Multi-billion dollar transport package would undo fuel export tax repeal
As the Washington State Legislature deliberates its ambitious transportation agenda dubbed Move Ahead Washington – a 16-year spending plan that is part of carbon-cutting legislation passed in 2021 and puts the emphasis on alternative transport to the car in the form of public transport, hybrid electric ferries, high-speed trains, and improving safety for cyclists and pedestrians – its sources of funding have been hotly contested according to the party lines.
Washington Democrats unveil sweeping $16 billion transportation package
Traditionally, revenue for the state’s transportation budget comes largely from motor vehicle fuel taxes (MVFT) – Washington State levies a tax of nearly $0.50 per gallon for gasoline — and subsequent taxes to fund transportation options that won’t materialize in the state for years or decades is an impossible ask for an economy still recovering in an imbalanced fashion from the pandemic. Democrats, instead, are funding their proposal in part through a tax on fuel exported to neighboring states.
Washington state accounts for 3.3% of U.S. refined oil export capacity, according to 2019 data. As local consumers grapple with gasoline prices above $4 a gallon in the Seattle area, in part due to one of the highest gasoline taxes in the union, fuel exported out of state is exempt by law from the full $0.49 MVFT per gallon. Move Ahead Washington repeals this exemption, effectively imposing an MFVT of $0.06 per gallon on fuel exports to states like Oregon and Alaska that have lower gasoline taxes than Washington State. .
This tax was largely the subject of the Senate Transportation Committee hearings on Monday, February 14. Democrats introduced and ultimately rejected an amendment by Sen. Curtis King (R-14th Dist.) that sought to repeal the tax and approved an amendment by the senator. Annette Cleveland (D-49th Dist.) who delayed the requirement until June 30, 2023 (previously February 1, 2023).
“I would tell you that we’ve heard about Oregon…Idaho and…Alaska, where we sell most of this gas. They don’t jump for joy. I can tell you that. At least Oregon talked about things like retaliation. I think there are a variety of issues with that,” Senator King said Monday.
This “retaliation” refers to nebulous comments last week by Oregon State Senator Lee Beyer, a Democrat and co-chair of the state’s Joint Transportation Committee, a spokesperson for Senator King said. at MyNorthwest.
Legislative staff estimate that the tax would, over a 16-year period, add about $2 billion to the state’s Motor Vehicle Fund.
“I think that’s an oversight, that we don’t have the same kinds of tax bases as other states, and we need to make sure that we have a balance of income that makes sense for Washington residents.” , said the senator. Rebecca Saldana (D-37th Dist.)
“In particular, the fact that more than about half of the oil refined in this state goes out and without any benefit to our local transportation system; this has a huge impact on the residents who live in this area, as well as impacting our ability to ensure that we preserve and maintain our transportation system.
Ultimately, the fuel export tax would fall primarily on Oregon’s shoulders, as their MVFT is significantly lower than Washington State. Tax revenue would also be generated by Idaho and Alaska. While Washington exports fuel to California, their MVFT is higher and therefore the tax would not be applicable.
“One of the revenue sources included in this package, the tax on exported fuels, is of grave concern to our partner state of Oregon,” Senator Cleveland noted. “They will be paying a disproportionate share of this tax to help fund our Move Ahead Washington package while also working to fund their own portion of the I-5 bridge replacement, which I think is too burdensome and unfair.”
With the delay offered by Senator Cleveland, Senate Bill 5974, one of many under Move Ahead Washington, was sent to the rules committee. February 15 is the deadline for the bill to pass into the original house, and March 10 is the last day of this legislative session.