Gregoire Calls New $1.50-a-Barrel Charge a ‘Fee,’ but Republicans Cry Foul and Vow a Challenge

By John Stang

Contributing writer/ Washington State Wire

OLYMPIA, Jan. 10.—With her State of the State address Tuesday, Gov. Christine Gregoire lined up yet another battle for this year’s legislative session as she proposed a $1.50 charge on every 42-gallon barrel of oil refined in Washington state.

            Gregoire intends it to raise $2.75 billion out of nearly $3.7 billion she hopes to spend on transportation-related construction and maintenance projects, as well as stormwater retrofits. In her session-opening speech Tuesday, Gregoire contended the entire package would generate 5,500 jobs annually over the next decade.

            In 2009, Washington’s refineries produced 564,000 gallons a day – which would translate to $846,000 per day of production.

            Numerous factors make it extremely difficult to say what that $1.50 charge would mean at the gas pump, said Gregoire spokesman Cory Curtis. He said Hawaii recently considered a $1-per-barrel increase that translated to a 2.5-cent-per-gallon increase at the pump.

“We can’t wait until roads, bridges and ferries are falling apart to fix them. We can’t kick the can down the road and saddle our future generations with the repairs we failed to make. This is our year to act and approve a jobs package and invest in our future,” Gregoire said.

            Republicans Will Challenge

The Legislature’s Republican leadership was quick to denounce the idea. “The fee is going to come directly to the pump,” said House Minority Leader Richard De-Bolt, R-Chehalis.

And higher gas prices aren't the only thing they find objectionable. There’s also the fact that Gregoire is calling it a “fee.” By using that term, Gregoire gets around the restriction imposed by Initiative 1053 that requires either a public vote for tax increases or a two-thirds vote of the House and Senate. A public vote would mean voters would be asked twice this year for new taxes. Lawmakers already are hoping to send some sort of a tax referendum to the ballot this spring, to bail out the state budget. A second vote for transportation might be problematic.

 Meanwhile, passage of a tax in the Legislature would require support from minority Republicans, and they aren’t about to provide it. But a fee can be passed by a simple majority, meaning that majority Democrats have all the votes necessary to enact it into law.

          If the proposal makes to the House floor in the form of a bill and Republicans choose to challenge it there, Democratic House Speaker Frank Chopp would make the tax-or-fee ruling. But a challenge is more likely in the Senate, where the call would rest with Lt. Gov. Brad Owen, an independently elected Democrat who has no formal ties with either party caucus.
           DeBolt said the potential increase in gas prices will scare off new manufacturing jobs. At a news conference following the speech, DeBolt and the Senate’s chief budget writer Sen. Joseph Zarelli, R-Ridgefield, contended creating private sector jobs produces more wealth for the state than public sector jobs.

            Combines Green Proposal With Transportation Plan

Gregoire's proposal combines a pair of ideas that have been in the air for some time. Since 2009, environmental groups have been advocating a by-the-barrel charge on refiners for stormwater projects. Advocates have always referred to it as a "fee," on the assumption that gas and oil is a major contributor to water pollution, though that contention is highly disputed, and the fee-or-tax issue has never been tested on the House or Senate floor. Meanwhile, the governor's Connecting Washington task force has been working to identify transportation projects that might be funded by a gas-tax increase. 
            The governor winnowed her $3.7 billion package of transportation projects and stormwater retrofits down from the $21 billion worth of potential projects identified by the blue-ribbon panel.

Gregoire’s package also calls for:

* A fee of $100 on each new electric vehicle. This is expected to raise $10 million for transportation work.

* Adding a 15 percent increase on heavy commercial vehicle combined license fee. This is to raise $177 million for pavement preservation.

* Adding a $15 passenger vehicle weight fee. This would be earmark $760 million to the Washington State Patrol, public transit, passenger rails service and local governments.

* Exploring allowing local governments to impose a 1 percent Motor Vehicle Excise Tax for local road and transit needs, or to adopt up to a $40 vehicle license fee for the same purpose.

            Plugs Sales Tax

Also Tuesday, Gregoire renewed her call for a series of education reforms including revamping teacher evaluations, rejuggling some graduation requirements for advanced students, and zeroing in extra help to the state’s worst schools.

            She said her proposal for a half-penny sales tax increase for five years to raise $494 million annually with $411 million to go to avoid cutting the current 180-day school year and to maintaining cost-of-living salary adjustments for teachers. These are eliminated in Gregoire’s current plan to deal with the $1.5 billion shortfall for 2011-2013. Her plan is that the sales tax increase – which she wants to be taken to a public referendum later this spring – would be used to reinstate the full-school year and the teacher pay hikes.

            Republican leaders support keeping K-12 programs as a top funding priority, but oppose the sales tax proposal.

            Zarelli said education and health programs are a high Republican priority to keep intact in the budget talks with Democrats, who share the same stance. He and other Republican leaders contended reforms and eliminating low priorities would take care of the $1.5 billion shortfall without  any need for tax increases. However when pressed, they could not identify what programs they believe are a low-enough priority to be eliminated beyond $200 million in social services for non-citizens and $150 million due to what they described as “lawsuit abuse.”

            Zarelli said the big budget picture is complicated with tricky ripple effects. “It’s not black and white,” he said.