After two years of watching gas-tax increases tank in the Legislature, Gov. Jay Inslee proposed Tuesday to take a new approach: Charge major polluters for the right to emit carbon.
Inslee’s plan, featuring a “cap-and-trade” system, would generate $400 million a year, he said, to cover nearly 40 percent of his $12 billion, 12-year transportation improvement plan. The remainder would come from bond debt, existing gas taxes, tolls and an assortment of vehicle fees.
The new six-lane Highway 520 bridge would be completed all the way to Interstate 5, using $1.4 billion, while the state would abandon the idea of tolling the I-90 Mercer Island floating bridge. An additional $1.3 billion would widen Interstate 405 from Bellevue to Renton.
Several projects have been on the drawing board for years, and even failed in a regional ballot in 2007.
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Ferry riders would see a two-year freeze in fares, while a fourth ferry would be built to join the new Tokitae and two others under construction.
“We can clean our air and water at the same time we are fixing our air and our roads,” Inslee said in Medina, overlooking the 520 construction site. “It is indeed a twofer.”
Inslee, who is spending the week rolling out his budget wish list, is expected to announce further details about his Carbon Pollution Accountability Act, with his full budget proposal to come Thursday.
What the Democratic governor did make clear Tuesday is that in the face of Republican gains in the Legislature, he is holding fast to his idea that climate-change legislation can pay for much of government’s costs.
The governor said he aims to reach across the so-called Cascade Curtain and connect all of Washington through a “bipartisan spirit” that aims to “reduce the hours we spend on the roads away from our families.”
Rep. Ed Orcutt of Kalama, ranking Republican in the House Transportation Committee, scoffed at the notion that Inslee could raise nearly $5 billion in 12 years from polluters.
“It is difficult to comment on a proposal as lacking in details and verifiable facts as the governor’s,” he said in a statement.
Inslee seeks what his aides call a “market-based” program, in which the state sets a hard cap on total carbon pollution, then charges fees for permits that authorize the release of emissions that contribute to climate change.
Motor vehicles in Washington cause roughly half of global-warming emissions, yet individual drivers would be spared the usual burden of higher fuel taxes, at least directly.
Sen. Curtis King, chairman of the Senate Transportation Committee, predicts petroleum companies will pass their cap-and-trade costs to consumers.
“It’s going to raise the price of a gallon of gas,” said King, R-Yakima. That would mean higher costs for Yakima Valley fruit shippers, he said.
The current state gas tax is 37.5 cents a gallon.
Instead, King said, the state should offer incentives to reduce carbon. For instance, give tax breaks to trucking companies that undergo costly conversions from diesel to cleaner liquefied natural gas, he said — much like Inslee seeks to invest in slashing ferry emissions with LNG.
Charles Knutson, the governor’s policy adviser for transportation, said petroleum companies, which rank among the largest carbon emitters, have a choice to make refineries cleaner or pay. “We don’t anticipate they’ll pass all of it on [at the pump],” Knutson said.
Environmentalists may ask what’s the point of collecting carbon fees and then spending those on highway projects?
Inslee’s aides reply there’s a separation in the plan: The cap-and-trade income would go only toward green uses, such as transit grants or incentives for electric vehicles, and to maintain existing roads. The highway megaprojects would be funded through gas taxes and motorist fees, such as licensing and weight charges for cars and trucks.
King warns there’s a financial risk in paying for maintenance with carbon fees, instead of covering it through gas taxes. Normally, part of the gas tax would be set aside for maintenance — money that’s also an emergency cushion to pay debt, if need be. But Inslee’s plan means the gas tax would need to be 100 percent pledged to repay construction bonds, said King.
If revenues plunge, the state might wind up delaying projects, or in a worst case, tapping the general fund, King said. “It places the state in a precarious position.”
Nonetheless, King praised the governor for offering a plan ahead of the January session, to get the talks moving early.
Regarding I-90 tolls that Inslee decided against, House Transportation Committee Chairwoman Judy Clibborn, D-Mercer Island, said the Washington State Department of Transportation asked legislative leaders to let it stop spending time and money on public process — pending another attempt to get the Highway 520 bridge fully funded. Mercer Island residents have fiercely objected to paying I-90 tolls to finish the 520 bridge, which doesn’t serve the island.
“I think you lose votes in the Senate, and you lose my vote, because there’s no way I can vote for it,” Clibborn acknowledged.
Bill Mundy, a Montlake-area neighborhood advocate, called the $12 billion proposal “pie-in-the-sky” and likely to fail, taking the Highway 520 money down with it.
Mundy urges the state to promptly retrofit and repave the four-lane Portage Bay section of 520, which has hollow columns vulnerable to earthquake. “We don’t need six lanes anyway,” he said, because tolls of up to $3.80 have caused traffic to decrease.
Several local-option taxes, mostly for transit, made it into Inslee’s plan.
Sound Transit would be allowed to send new local property, sales and car-tab taxes to the ballot for “ST3” projects. Community Transit could enact a sales-tax increase with voter approval.
King County Metro could reimpose its unique $20 car-tab fee with County Council approval.
Local passenger-ferry districts could be formed with voter approval. Cities or counties could hike car-tab fees from $20 to $40 without a ballot measure.
And the state would provide $1.1 billion in grants over 12 years to communities for transit, bicycling and walking.
Inslee wants safety projects, including adding rumble strips, guardrails, improved signals, a landslide-warning system, and funds for the State Patrol.
Besides carbon fees, the biggest difference from past years is the governor omitted the I-5 Columbia River Crossing, where local opposition to proposed bridge tolls, and a light-rail line across the river, helped defeat last year’s packages.
“A bow to political reality,” said Steve Mullin, president of the business group Washington Roundtable. He said the new plan has much to offer, especially a $1 billion highway-preservation fund.