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MC McAleer discusses the complexity of Washington’s carbon pricing initiative

During a presentation on climate change litigation and policy development in Washington, Mary Catherine McAleer, of the Association of Washington Business (AWB), discussed some of AWB’s concerns with Washington’s latest carbon pricing initiative.

McAleer is AWB’s director of government affairs on climate and energy policy. She says that while AWB has yet to take a formal position on Initiative 1631, they do have concerns about the complexity of the proposal and how that complexity influences the initiative’s effectiveness.

Specifically, McAleer’s presentation focused on I-1631’s proposed allocation of funds.

The initiative proposes putting all collected money from the pollution fee into the newly created “Clean Up Pollution Fund.” From there, I-1631 dedicates 70 percent of fund expenditures toward “clean air and clean energy investments,” 25 percent toward “clean water and healthy forests investments,” and 5 percent toward “healthy communities investments.” Each funding account is then further broken down into smaller funding areas.

McAleer presented the following chart to illustrate the initiative’s complexity, with dashed arrows representing funding streams and the Public Oversight Board at the center in charge of evaluating funding proposals and developing funding mechanisms.

 

McAleer says allocating all of the money appropriately and effectively will involve many studies and a lot of complex modeling.

“The complex nature of this proposal will make it administratively inefficient to administer those funds. It’s kind of remarkable. We haven’t seen, I don’t think we have another government program in Washington State that has this level of architecture,” said McAleer.

To add another layer of complexity, the initiative also attempts to address the regressive nature of the pollution fee. I-1631 would use fees collected to invest in benefits for low-income households. The proposal allocates 15 percent of funds from the clean air and clean energy account toward “investments that directly reduce the energy burden of people with lower incomes.” The initiative states that this could be anything from energy bill assistance programs to weatherization of households.

“To get around the regressive nature of this tax, I-1631, and several of the other bills before it, have been designed to remediate the impact on low income, vulnerable populations,” said McAleer. “And doing that has created a lot of conversation amongst the environmental community, labor groups, social justice groups, business and legislators. And what you end up with is a very complex structure in terms of funding dispersals.”

If the initiative passes, McAleer says conducting analyses, properly modeling, rule-making, and appropriating funds within the Clean Up Pollution Fund may mean the state is collecting money before it is ready to spend it. In cases like these, McAleer says the state has a habit of simply moving the money to the general fund.

“We would be collecting the tax before, probably before as a state we are able to spend the money [on these programs],” said McAleer. “In the past, when we have programs like this, the legislature will re-appropriate the money into the general fund and use it for other activities. That could be anywhere from $500 million to the tune of $2 billion by the time this group is able to spend these dollars. So, what we may end up with… is we would still have the carbon tax, maybe without the remediating help on impacted populations.”

I-1631 is still in the signature-collecting phase, but McAleer says it will likely be on the ballot in November. To learn more, check out this podcast with Senator Guy Palumbo who was a key leader on the carbon tax bill this past session.