Carbon gas tax hike claimed to be part of funding for $16B transportation package

(The Center Square) – Sen. Marko Liias, chair of the Senate Transportation Committee, made sure to point out there is no gas tax increase on Washington state drivers in the $16 billion, 16-year transportation packaged dubbed “Move Ahead Washington” by its drafters.

Todd Myers, director of the Center for the Environment at the Washington Policy Center, contends Liias is playing word games in making that claim regarding the transportation spending blueprint that consists of Senate Bills 5974 and 5975 and House Bills 2118 and 2119.

“We heard loud and clear that working families are still facing this brunt of an economic burden caused by the pandemic,” Liias said during Tuesday’s virtual press conference where Democratic transportation leaders unveiled the proposed transportation funding and projects package. “That’s why there is no gas tax in this package.”

But Myers points out that cap-and-trade legislation passed in 2021 by the legislature and signed into law by Gov. Jay Inslee – Senate Bill 5126, or the Climate Commitment Act (CCA) – will have the effect of increasing the gas tax starting next year.

On Thursday, Myers tweeted, “In reality, their plan relies on a tax on gasoline that starts at 18 cents per gallon in 2023 and increases to 30 cents per gallon in 2030.”

That’s because the carbon pricing program that became law last year requires the state’s largest emitters, like refineries, to purchase credits for allowed emission if they exceed a cap set by regulators.

Myers relied on the fiscal note for SB 5126 in making his case. A spreadsheet on page 121 of the fiscal note provides the numbers Myers used to arrive at his conclusion.

The fiscal note has projections for the minimum floor price.

“Toward the right there is a column for ‘Low/Floor Price,’” he explained in an email to The Center Square. “Those are the numbers I use to estimate the tax on gasoline. There is a footnote for that column.”

Myers went on to say, “The text (found on page 120), reads: ‘Allowances are assumed to be purchased at floor price to provide a conservative revenue estimate. Actual allowance pricing will be driven by supply of, and demand for, allowances. Floor prices are based on the state of California’s projected floor prices, which are estimated to increase by 7% each year.’ This notes that the actual prices will be higher than this and that these numbers are the floor.”

Myers showed his work, as it were.

“Each gallon of gas emits [carbon dioxide] equivalent to 0.89% of a metric ton,” he said.

The 0.89% figure comes from 19.4 pounds of carbon dioxide from a gallon of gas, divided by a metric ton, which is 2,204.6 pounds.

That means if one metric ton of carbon dioxide at the 2023 low/floor price of $20.60, then one gallon of gas is 0.89% of that, which is a little more than 18 cents. Applying that same formula to the 2030 low/floor price of $33.73 results in an increase to 30 cents.

Myers supported his case in referencing a state law that notes the Department of Ecology “may not sell allowances at bids lower than the auction floor price.”

While Liias did not respond to an email from The Center Square asking for comment on Myers’ take, the Lynnwood Democrat defended his position in a lively back-and-forth Twitter conversation with Myers.

“At last we land on some truth! #MoveAheadWA merely allocates the revenue from the bill we passed last year,” Liias tweeted. “So as I said from the outset, my bill doesn’t have a gas tax. Another bill passed last year, SB 5974 invests those resources in needed projects around the state. We agree!”

Liias had previously tweeted as part of conversation, “I understand why others get confused but you are purposely lying. CCA doesn’t impose a tax at all, it requires polluters to buy allowances through an auction. So the economic impacts are projections based on assumptions. Until the auction takes place, we don’t know. Stop lying!”

While there is no direct gas tax in the transportation package, it does include a 6 cents per gallon tax on fuel exports.

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