Washington state export tax draws fire from targeted states

Pursuit at the Washington statehouse to help fund transportation via an export tax has drawn the ire of elected officials at multiple legislatures in the region.

The Washington Senate voted along party lines to advance the lead bill of a 16-year, $16.8 billion transportation funding package that includes a provision to charge a 6-cent-per-gallon export tax collected at the wholesale level.

Dubbed “Move Ahead Washington,” the Democrat-led plan would provide money for purposes that include highway repair and construction, bridge replacements, and ferries.

There would be no increase to the state’s 49.4-cent fuel tax rate on gas and diesel. However, more than $2 billion would come from additional vehicle fees. Local governments also would get more taxing authority.

In lieu of a tax increase on fuel purchased in the state, the bill package includes an export tax on gas and diesel shipped from Washington refineries to states with tax rates less than 49.4 cents. The states of Alaska, Idaho and Oregon would be affected.

Alaska has an 8.95-cent fuel tax rate. Idaho has a 33-cent rate and Oregon has a 38.5-cent rate on gas and diesel fuel.

Governors from both parties voice concern

The export tax provision is going over like a lead balloon in the three western states.

Alaska Gov. Mike Dunleavy is calling on his residents to make their voices heard to Washington state lawmakers about “a tax that targets Alaska’s fuel costs.

“Their view of Alaska as a colony is reflected on a tax on all of us, with nary a care to our lives and economy,” reads a Facebook post from the Republican governor.

Oregon Democratic Gov. Kate Brown said the proposed tax is “unacceptable.”

On Twitter, Brown said she spoke with Washington Gov. Jay Inslee and “made very clear that Washington taking unilateral action to increase gas prices for Oregon families and businesses is unacceptable.”

Right now, Washington State is moving a bill that will tax Oregonians to fund Washington’s transportation package.

Yes, you read that right: Washington wants to tax Oregonians at the pump for their transportation costs.https://t.co/Zm7gUFUTMs

— Governor Kate Brown (@OregonGovBrown) February 18, 2022

In Idaho, Gov. Brad Little and Attorney General Lawrence Wasden sent a letter to Washington’s Democratic governor asking for a meeting to discuss the “dangerous legislation.”

“During a time when inflation is soaring at historic levels, we ask you to step in and do what you can to stop these harmful proposals,” the Idaho Republicans wrote. “Now is not the time for our states to turn on each other with excise tax proposals that dampen our economy and increase costs for everyone.”

Retaliation on the table

State lawmakers in affected states want Washington state lawmakers to consider the ramifications of the continued pursuit of the export tax.

Alaska Senate President Peter Micciche, R-Soldotna, said Washington legislators need to evaluate their relationship with Alaska before passing the excise tax. He highlighted the commercial fishing industry.

Fellow Alaska state legislator Kevin McCabe, R-Big Lake, has introduced legislation in the House to levy taxes on Washington state fishing boats that operate in Alaskan waters.

In Oregon, two House lawmakers spoke against the Washington state legislation.

Oregon Rep. Shelly Bohart Davis, R-Albany, has a family trucking business. She labeled the action at the Washington statehouse as “offensive.”

“I cannot stand by and watch as the hard-working people of Oregon are hit with an unfair and unjust tax with zero representation,” Bohart Davis wrote in a press release.

Oregon Rep. David Brock Smith, R-Port Orford, labeled the Washington legislation as poor policymaking.

“The Washington Legislature set goals and approved transportation projects they couldn’t afford. Instead of doing a better job with writing public policy, they’re going to ask my residents to pay for their roads when they have never, nor will ever, use them,” Brock Smith wrote.

In Idaho, the House voted unanimously to approve a joint memorial that calls for Inslee to veto the tax if it reaches his desk.

The memorial warns that the Idaho Legislature “will take any and all actions necessary to block this new tax.”

Washington statehouse leaders not backing down

Bill supporters in Washington state say the export tax would not be unique to the state of Washington.

Senate Transportation Chairman Marko Liias, D-Lynnwood, said that Florida, Texas, and Tennessee have taxes that they apply to exported fuel from their in-state refineries.

House Transportation Chairman Jake Fey, D-Tacoma, said the tax would help compensate for the environmental effects of fuel refined in his state.

“This is really related to being fair with respect to climate impacts,” Fey said during a video conference. “In terms of fairness, I think it’s only appropriate since we produce fuel for (other states’) use that they support our climate activities and our overall activities in the package.”

Where the money would go

The bill package would route $3 billion each to highway improvements and transit. Another $1.3 billion would be used to build four hybrid-electric ferries and electrify two ships run by Washington State Ferries.

Additionally, the bill package would access billions in federal funds and a one-time $2 billion transfer from the state’s operating budget. An additional $5.4 billion would come from a climate bill approved last year by legislators.

The lead bill in the four-bill package, SB5974, has moved to the House. The second Senate bill, SB5975, is scheduled for a Senate Transportation Committee hearing this afternoon. The House versions are HB2118 and HB2119. LL

H3: More Land Line coverage of news from Washington.