Tripled oil tax seen as solution

Environmental groups and Democratic lawmakers are teaming up behind a bill that would triple the tax on petroleum and other toxic substances, raising $225 million a year to help close a state budget gap and pay for stormwater projects.

The proposal, which could raise gas prices by a few cents per gallon, builds on a toxics tax enacted by voters in 1988. It would raise $156 million in each of the first three years for the state’s deficit-riddled general fund while sending $45 million to cities and counties for stormwater projects. Smaller amounts would go to state transportation projects and other clean water programs.

In the long run, it would shift more of that cash flow to local projects that deal with Puget Sound pollutants and runoff problems tied to hazardous chemicals.

Oil refineries and other petroleum interests that pay 83 percent of the existing tax were gearing up for a fight Friday – even as Democratic Rep. Timm Ormsby of Spokane was putting finishing touches on the bill.

“We have some core services that are being impacted. I think this is a very elegant approach to do over time,” Ormsby said. “We relieve some of that immediate pressure on the operating budget, but eventually we dedicate virtually all of this revenue to stormwater pollution” remedies.

Ormsby said it is a clearer, more direct approach than a $1.50-per-barrel oil tax that he proposed last year, and he expects it to be introduced formally Monday.

The idea is one of many tax proposals floating around the Capitol as majority Democrats look to plug a budget gap the governor now estimates at $2.2 billion.

Voters approved the 0.7 percent tax on hazardous materials as part of Initiative 97, and the tax rate has stayed the same since it took effect in 1989, according to the state Department of Revenue.

A raft of groups – the Washington Environmental Council, Washington Conservation Voters, the Washington State Labor Council, the state associations for cities and counties, and the State Building and Construction Trades Council – support the tax. Gov. Chris Gregoire was approached by lobbyists about it and agreed to look at it, said her legislative director, Mary Brown.

Brown said the concept appears to be “gaining a little speed.”

Environmental lobbyist Clifford Traisman said the tax would provide needed money for stormwater projects, create jobs and give relief to the state general fund.

But Dave Fisher, a spokesman with the oil industry and StopWaHiddenGasTaxes.com, said the state’s five oil refineries pay most of the existing tax. Tripling the tax rate from 0.7 percent to 2 percent would threaten some of the industry’s 20,000 direct and associated jobs in Washington if a parent oil company decided it was no longer viable to keep a refinery going, Fisher said.

Fisher said there would be plenty of money for stormwater projects if lawmakers had not raided those accounts to balance the budget. He said transfers of funds from the Model Toxic Control Act fund to other programs totaled $184 million in the past two budgets.

“Secondly, this is really a general fund bailout masquerading as an environmental action,” Fisher said.

Fisher also claimed it would raise gas prices by 6 cents a gallon, but Traisman disputed that claim, suggesting that in a worst-case scenario, the highest increase would be 3 cents.

Ormsby said that state Department of Revenue studies show prices fluctuate 16 cents per gallon each month, and there is no evidence to show that the toxics tax has affected fuel prices. Others say consumers won’t notice any effect on prices, and Ormsby said it would be up to oil companies whether they absorbed the costs from profits.

Brad Shannon: 360-753-1688