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Export fuel tax likely on the way out as neighboring states criticize Washington proposal

A person walks near the Legislative Building, Wednesday, April 21, 2021, at the Capitol in Olympia.  (Ted S. Warren)
A person walks near the Legislative Building, Wednesday, April 21, 2021, at the Capitol in Olympia. (Ted S. Warren)

OLYMPIA – A controversial proposal to include a tax on fuel exported out of Washington to neighboring states could be on its way out.

The 6-cent-per-gallon tax proposal is part of a 16-year, almost $17 billion transportation package that Democrats say will fund transit, maintenance and other projects. But the export tax brought on criticism from lawmakers in Oregon, Idaho and Alaska, who called it “shortsighted” and “dangerous.”

Now, a proposed amendment from House Democrats would remove the tax from the plan. It would’ve brought in about $2 billion over the next 16 years to Washington.

That amendment would be voted on when the bill makes it to the floor, which could happen as early as this week.

The amendment was filed Saturday, a day after the Oregon Legislature and Gov. Kate Brown sent a letter to Washington lawmakers urging them to remove the tax from the package.

“Do not pit Oregon against Washington,” the letter read.

It also comes one day after Senate Transportation Chair Marko Liias, D-Lynnwood, apologized on the Senate floor after making “unkind and disrespectful and inappropriate comments about the governor of Oregon,” according to the Seattle Times.

Liias told conservative radio host John Carlson on Thursday that Brown was “living in fantasyland.”

Brown has been outspoken against the proposal since Washington Democrats first proposed it earlier this month.

In an op-ed in the Seattle Times on Tuesday, Brown said no one in Washington consulted with her office before proposing the “shortsighted tax increase.”

“Let me be clear: Oregon will not stand for taxation levied by Washington leaders with no consultation with our state government, our business community or our residents,” Brown wrote.

Several Oregon Republicans also threatened to walk away from Interstate 5 bridge replacement talks with Washington if the tax passes.

“If this unconstitutional tax passes, then Washington should pay the entire cost of the Interstate Bridge Replacement themselves,” state Rep. Shelly Boshart Davis said in a statement.

Funding is included in Washington’s proposed transportation package to complete their portion of the I-5 bridge.

In Idaho, the state House of Representatives unanimously passed a resolution Tuesday opposing the tax. The resolution says the proposed tax would impose “an enormous financial burden on Idahoans in the name of offsetting Washington business costs.”

It strongly encouraged Gov. Jay Inslee to veto the tax if it reaches his desk.

A letter from Idaho Gov. Brad Little and Attorney General Lawrence Wasden also urged Inslee to stop the “dangerous” proposals.

“Now is not the time for our states to turn on each other with excise tax proposals that dampen our economy and increase costs for everyone,” the letter reads.

Mike Faulk, an Inslee spokesperson, said Thursday that the governor at the time continued to support the package, which he called the “most climate-friendly investments in state history.” He said he hoped the legislation was delivered to his desk, where he planned to sign it.

“Funding sources are always a point of debate, and this plan is no different,” Faulk wrote in an email. “Washington produces fuels that benefit communities in other states, and Washingtonians bear the climate impacts of that fuel production. It’s not unreasonable to share the social cost of carbon with those who benefit from our fuel production.”

Alaska lawmakers have said they would retaliate over the tax. A bill proposed in the Alaska Legislature would put a $15.75 surcharge on a barrel of oil produced in Alaska and delivered to a state that imposes a tax on fuel delivered to Alaska.

Washington Democrats initially were sticking to their plan. The transportation committee on Tuesday voted 15-14 to keep the export fuel in the package.

During debate on a Republican amendment that would remove the tax from the package, Republicans argued the tax could lead to a “trade war” between the states.

“This relationship that we’re damaging with our friends across various borders is problematic,” said Rep. Mike Volz, R-Spokane.

Transportation committee chair Rep. Jake Fey, D-Tacoma, said Washington has needs other than transportation this year, and “we are in a balancing situation here” when it comes to allocating revenue. The transportation package already uses $2 billion from the operating budget, he said.

“That is unprecedented,” Fey said. “That is a recognition that we have needs.”

House Speaker Laurie Jinkins, D-Tacoma, said she was open to other ideas as the bill moves to the floor but added before Saturday’s amendment came up that there were “few other ideas that are out there.”

“There’s no tax that’s ever passed that’s without a lot of consternation,” Jinkins told reporters.

House Majority Leader Pat Sullivan, D-Covington, said in a Feb. 8 news conference that Florida, Texas and Tennessee have similar taxes that Washington used as models for this proposal.

Laurel Demkovich's reporting for The Spokesman-Review is funded in part by Report for America and by members of the Spokane community. This story can be republished by other organizations for free under a Creative Commons license. For more information on this, please contact our newspaper’s managing editor.

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