Gov. Inslee was in Vox this week renewing his call for a carbon tax, an issue he’s been pushing since taking office in 2013. However, we know Inslee won’t back just any carbon tax after opposing I-732, a revenue-neutral carbon tax initiative last year that voters rejected.
I-732 was spearheaded by a group called Carbon Washington, and they are backing a new middle ground approach to a carbon tax being proposed by Sen. Guy Palumbo in the Legislature this year.
Carbon Washington’s Executive Director, Kyle Murphy, and I chatted last week and talked about what went wrong with I-732, how Palumbo’s proposal differs from it, and what’s next for the group once the carbon tax debate is over.
Schipper: Let’s start off with the tough question first: What went wrong with I-732 last year? I’d say from the outside, it was very confusing as to why the environmental community couldn’t unite behind a policy they all say they support. Why wouldn’t Governor Inslee and the allies get behind your approach?
Kyle Murphy: I think the short answer probably has to do with revenue – where it goes, what it does, and who gets it. Our approach used the revenue for tax rebates – a sales tax cut, low-income rebate, and B&O cut, and replaced all that with a carbon tax on polluters. There’s another idea, that you will have a carbon tax but use the revenue to fund things like transit, or clean energy development, or other stuff that attracts liberal constituencies. Some folks seemed to think, “why settle for I-732, when we can just wait and pass our preferred version in 2018?”
Some of their critiques, like that I-732 didn’t do enough for environmental justice or it should’ve dedicated some revenue to deploying clean energy, have some credibility and open up interesting policy trade-offs. I’m sympathetic to that. But, in our view, the opposition on the left to I-732 kind of threw the baby out with the bathwater.
Schipper: I see that you have teamed up with Sen. Guy Palumbo to offer another version. How does it differ from your previous approach?
Murphy: With the Palumbo bill, we were one of the key stakeholders but not the only one. The aim was to create a pragmatic bill that businesses, utilities, and moderates from both parties could look at and think of as a reasonable approach. It’s not perfect from a climate perspective, but it’s a step in the right direction.
Our plan last year would have set a price of $25 per ton and used the revenue for tax rebates, mostly through a one percent reduction in the sales tax. This bill includes a carbon price of $15 per ton, and it repeals a set of carbon regulations that the business community has said are complicated and hard to deal with known as the Clean Air Rule. A portion of the revenue goes to fighting forest fires and droughts, which makes sense given that those are pretty well established impacts of a warmer climate.
Some of the revenue would help businesses and local governments make the transition to clean energy, and some of it will provide stable funding for existing environmental programs.
Schipper: The Palumbo bill seems like it may be one last effort to bring the sides together before enviros take another initiative to the voters. After last year’s minimum wage initiative passed, I think the biggest takeaway for the business community is that you can’t stop policies popular with voters. Does it seem like the business community has learned this lesson and is more open to discussing a carbon tax?
On the flip side, how do you convince them that this debate isn’t about raising taxes? We had a revenue neutral option that would allow us to act on climate while preventing an additional tax burden on hardworking families, yet the “Greenest Governor in America” actively opposed the effort. Can we bring the sides together to deal with climate change or is this debate now about raising taxes?
Murphy: The Palumbo bill is an invitation to the business community. Microsoft, REI, and Amazon and some of the region’s biggest employers getting ahead of this issue. The Washington Business Alliance has called for a ‘well designed carbon price’. The Palumbo bill has a lot of provisions that are meant to help specific industries adjust. Some businesses are being really constructive while other business groups aren’t there yet, which is too bad because ultimately a refusal to come to the table will harm their bottom line.
I still love the idea of a revenue neutral carbon tax. It combines the best aspects of populism and environmentalism. Even though we didn’t pass, I’m optimistic that leadership will come from the constructive center, not necessarily from the loudest voices. There are people in both parties, the business community, and the environmental community that want to make this happen. Jay Inslee just signaled that he’s ready to be pragmatic as long as it “doesn’t waste money,” so that’s a good sign and a change. I would urge everyone to worry less about the other players, and worry more about the world we are leaving for our kids in 20 years.
Schipper: I’m glad you brought up Affordable Fuel Washington because the price of fuel seems to be at the heart of the issue a lot of people have with a carbon tax. Gas prices are one of those things that really fires up folks on either side of the spectrum. It’s going to be interesting to watch how the public reacts when they see just how much we are paying in taxes every time we fill up when these stickers start popping up at gas stations. We already have the second highest gas tax in the country, and voters have been visibly frustrated as we started paying higher car tabs to pay for Sound Transit this year. It’s getting more and more expensive just to drive your kids to soccer practice. How do you sell higher gas prices via a carbon tax to the public? Would it be possible to manage these worries by passing a carbon tax that would cut gas taxes or bring down the cost of owning a car, or is that a non-starter for environmentalists?
Murphy: Sound transit is expensive. The Palumbo bill would probably be 10-15 more cents on gas prices, so it wouldn’t be massive compared to normal fluctuations and the bill also includes a low income cash rebate. A carbon price is about using economics, accounting for the externalities of pollution, to help the environment through consumer choice. That’s why people like Hank Paulson, from the Bush Administration, support it as a free market, solution. We’ve always supported balancing a carbon price with tax rebates to help families. I don’t know about all environmental groups, but if you came to me with a proposal that used a carbon price to stop free polluting and incentivize clean energy, and that proposal would also reduce car tabs, I think we would support that and a lot of the groups in our ACT NOW coalition would too. You brought up the kid going to soccer practice, but that kid needs us to do something about climate change too.
Keith, do you think we need to do something about carbon emissions? Can we get the Republican Party to embrace a solution like a version of the Palumbo bill or to propose something proactive like a price that includes tax cuts?
Schipper: I do think we need to do something about carbon emissions, but I’d be lying if I didn’t say that my bigger priority is finding a balance between getting climate results and not driving up the cost of living for rural, low income, and middle class families. I believe it was Sen. Joe Fain in his endorsement of I-732 last year that said a carbon tax is coming so let’s find a solution where that works for everyone. I think Republicans will get there but if we don’t, then we’re going to have to live with whatever policy California billionaire Tom Steyer decides to put in an initiative and that’s scary.
Here’s my last question: a negotiated carbon tax compromise has been reached. What’s next for Carbon WA? I assume you guys have a long-term game plan. Can you share what that is?
Murphy: I think Republicans have something valuable to offer the climate discussion, and that without them it’s Steyer’s game, so I hope your right.
Our long-term game plan is to build a grassroots climate organization where citizens are in charge and where moderates and conservatives can come to the table with liberals as partners. We believe if you get citizens and leaders from all political backgrounds working together, we’ll get good outcomes and that a low carbon future can actually be a really prosperous one too.