the concept would fail.
“I really think that’s what the ruling would be,” she said. “That’s one reason why – and then we have the 18th amendment.”
Haugen said there is one other big problem. “I don’t have the votes,” she said. “I know how to count.”
No Support From Republicans
At the transportation hearings last week, the only supportive testimony came from labor and the Associated General Contractors. Other business interests said no to the barrel tax, and even local-government associations admitted their memberships were split. Those from the northern Puget Sound counties where oil is refined are loath to do anything that might lead their biggest employers and tax generators to close refineries and shift business out of state.
Can a transportation plan be put over when transportation interests themselves are divided? “No,” said Republican leader Hewitt. “I hate to be so clear, but I don’t think so.”
And he’s equally clear on the barrel tax. “The barrel ‘fee’ is dead,” he said. “I don’t think you’re going to see anything on the barrel fee. That’s my sense. No one is even talking about that any longer.”
Constitutional Amendment Proposed
What does that leave? Gregoire’s transportation plan didn’t depend entirely on the oil-barrel tax. Only $2.75 billion of the money came from that source. The rest of it came from increased license and truck-weight fees, and those elements might survive. At the same time, Haugen has introduced a measure that would permit local governments to impose local gas taxes of up to three cents a gallon – one way to finance local road-improvement projects.
Gregoire spokeswoman Karina Shagren said, “The governor has made it clear – we can’t wait until our roads, bridges and ferries are falling apart to fix them. She and her staff will continue to meet with lawmakers to express the importance of new revenue to maintain our transportation infrastructure.”
Meanwhile, there’s a sign that oil-barrel taxes will remain a subject of debate this session. In the House Thursday, Reps. Mike Armstrong and Judy Clibborn, the Republican and Democratic transportation leads, introduced a constitutional amendment that would restrict any oil-barrel taxes to highway purposes. House Joint Resolution 4228 can be seen as a way to block the environmental lobby’s long-running effort to tax “big oil” for Puget Sound cleanup. The proposal has been a subject of debate in the Legislature since 2009.
But there’s another way of looking at it. The measure also would establish a framework under which by-the-barrel oil taxes could be levied.
Because the measure would be offered as a constitutional amendment, voter approval would be required in November.
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