State Officials Move To Halt Damage Done By Tax Ruling

A King County Superior Court ruling invalidating repeal of a gasoline tax exemption that stripped $30 million a year from the transportation budget has set off a scramble in the Legislature and the attorney general’s office.

The House Transportation Committee on Monday quickly approved a bill that would allow the state to continue to collect the tax but not spend it until there is a final resolution.

The attorney general’s office said it will file an appeal with the state Supreme Court and ask that the case be heard during the court’s May term.

The ruling March 28 by Judge Jim Bates invalidated a 1994 law repealing a gasoline tax exemption enacted to aid the state’s agriculture industry. It amounts to about 3.7 cents a gallon.

The exemption goes to makers of ethanol that is mixed with gasoline in winter months to meet requirements of the federal Clean Air Act in King, Pierce, Snohomish, Clark and Spokane counties.

The exemption was designed to stimulate production of ethanol in Washington, creating a major market for the alcohol fuel that can be produced from a variety of sources from pulp mill waste to surplus wine.

State officials said the exemption was not aiding Washington agriculture, but benefiting only big oil companies and out-of-state and foreign processors who supply 95 percent of the ethanol used to blend gasohol in the state.

Bates ruled that repeal of the exemption amounted to a tax increase and violated state spending lid Initiative 601.