Inslee wants to fund transportation with a carbon tax
No gas tax hike. Big charges on industrial carbon emissions. That's how Gov. Jay Inslee proposes to pay for the 12-year, $12.2 billion transportation plan he unveiled on Tuesday in Medina.
The spending portion and projects are roughly similar to what's in the Democratic and Republican packages that have been deadlocked in the Legislature for the past 20 months. But Inslee's proposal drastically changes the debate on how revenue would be raised for the state's long-term transportation needs.
The dueling Democratic and Republican transportation approaches have hinged on 10-12-cent per gallon gas tax increases. (The state's current gas tax rate is 37 1/2 cents per gallon.) Inslee's plan has no increase in gas tax. Instead, the governor proposes carbon emissions "charges" on industrial greenhouse gases.
Such charges would raise a yet-to-be-revealed amount of revenue; $4.8 billion of those dollars would replace a gax tax hike in the governor's transportation package. Inslee calculates that the $4.8 billion would equal the amount of revenue raised by a 12-cent-per-gallon gas tax hike over 12 years.
Inslee was vague about how exactly his plan would work, except to say that Washington's total carbon emissions output would be partitioned into 130 limited segments. Corporations would bid each segment, which would come with an allowance to emit a certain amount of pollutants into the air. Corporations could then swap or sell parts of their legally-capped levels to other firms. "This replaces a gas tax on commuters with a tax on polluters," said the governor.
There is a strong possibility that any carbon emissions revenue over the $4.8 billion might go to education or tax relief. More specifics are expected to emerge on Wednesday and Thursday when the governor makes his climate change and budget plans public.
While Inslee pushed the benefits of his package — no gas tax hike and reduced travel times among them — he also acknowledged that "it is possible" polluting industries might pass costs on to customers and lay off some workers.
Most of the rest of the proposed $12.2 billion transportation spend would be raised through existing fees and other existing revenue sources. Inslee proposed reducing the use of sales taxes on construction as a transportation revenue source, an idea the Republicans pushed in their transportation proposal. Charles Knutson, a senior policy advisor to the governor, described Inslee's adoption of the idea as a show of good faith to the GOP.
Inslee's proposal calls for completing work on several major state transportation projects, including completing the state Route 520 overhaul, upgrading I-405, finishing work on state routes 509 and 167, tackling I-5 congestion at Joint Base Lewis-McChord and continuing work on a new I-395 corridor through Spokane.
The governor also proposes freezing ferry rates and giving local governments and transportation authorities more freedom to raise revenue by, for example, authorizing Sound Transit to ask voters for limited property, sales and motor vehicle excise tax hikes to expand light rail.
Response to the governor's proposals was lukewarm. Rep. Judy Clibborn, D-Mercer Island and chair of the House Transportation Committee, said Tuesdays' announcement was the first she'd heard about Inslee's carbon emissions revenue approach to transportation funding. House Democrats, she said, would have to mull it over.
The Senate Republicans' transportation leader Sen. Curtis King, R-Yakima, could not be reached for comment Tuesday. But Rep. Ed Orcutt, R-Kalama and ranking Republican on the House Transportation Committee, responded in a press release. "It is difficult to comment on a proposal as lacking in details and verifiable facts as the governor's," wrote Orcutt. "For example, he says his tax on polluters will raise nearly $5 billion over the next 12 years. How did he arrive at that figure? If his past statements as a candidate and governor on budget and tax-related issues are any guide, I suspect it will not stand up to scrutiny."
In another press release, Sen. Mike Baumgartner, R-Spokane, called the governor's transportation proposal "a big disappointment. It hitches one of the state's most important functions to a questionable tax."
Baumgartner also took issue with Inslee's approach on I-395. "The governor's plan provides just $480 million for the freeway," said Baumgartner. "It's going to take $750 million to finish the job and connect to I-90. If we go with the governor's plan, we'll be waiting a long time for the rest of the money to come through."
For his part, Gov. Inslee was sanguine about the less than enthusiastic reception. "This is a new idea," he said, about his transportation proposal. "And like any new idea, we're going to have to talk a lot about the intricacies of the plan."