Seattle officials have delayed the start date for a new tax on heating oil until next September, citing the COVID-19 crisis.
The tax of 24 cents per gallon, proposed by Mayor Jenny Durkan and passed by the council with unanimous support in 2019, was supposed to take effect Tuesday.
Instead, the tax will be collected starting on Sept. 1, 2021, according to legislation approved by the mayor and the council this month.
The COVID-19 pandemic is “causing severe harm to the economy,” and collecting the tax this year could “cause undue hardship to certain households that purchase heating oil,” Seattle’s new legislation said.
New business growth in Washington bounced back this summer after a dip when the pandemic hit and now may be leveling off. Job openings have regained some ground since a plunge in March when the economy shut down. The total number of Washington workers receiving jobless benefits has been edging down but remains historically high, at 350,000 people.
Revenue from the new tax has been earmarked for programs that help residents convert to electric heat pumps, and that sort of work has slowed due to concerns about COVID-19 exposure, added Jessica Finn Coven, director of the city’s Office of Sustainability & Environment.
“We can’t get as much work done, and we don’t want to burden people [with the tax] when we can’t provide them with the benefits,” she said.
When Durkan signed the tax last year, she said the policy would combat climate change by encouraging residents to move to clean heating systems. At the time, as many as 18,000 Seattle households still used oil heat. That number has been dwindling, even without a tax in place.
Home heating oil in 2016 accounted for an estimated 63,000 metric tons of Seattle’s greenhouse gas emissions, or about 2% of the city’s total emissions. In 2008, home heating oil accounted for 109,000 metric tons of emissions.
Cars and light trucks accounted for about 53% of the city’s total emissions.
“We’re in a fight for our climate and we’ve got to be tackling every source,” Durkan said last year. “We know our greenhouse gas emissions come mostly from transportation and buildings, so we’ve got to tackle those.”
The tax’s critics said the city should have consulted with oil providers. Many residents who still use heating oil are older people with modest incomes and renters, said Warren Aakervik from Ballard Oil, hailing the tax’s delay. “I feel sorry for them,” Aakervik said.
Durkan promised that much of the tax revenue would be spent on grants and rebates to help residents move to electric heat, on retraining workers and on assistance for heating oil providers.
The typical Seattle household with oil heat pays about $1,700 per year and could save $850 per year with an electric heat pump system, the city said last year. But converting to a heat pump system can cost more than $10,000, according to a council memo.
The city estimated that about 3,000 households would receive grants and rebates with money from the tax, including about 1,000 low-income households that would have the entire cost of their conversions covered.
Some people move from heating oil to gas heat; they wouldn’t get assistance.
Existing programs are helping residents convert to electric heat, using revenue sources other than the tax, Finn Coven said. As many as 25 low-income households will have their conversions covered this year and as many as 125 other households will receive partial rebates, she said.
“Some of this work is still going on,” she said. “We want to make sure we’re moving away from dirty energy.”
Aakervik, from Ballard Oil, said he thinks the tax revenue should be used to help residents with heating oil pay for better insulation and other energy-efficiency upgrades.
Seattle’s tax legislation initially directed city departments to come up with a plan by July 1, 2020, to ensure that all oil tanks were decommissioned or upgraded by the end of 2028. The new deadline for the plan is July 1, 2021. Most tanks are more than 60 years old, and leaks can lead to soil and water pollution.