Gov’s transportation plan isn’t honest about who will pay

It’s been a busy week in Olympia, one long on hyperbole and short on details. Gov. Inslee unveiled his education plan, transportation plan, a new cap-and-tax system for limiting carbon emissions, and his overall budget proposal that includes new taxes.

It’s a bit strong to say that plans were unveiled, if “plan” means a fleshed-out proposal. Legislators and voters are left wondering what the actual proposed legislation will look like.

One thing is clear, though: After a slow start, Inslee is using the second half of his term to govern as a liberal Democrat.

Inslee held a transportation event Tuesday where he announced his plan to use a cap-and-trade tax to fund transportation improvements instead of a higher gas tax. On Wednesday, he rolled out the cap-and-trade proposal, though at a level that left a whole lot of questions unanswered.

To be clear, I have long advocated for a new transportation package to support our state’s economy. We need to finish 520 and complete Hwy 167 to the Port of Tacoma, among other critical investments. We know that the financial costs of further delay are high. That said, the governor’s proposal has some real problems.

  1. The costs are hidden, but the “polluters” who will pay are all of us

You and I may not enjoy paying gas taxes, but they have the advantage of being consistent, transparent, and directly linked to the service – highway improvements and maintenance – that the state then provides.

Of his plan to pay for new improvements through “carbon charges” rather than additional gas taxes, Inslee said “It’s better to tax polluters than drivers.” A reporter asked the obvious, wondering if he thought carbon taxes levied on refineries would be passed along to drivers at the pump. Inslee replied that he has economic modeling that suggests the whole cost will not reach drivers.

But perhaps no statement of the day was more emblematic of Inslee’s approach than when he added on to that answer. His advice to consumers: “It is impossible for them to pass along costs associated with gasoline when you don’t burn any.”

As the state Senate Republicans pointed out, there are 5.3 million drivers in this state, few of whom can afford the current crop of expensive electric vehicles. When the governor says “polluters” will pay, citizens need to recognize that the governor means them.

This scheme is the opposite of a transparent gas tax, but this approach isn’t surprising. Politicians generally downplay the costs of their plans and overstate the benefits. But it simply isn’t true that levying carbon taxes through a cap-and-trade system instead of a rise in the gas tax means drivers in Washington will avoid paying new taxes to fund road improvements. Those are taxes that you will pay indirectly.

  1. Key legislators weren’t keyed in to the plan

Legislators have been grappling with a new transportation package for some time. Inslee’s proposal is a radical departure from the packages under discussion, but he didn’t seem to consult with the transportation chairs in the Legislature – not even from his own party.

According to Crosscut, “Response to the governor’s proposals was lukewarm. Rep. Judy Clibborn, D-Mercer Island and chair of the House Transportation Committee, said Tuesdays’ announcement was the first she’d heard about Inslee’s carbon emissions revenue approach to transportation funding.”

  1. A low carbon fuels standard is a non-starter, and the gov knows it

Negotiations over a transportation package earlier this year were hampered by Inslee’s refusal to say whether or not he wanted to impose a low carbon fuels standard by executive order. Senate Republicans were explicit about their hesitance to support new gas taxes if Inslee was going to raise the price of fuel further through executive order.

Inslee now says he will direct the Dept. of Ecology to draft rules for a low carbon fuels standard for his signature. He promises a transparent and rigorous process, but the goal is still problematic. A study produced for the governor shows a low carbon fuels standard is one of the least efficient methods to reduce carbon.

  1. About those cost shifts…

A friend noted this parallel. Doesn’t this sound familiar?

Jonathan Gruber: “John Kerry said no – no we’re not going to tax your health insurance, we’re going to tax those evil insurance companies…So basically it’s the same thing – we just tax insurance companies, they pass on higher prices, that offsets the tax break we get into being the same thing. It’s a very clever basic exploitation of the lack of economic understanding of the American voter.”

Gov. Inslee: “Rather than raising a gas tax on everyone, our worst polluters will pay instead. Big transportation polluters, which includes the oil and gas industry, will pay…”

We need a solid transportation plan to move our state forward. This plan is a conversation starter, but it’s a long way off from the realistic plan taxpayers deserve.

-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.