Who killed the water quality tax?

Eying long-term boosts for water-quality protection, environmentalists seemed to have a straight shot to getting the legislature to hike a tax on petroleum products. Then, industry lobbying turned the tide.
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Puget Sound

Eying long-term boosts for water-quality protection, environmentalists seemed to have a straight shot to getting the legislature to hike a tax on petroleum products. Then, industry lobbying turned the tide.

Puget Sound water quality, Washington's cash-strapped municipal governments, and unemployed laborers and teamsters all lost when the Clean Water Act of 2010 perished in the special session. The legislation would have raised the tax on hazardous substances — mainly petroleum — to pay for stormwater projects in the Puget Sound basin and elsewhere around the state, including the banks of the Columbia and Spokane rivers. A similar bill passed the House last year but never reached the Senate floor. This year, bills were reintroduced in both chambers where they died, not with a bang, but with a whimper.

"It's been such an up and down ride,'ꀝ said Brendon Cechovic, program director for the Washington Conservation Voters, while he was waiting to see what the special session would do. "I wish we had something else to pull out of the hat," he added, but 'ꀜat this point ... I have nothing else up my sleeve, and neither do our opponents."

The arguments pro and con had all become pretty familiar by the time legislators reconvened in Olympia. And the petroleum industry was putting on a full-court press to sell the cons. The industry's lobbying blitz was "unlike anything I've ever seen," Cechovic said.

Was it the industry lobbying that turned the tide, or the legislature's inability to even pass a budget before the last minute, or the unwillingness of certain members to stick their necks out? Yes. All of those factors came into play. The bill's support always seemed fairly broad but shallow, and the leadership didn't push it.

People for Puget Sound executive director Kathy Fletcher suggests that the legislators' prolonged struggle to pass a budget "really reduced their appetite to deal with another tax issue." And, of course they were reluctant to raise taxes in a recession. But when push came to shove, they did. Selectively. Fletcher says it's 'ꀜstrange ... that they felt they could tax consumers and not oil companies."

She also considers it rather strange that the explosion which killed six workers at Tesoro's Anacortes refinery seemed to increase legislative sympathy for oil companies. "One might have expected" legislators to take a critical look at the refinery's safety record, she notes. Instead, legislators felt a natural sympathy for the workers who had been killed and maimed, and "transferred that sympathy to the companies."

The tax would have covered the companies' gasoline, motor oil, and asphalt, but not jet fuel. The Department of Ecology would have doled out most of the money for capital projects and retrofits that dealt somehow with the petroleum content of stormwater, and with those or other projects that had the highest priority based on ecological or water quality benefits. For capital projects, local government would have needed a 50 percent match.

These are big construction projects — think excavation, concrete pours, large-diameter pipe — so they would generate construction-industry jobs. Not surprisingly, some labor unions have supported the idea. Stormwater projects also cost a lot of money that city and county governments, which are legally obligated to undertake them, don't have. Not surprisingly, city and county governments have supported it, too. In early March, going into the special session, the King County Council passed a motion urging the legislature to enact the bill.

The legislature didn't pass the measure, but it didn't send the bill's supporters home entirely empty-handed. "A funny thing happened on the way to finalizing the budget," Fletcher says. At the last minute, the legislature set aside $50 million from existing Model Toxics Control Act (MTCA) and other funds to help local governments with stormwater. She says that was "wonderful" — but the funds will be available for only one year.

"If anything, the pressure on local governments is going to be greater" next year, Fletcher says, so governments won't lose interest in legislation that would create an ongoing stream of cash. Neither will the environmental movement. "We'll probably be back" next year, Fletcher says.

How significant would it be to get an ongoing source of money for stormwater projects? "I think it's huge," says Fletcher. Cechovic said the Clean Water Act was "one of the most significant environmental bills" to come down the pike in years. As a source of dedicated funds, which may be an essential part of restoring the Sound, this tax proposal may be as good as it gets. And realistically, it would spread the cost around to the people who are actually causing the problems; that is, all of us. Puget Sound advocates have gotten absolutely nowhere with the idea of forming an improvement district that could raise money explicitly for the Sound. But assuming the oil companies passed this tax along to consumers — which seems a safe bet — virtually everyone would pay at the gas pump. And no one would notice: An extra couple of cents per gallon would be lost in the normal yo-yoing of gasoline prices.

But the bill had its share of opposition. Trying to increase the bill's appeal in a tough budget year, the environmental coalition put in a mechanism that would have sent a lot of the money to the general fund for the first couple of years, gradually shifting all the revenue stream to stormwater projects.

Lo and behold, that formed the basis for some of the opposition. The Seattle Times editorialized, for example, that the bill would put local refineries at a disadvantage (competitors for out-of-state business wouldn't have to pay any comparable tax), that raising taxes in a recession was a bad idea, and that, hey, not all the money would go to clean water, anyway.

The petroleum industry fastened on the same arguments. It invoked the bogeyman of lost jobs at the refineries. (These are very high-wage jobs. They average six figures.)

"I didn't know that filling up your tank and going to work was a sin" —AUTO executive director Tim Hamilton

So the coalition went to work. In the revised version of the bill, the refineries got a credit for out-of-state sales. And the general fund contribution, put in so that the bill would have a greater chance of passing, came out so that the bill would have a chance. (Given the legislature's last minute scramble to find general fund revenue, Fletcher wonders in retrospect if leaving the general fund contribution in might have enabled the bill to pass.)

The revised bill didn't mollify all the opponents. On March 25, AUTO, a gas station owners' group represented by former state Supreme Court Justice Phil Talmadge, filed a suit challenging the constitutionality of the underlying law. That law, passed by initiative in 1988, places a .7 tax on petroleum and other hazardous substances to be used primarily for cleaning up toxic waste. The courts have never ruled on its constitutionality.

The suit was filed the same week Attorney General Rob McKenna joined a dozen other Republican state AG's to challenge the constitutionality of the Obama health insurance reform legislation. In both cases, one can ask legitimate constitutional questions, but the timing and the bedfellows sure make it look a lot like poliics.

Public rhetoric also made the lawsuit sound like a round in the ongoing culture wars. AUTO executive director Tim Hamilton told the Times, "They've categorized us like a sin tax. I didn't know that filling up your tank and going to work was a sin."

Well, plenty of people think that burning gasoline is a kind of sin, although not many forgo the convenience of driving. Precisely because just about everybody drives, unlike most sin taxes, this one would have been paid by just about everybody.

But does the Washington constitution let the state tax petroleum for clean water? Section 40 of the constitution says that "all excise taxes collected by the State of Washington on the sale, distribution or use of motor vehicle fuel ... shall be ... used exclusively for highway purposes." The Hazardous Substances Tax does not apply to the "sale, distribution or use" of fuel; it applies to the "possession." This distinction is, of course, deliberate. Is it sufficient? That's the question.

Another big question: should we amend the constitution? If you believe that gasoline consumption contributes to environmental problems, national security problems, and health problems, then requiring gas taxes to be used for highways may seem rather like requiring cigarette taxes to be used on ashtrays and vending machines. At best, it's a circular system: the more we drive, the more gas we buy, and the more money we generate to build more highways, so that we can drive more. Does this make sense in the 21st century?

Creating a long-term source of money for environmental programs in this economy would have been a coup. But even in this economy, spending money on capital projects would be the easy part. Politicians find it less challenging to spend tax dollars than to tell developers 'no.'

"The harder stuff is the regulatory stuff," Fletcher says. "Stormwater is kind of on the cusp," part capital projects, part regulation. "There's no way a local government can just take the money and go out and build stuff and solve the problem," Fletcher says. But "the regulatory stuff requires more guts and money."

Just educating the public won't suffice. "The politicians' dream is that you just get the info out there," and let people change behavior on their own, Fletcher says. "If only it were that simple."


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About the Authors & Contributors

Daniel Jack Chasan

Daniel Jack Chasan

Daniel Jack Chasan is an author, attorney, and writer of many articles about Northwest environmental issues.