Seeking a budget deal, Democrats in the Legislature have resurrected the centerpiece of Gov. Jay Inslee’s environmental agenda — a tax on carbon emissions that could raise billions for the state while combating global warming.
Democrats in the state Legislature are working to revive the centerpiece of Gov. Jay Inslee’s environmental agenda — new charges on carbon emissions that would raise billions of dollars for the state budget while combating global warming.
Although supporters often point to opposition from Senate Republicans, Inslee’s cap-and-trade plan had been snubbed by majority Democrats in the state House, who didn’t pass the legislation or include it as part of their budget proposal in March.
On Monday, Democrats unveiled revised cap-and-trade proposals to mollify businesses worried about higher energy costs, as well as sweetening the pot with new tax incentives for rural timber communities.
Backers hope to keep the idea alive as an attractive revenue option for budget negotiators trying to hammer out a compromise in the ongoing special legislative session.
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State Sen. Jim Hargrove, D-Hoquiam, chief sponsor of the revised proposal in the Senate called it “an economic winner in rural areas, as well as something that is going to deal with our climate-change problem.”
Inslee told reporters at a bill-signing ceremony Monday the new proposals are “very much in line with what I proposed” and encouraged lawmakers to hold “an open and forthright discussion of this as an option.”
Critics are still unimpressed, saying the changes don’t alter their objections to the proposed regulatory scheme.
“This is still a tax on energy,” said state Sen. Doug Ericksen, R-Ferndale, adding that the effort seems to be more about Democrats’ desire to raise taxes than climate policy.
The basic framework of the cap-and-trade system — essentially a new tax on carbon emissions — would remain the same under the revised proposal.
The state would set a cap on carbon emissions and require the biggest emitters, such as refineries and fuel distributors, to buy tradable pollution permits. Over time, the emissions cap would be reduced, forcing industries to cut their emissions or buy increasingly expensive permits.
The Democrats’ new proposal would alter how the estimated $1.2 billion raised annually from carbon fees is divvied up, according to summaries of the bill revisions provided Monday.
They’ve eliminated Inslee’s idea of using some of the money for a transportation package. Instead, the plan would direct more cash to education, devoting $500 million a year to public schools.
One of the biggest changes would rebate $333 million a year from the carbon charges to fuel suppliers to limit possible higher gas prices. Another change would boost rebates for energy-intensive companies like Seattle’s Nucor Steel, which had complained the new carbon charges would hurt its competitiveness against foreign firms.
As in Inslee’s plan, the proposal would also devote $108 million to a tax credit for low-income workers and provide more cash for the state’s low-income housing fund.
The new plan also makes big efforts to help rural communities, especially timber communities hit by mill closures.
The new legislation would devote $193 million to pay private timber landowners who opt to sell their wood to Washington mills instead of exporting it. In exchange, the landowners would have to open their harvest lands to the public for recreational activities.
Lumber mills would also be eligible for a $10,000 tax credit per new employee hired, as long as such workers stay employed for at least six months.
Nearly $90 million more would be set aside for projects to improve forest health and fight forest fires. Agricultural companies also would be eligible for new tax credits for transporting their products.
Hargrove, who had supported the original Inslee cap-and-trade proposal, said supporting forestland is good environmental policy as trees help sequester carbon. And rural communities need the help, as they have not bounced back from the recession like the Seattle area.
“We do have two worlds in our state here,” said Hargrove, whose legislative district spans the Olympic Peninsula. “We’re just not going to get a Microsoft campus moved to South Aberdeen.”
But Ericksen referred to the changes as a “Peninsula payoff.” And Brandon Houskeeper, a lobbyist on environmental issues for the Association of Washington Business, said the various subsidies and rebates in the legislation only prove the cap-and-trade plan will add costs for businesses.
“These are short-term fixes or Band-Aids that they’ve provided,” Houskeeper said. “There are a lot of industries that are still going to be exposed.”
Environmental groups are pleased to see lawmakers at least keeping the cap-and-trade proposal on the table.
“It is not a perfect bill, but we are pleased they continue to see this as an option,” said Cliff Traisman, state lobbyist for the Washington Environmental Council and Washington Conservation Voters. Still, he added, given the bill’s struggles so far “we’re not naive about what’s in front of us.”
If lawmakers don’t act, environmental groups already have discussed a 2016 ballot initiative to impose a cap-and-trade system. One group is gathering signatures for a possible carbon-tax measure that would differ from Inslee’s plan.
Rep. Joe Fitzgibbon, D-Burien, who sponsored Inslee’s cap-and-trade proposal in the state House, said business leaders would do well to come to the table and talk about a compromise. “Here’s a deal that is going to be much gentler on many of the businesses that are impacted than an initiative by the environmental community,” Fitzgibbon said.
A hearing on the revised cap-and-trade proposal, House Bill 1314, is planned in the House Appropriations Committee on Thursday at 1 p.m.
Information in this article, originally published May 11, 2015, was corrected May 12, 2015. A previous version of this story misspelled the name of Brandon Houskeeper, a lobbyist for the Association of Washington Business.