Supporters of an initiative to create a carbon tax in Washington are asking legislators to consider fixing flaws in the measure. But the Legislature appears unlikely to oblige, leaving I-732 facing political headwinds.
Supporters of an initiative to create a carbon tax in Washington are facing backlash over estimates the measure — advertised as “revenue neutral” — would actually cut state tax collections by $900 million over four years.
While Initiative 732 supporters strongly dispute that figure, some suggest the Legislature could cure any perceived flaws by sending a tweaked alternative version to the ballot this fall.
“I am very eager for them to pass a ‘732 B,’ ” said Joe Ryan, co-chair of Carbon Washington. He recently testified to a legislative committee on possible fixes, including correcting an “error in drafting” I-732 that inadvertently would grant a new tax break on the sale of commercial aircraft by Boeing and others.
But lawmakers so far don’t appear ready to oblige, leaving I-732 facing political headwinds as it heads for a vote in November.
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Already, the state Democratic Party and state Labor Council have formally opposed the measure, citing the potential hit to the state budget.
“It’s baggage for us to carry,” Ryan acknowledged. But he said I-732 remains the best option for voters concerned with global warming to take action this year, adding, “We have a moral obligation to do something about climate change.”
I-732 seeks to combat global warming and hasten clean-energy development by imposing a $25-per-metric-ton tax on carbon emissions from gasoline, natural gas and other fossil fuels.
At the same time, it would reduce the state sales tax from 6.5 percent to 5.5 percent and virtually eliminate the business and occupation tax for manufacturers. It also would fund a tax rebate of up to $1,500 a year for low-income families.
The goal was to make I-732 roughly revenue neutral for the state budget, with the tax cuts and increases balancing each other out. But official state estimates have punched a hole in that assumption.
State budget analysts say the initiative would reduce state revenue by $915 million over four years, even as the state faces demands for more spending on public schools, mental-health treatment and other services. An earlier estimate by legislative staff had pegged the four-year budget hit at $675 million.
I-732 supporters dispute the state’s numbers, arguing that analysts made errors including lowballing how much revenue the carbon tax would bring in. They hope the state will revise its estimates.
But testifying to lawmakers, Ryan acknowledged a mistake in I-732 means the measure as written would grant a new tax break on commercial airplanes sold by Boeing and others. The error cropped up in the initiative’s section cutting taxes for manufacturers to help them deal with higher costs from the carbon tax.
Fixing that mistake would boost I-732 revenue estimates by $800 million over four years — almost single-handedly eliminating the $900 million imbalance identified by the state, Ryan said.
While there are ongoing efforts in the Legislature to craft an alternative to I-732, some Republican and Democratic lawmakers said they did not expect agreement before their scheduled adjournment March 10.
“If we put together a proposal that corrected some of the shortfalls in 732, I don’t know I could tell you that it could get out of the House,” said state Rep. Joe Fitzgibbon, D-Burien, who chairs the House Environment Committee.
Sen. Doug Ericksen, R-Ferndale, who chairs the Senate Energy, Environment and Telecommunications Committee, said any alternative I-732 version he’d back would have to balance its carbon tax with rollbacks of other environmental regulations — including a prohibition on a carbon-emissions cap under development by Gov. Jay Inslee’s administration.
“It definitely would be a heavy lift,” Ericksen said.
If the Legislature were to pass an alternative to I-732, both proposals would appear on the November ballot. If lawmakers do nothing, I-732 will advance to the ballot by itself.
The measure was certified by the Secretary of State’s office earlier this year after receiving the required 246,732 valid signatures of registered voters.
There had been much talk about another climate-change initiative this year from a coalition of major environmentalist, labor and other Democratic-leaning groups called the Alliance for Jobs and Clean Energy.
That coalition tried unsuccessfully to get I-732 backers to stand down in favor of an alternative that would have abandoned the “revenue neutral” approach and added a price on carbon while also raising more money for the state.
But the prospect of competing climate measures led the group to back away.
“It’s unlikely that we would do an initiative, but there are a number of carbon-reduction and climate issues we will be working on,” said Jeff Johnson, president of the state Labor Council and a member of the alliance.
Johnson called I-732 a “step in the wrong direction,” despite agreeing with its backers on the urgency of combating climate change.
Yoram Bauman, co-founder of Carbon Washington, said critics have yet to come up with a viable alternative.
“What we are doing is putting pressure on everyone to say, ‘Hey, we think we have a pretty great policy here,’ ” he said. “If you don’t like our policy, you should come up with a better policy.”