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Driving Miss McCleary: 10% gas hike proposed for K-12 funding

Gas prices would jump. So might utility bills. And the airline, train, and truck transportation industries could see costs climb.

As details of Gov. Jay Inslee’s carbon tax proposal begin to take form in a bill expected to be introduced next week, one fact has become clear: The governor isn’t cowed by the failure of a more moderate carbon tax ballot measure that 60 percent of the state voters rejected only two months ago.

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Chris Davis, the governor’s senior adviser for energy and carbon markets, said Gov. Inslee’s greenhouse gas tax proposal is an improvement on Proposition 732 in a variety of ways. It corrals needed funds for education in a state facing a Washington Supreme Court order to spend more money on K-12 schools; it provides a small business tax cut, and it prompts a decline in carbon emissions.

“It provides a good chunk of the same tax relief that the bill last fall provided while providing further greenhouse gas reduction,” Davis said. “It’s a smarter package. It gets more done with the money and makes better use of it.”

If approved by the legislature, the bulk of the new carbon tax money – nearly $4 billion over the next two years – will come from drivers using the state’s gas pumps. The proposed tax would add 10 cents to every dollar of gas in the first year, making a $3 gallon of gas cost $3.30 for example. But it also would adjust upward annually at the rate of inflation plus 3.5 percent. It also would tax heating costs if the power source is fossil-fuel based, such as natural gas, oil, and coal.

Bob Plotnick, a professor at the University of Washington and expert on poverty issues, said this type of carbon tax effectively is the same thing as a sales tax. And in a state already loaded with so-called regressive taxes, it will disproportionately affect the group these taxes always hit the hardest: The poor.

“It’s going to hit some poor households much harder than others on the transportation side if they are using private transportation,” he said. “Sales taxes hit the poor more than middle class and upper class because they spend more on those kinds of items and they don’t have any savings.”

Davis said the governor understands this type of tax hits people with low incomes the hardest. He said the bill will include some relief in form of money earmarked for clean mass transit ($250 million) and money for job growth ($200 million). But the details have yet to be ironed out.

“That’s part of what we’re still working out,” he said. “That will depend on how the legislature chooses to do so. Our proposal puts significant funding into clean transportation, greater transit, and greater access.”

George Hamlin, president of Hamlin Transportation Consulting and a transportation industry analyst, said rail and trucking companies won’t like or support the new tax. But if it is approved, they won’t be able to do anything about additional fuel costs in Washington State.

Airlines and jet fuel are another matter, he said. “You will try to avoid the tax by tanking up somewhere else than in Washington state, for example,” he said. “And regardless, it will increase the cost of a ticket.”

Exempt from the carbon tax are manufacturers of aluminum, concrete and big agriculture (except for crop transport). While all three produce significant amounts of CO2, Davis said the state wants to focus on fossil fuel burning – and on raising money to help pay fund education in the wake of the state Supreme Court’s McCleary Decision.

“We are using this in part to solve a problem that is recognized far and wide which is the K-12 public education problem,” Davis said. “We’re taking a step to solve that in a smart way.”

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