Former WSDOT economist files claim against state over gas price forecast

A former economist for the Washington State Department of Transportation (WSDOT) claimed he was told to falsify numbers concerning the impacts of Washington’s Climate Commitment Act on gas prices.

Scott Smith, a former transportation planner, filed a complaint Thursday against WSDOT, the Office of Financial Management (OFM) and the governor’s office. In it, Smith claimed that he was the primary employee tasked with preparing a gas revenue and price forecast at the beginning of 2023 for WSDOT’s revenue forecast council.

Smith calculated that Washington’s cap-and-invest program — which went into effect on Jan. 1 — would lead to a 45- to 50-cent increase on every gallon of gas. But, Smith said his supervisors at WSDOT instructed him to keep that information quiet, per direction from the Office of Financial Management.

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“It was suggested in strong terms that management would prefer that he not include the impacts of the cap and trade program [in his analysis],” Smith’s legal representative Jackson Maynard said. Maynard is the executive director of the Citizen Action Defense Fund, a “watchdog” organization that has opposed Washington’s new cap-and-invest carbon pricing program.

Maynard also stated Smith and other staff members were also instructed to not include ‘carbon tax issues’ in any email so that the agency could avoid public record requests.

According to the claim, when Smith refused to alter the numbers of his estimates, the retaliation began.

“In addition to denying him a promotion, [WSDOT] also failed to give him basic software upgrades he needed to be able to do his job. They eliminated his position and then continued to have him work until the vacancy would be finalized,” Maynard said. “They denied him the ability to work remotely, when just about every employee in the state government was able to do that. And they denied him leave to be able to visit his elderly mother out of state. For him, that was the last straw.”

Smith, 64, said after more than five years as a gasoline tax revenue and gasoline price forecaster for WSDOT, he was forced into early retirement on November 6.

He filed a whistleblower complaint the same day. WSDOT Communications Director Kris Abrudan provided a statement in response.

“The Washington State Department of Transportation takes whistleblower allegations very seriously and what our agency can say is limited as this is both an investigation and legal matter,” Abrudan’s statement read.

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Mike Faulk, a spokesperson for Gov. Inslee’s office, also said Smith’s claims of being told to “jimmy the numbers” are being looked into.

“The Office of Financial Management individual named in the letter has expressed surprise and no recollection of events matching Mr. Smith’s claims regarding how his analysis would be used,” Faulk said. “He does not recall ever talking with this individual about the Climate Commitment Act and does not recall needing to ‘approve’ or review reports from Mr. Smith.”

Washington’s climate laws and gas price impacts

The cap-and-invest program, a component of Washington’s Climate Commitment Act (CCA) passed by the legislature in 2021, puts a cap on maximum emissions. The goal is to get to 45% below 1990 levels by 2030, 70% by 2040 and 95% below and net-zero carbon emissions by 2050.

The system also charges the state’s biggest polluters for their carbon emissions. The money is then spent on initiatives to reduce the state’s reliance on fossil fuels. While the companies are buying those allowances now, they do not have to start using them until 2024.

There has long been a war of words over whether or not these policies have had an impact on fuel prices in Washington.

“This is going to have a minimal impact. If any, pennies,” Gov. Jay Inslee said before the CCA took effect. “We are talking about pennies.”

But critics like the Washington Policy Center disagreed, estimating in July 2022 the new climate policies would add around 46 cents to the price of a gallon of gas. The Department of Ecology (DOE) addressed that claim on its website, stating the “46 cents” estimate was incorrect and oversimplified.

“Ecology’s analysis predicts minimal price impacts to the price of gas in 2023 and very modest impacts in future years,” DOE’s website read. “These are not ‘best case’ outcomes. The impacts remain small when we evaluated them under a range of potential market scenarios.”

The new laws took effect on Jan. 1. A few weeks in, after gas prices jumped close to 10 cents, DOE Deputy Communications Director Andrew Wineke told KIRO Newsradio, “state regulations play a relatively small role in the cost we pay for fuels. Supply and demand are the biggest drivers of those prices.”

But over the next several months, fuel prices skyrocketed across the state. On June 20, Washington became the most expensive state in the country to buy gas for the first time in history.

Sometime between May and June, the Department of Ecology removed the portion of the webpage that claimed the “46 cents” argument was inaccurate.

It also removed a line that read, “Washington’s new climate policies have yet to take effect and played no role in recent fuel prices.”

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There is general consensus that multiple factors play a role in Washington’s gas prices at any given time, including: Inflation; supply and demand; the Pacific Northwest’s geographic distance from crude oil pipelines; and the state’s gas tax which is third-highest in the U.S. Fuel suppliers have also enjoyed historically high profit margins in Washington.

But as previously reported by KIRO Newsradio, around 50 cents of Washington’s current gas prices can be attributed to the CCA, according to multiple expert analyses including the Oil Price Information Service, a Dow Jones company that collects fuel-pricing information for AAA and other clients.

Inslee and other supporters of the state’s climate laws argue the spike in prices is due to price gouging from oil and gas companies. Democratic lawmakers have announced plans in the 2024 legislative session to increase transparency for gas prices and oil company profits and “hold oil companies accountable for the damage to Washingtonians’ air, water and health caused by fossil fuel pollution.”

State responds to claim

While Smith and the Citizen Action Defense Fund claim there were instructions from multiple government agencies to lie about the CCA’s impact on gas prices, state officials said that’s far from accurate.

Smith said he was the primary WSDOT employee charged with forecasting fuel consumption, pricing and revenues from gas taxes and fees. However, Andrew Wineke with the Department of Ecology said the cap-and-invest program should not be included in the transportation revenue forecast — because it’s not a gas tax.

Furthermore, “Ecology used its own economists to conduct the regulatory analysis for the cap-and-invest program, with support from a respected independent economics firm,” Wineke said. “No one from the Department of Transportation provided input on that analysis.”

Faulk said Thursday’s complaint was the first time the governor’s office was made aware of Smith or his analysis.

“Ecology is the lead agency on CCA [analysis], not WSDOT. Our office has always worked with Ecology on understanding price impacts,” he wrote in an email to KIRO Newsradio.

Faulk also said Smith’s position was not eliminated by WSDOT, but by state lawmakers who passed HB1838 earlier this year, “that would eventually move the essential functions that were performed by Mr. Smith from WSDOT to the Economic Revenue Forecast Council.”

The governor’s office countered another point in the complaint.

“Mr. Smith claims he was denied leave to spend time with his mother around Thanksgiving, and that this denial was tied to some vendetta,” the governor’s office wrote. “In reality, Mr. Smith was the expert presenter at a meeting that conflicted with his date requests.”

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Faulk said there will be investigations to determine if Smith’s other assertions can be substantiated.

The Citizen Action Defense Fund, which is representing Smith, has filed multiple lawsuits against the state aimed at disrupting the state’s climate policies. The CADF lost a case in Thurston County Superior Court in September after challenging the Legislature’s 2022 transportation bill, which included the nuts and bolts of the cap-and-invest program. The CADF argued it violated the Washington Constitution by covering more than one subject, but the Superior Court sided with the state. CADF is appealing the ruling to the Washington Supreme Court.

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