Wasting no time, Gov. Chris Gregoire on Monday signed into law a $5-million-a-year diesel tax break passed Friday.
The change, which includes an emergency clause, takes effect immediately.
For years, Washington has exempted red-dyed diesel for farm use from the regular state fuel tax. Instead, users paid the lower sales tax.
Under House Bill 2424, however, diesel (red or clear) and aircraft fuel sold to a farmer for “non-highway purposes” would be exempt from the sales and use tax as well. The tax break does not, however, apply to fuel used for heating water or human dwellings.
“Agriculture is an intensive user of diesel fuel,” said Sen. Mark Schoesler, R-Ritzville. “Unfortunately, as those prices have basically tripled in recent years, the tax tripled with it.”
Farmers and farm-belt lawmakers pushed hard for the bill, noting that the recent diesel price spikes for the first time pushed the cost of a gallon of fuel above the price for a bushel of wheat.
Farmers, wedded to the commodity markets, cannot boost their crop prices to compensate for the rising cost of fuels, said Rep. David Buri, R-Colfax. “The high cost of fuel is the single, most critical problem facing growers and ranchers,” he said.
The bill was opposed, however, by some cities and counties, who got a share of the tax. In Whitman County alone, treasurer Robert Lothspeich told lawmakers last month, the change would mean a lost $75,000 to $100,000 to the county.
According to a state budget analysis, the exemption is expected to cost the state (or save farmers, depending on how you look at it) $3.9 million a year. Local cities and counties would lose another $1.1 million.