A State Carbon Tax?

Washington State Governor Jay Inslee has announced that he will propose some sort of a carbon pricing program to help raise revenues for his state's starved budget, which is currently about $2 billion in the red (over two years, and out of a total budget of about $33 billion), and which includes a Washington Supreme court-mandated increase in school funding. The details remain sketchy at this point, like whether it is a carbon tax or a cap-and-trade program (Greeenwire is calling it a "carbon  fee" and the Seattle Times is reporting it as a cap-and-trade), but the Governor is hoping that it will produce $400 million per year. He has tied it to transportation funding, which both parties in Washington state would agree is badly needed.

Inslee is a Democrat and Republicans have a majority in the Washington Senate, and are just barely a minority in the State House, so prospects of passage might appear dim. But this is a state where the parties still seem capable of working together. Republican state senator Curtis King of Yakima (the hometown of Justice William O. Douglas) criticized the Governor's plan for linking such a tax to general spending projects like transportation projects, but praised the Governor for proposing something in advance of January budget negotiations. (Can we get some of those Republicans down here in Florida?)

I have one problem with this. Washington State still has to figure out a way to comply with the Obama Administration's Clean Power Plan to reduce emissions from the electricity generating sector. Washington's goal is already a heavy lift -- 1,379 lbs./MWhr down to 215 by 2030 -- this is a state with only one coal-fired power plant so it does not have much low-hanging fruit to pick. I would save my political capital for when I needed to propose something for the Clean Power Plan, which is going to really cost Washington State. What Washington could do, much more directly if it truly wishes to fund transportation projects, is just raise its gasoline taxes, currently at 37.5 cents per gallon. That is high (ninth among states) but Washington is one of seven states with no state income tax. If I am a motorist in the Emerald State, I would accept a gasoline tax as the price of having good roads and bridges (a major and important bridge collapsed in Northwest Washington in 2013), and could separate that from carbon reduction measures. Washington State consumed about 64 million barrels in 2013, or 2.7 billion gallons. A tax of 10 cents per gallon would raise $270 million dollars, and 15 cents would raise about $400 million, the hoped-for amount raised by the carbon "fee," or permit price, or whatever it is going to be. Do it now, when gas prices are low!