Monday, June 27, 2022
June 27, 2022

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Inslee signals no interest in a Washington gas tax ‘holiday’; others skeptical, too

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SEATTLE — As he pushed for a three-month suspension of federal gas taxes, President Joe Biden on Wednesday also urged states to do the same at the local level.

But in Washington, which has one of the highest gas taxes in the country, lawmakers so far are skeptical of taking that step. Democrats in particular questioned whether the reprieve would benefit those most in need.

Gov. Jay Inslee would need to call a special legislative session so members of the House and Senate could propose and pass a bill pausing the tax. Inslee signaled Wednesday he wasn’t interested in doing so.

“As for the idea of temporarily suspending the state gas tax, the oil companies would be the ones to benefit from yet another opportunity to pocket more profit at the expense of our ability to put people to work fixing our roads and bridges,” said Jamie Smith, spokesperson for Inslee.

At 49 cents a gallon, Washington’s tax is behind only California’s and Pennsylvania’s rate and almost triple the federal government’s 18 cents. Lawmakers in the state for years have leaned on the revenue source to fund large-scale investments in the state’s transportation system.

State officials couldn’t immediately say how much a three-month break in gas tax would cost the state, but Senate Transportation Committee Chair Sen. Marko Liias, D-Lynnwood, said it likely would be in the “hundreds of millions of dollars.”

“Even three months is a significant-enough revenue hit. It would mean that some projects would have to be delayed or scaled back” if not backfilled from other sources, he said.

Gas in Washington was selling for an average of $5.53 a gallon Wednesday, according to AAA. Nationwide, the average was under $5.

In proposing a holiday on gas taxes, Biden is in partial alliance with some Republican lawmakers in the Washington Legislature. Sen. Simon Sefzik, R-Ferndale, offered Senate Bill 5897 during this year’s legislative session, which would have suspended the state’s gas tax until the end of the year and backfilled dollars from the state’s better-than-expected operating budget. The bill died in committee.

Liias acknowledged the strange bedfellows. He said he’s more open to discussing a tax break now than he was several months ago, as inflation pains have increased, but remained unconvinced it’s the best path for the state. More targeted relief mechanisms, such as expanding the Working Families Tax Credit or offering energy rebates, could more directly benefit struggling families.

“It doesn’t feel like the gas-tax holiday would deliver the relief we need,” he said.

Rep. Jake Fey, D-Tacoma, chair of the House Transportation Committee, echoed Liias. “It seems to me that reducing the gas tax isn’t a strategy that’s going to be broad-based and provide a lot of benefit,” he said.

State Republicans were more supportive of the idea in theory, but said it was a drop in the bucket when compared to the need. Republicans have in the past pushed to use more of the state’s operating-fund revenue, which had yet another rosy forecast Wednesday, to fund transportation projects.

“I think it’s a great gesture,” said Rep. Andrew Barkis, R-Olympia, ranking member of the House Transportation Committee. “I don’t know if it will have the impact that’s really what’s needed.” Barkis similarly expressed worry about the impacts that suspending the gas tax would have on large construction projects and the jobs they provide.

“I think it’s way too late,” Sen. Curtis King, R-Yakima, ranking member of the Senate Transportation Committee, said of Biden’s push.

Biden is advocating for a rollback of federal and state gas taxes while facing an increasingly discontented country. Inflation is high and hikes in federal interest rates have made talk of a recession frighteningly common. Biden argued that pauses in taxes at both the state and federal levels could bring relief of as much as a dollar a gallon at the pump.

But his maneuvering has been met with pushback from Republicans and Democrats. Many economists, meanwhile, doubt it would make a noticeable difference in Americans’ pocketbooks.

“I think it really doesn’t address the problem that we are facing,” said Alexander Rist, a local economist who signed onto a letter opposing gas tax holidays. Rist now works for King County, but was previously employed by Switzerland’s Ministry of Transportation.

“The high prices, they just reflect scarcity of oil and refining capacity,” he said, speaking for himself and not the county. “The tax relief would be probably absorbed by the companies and not given to the consumers, so it’s not very effective.”

An analysis from the University of Pennsylvania’s Penn Wharton Budget Model found that somewhere between 58% and 87% of state-level gas-tax holidays benefited the consumers, with the rest going to the suppliers.

Any path to passing the reprieve is narrow at both state and federal levels. Rep. Pramila Jayapal, who chairs the Congressional Progressive Caucus, said there’s little to no support among progressive members of the House. Speaker of the House Nancy Pelosi has so far not endorsed Biden’s plan.

Jayapal similarly opposes a pause at the state level, where she served in the Legislature on the Senate Transportation Committee before being elected to Congress.

“Oil companies are turning this profiteering into a full-time vocation,” she said in an interview. “I really don’t believe that they’re going to lower the price of gas at the pump if we do this.”

In recent years, state lawmakers have raised the need to find new ways to fund transportation projects beyond the gas tax. Republicans have pushed to use sales taxes on cars and trucks for highway projects, and conversations around a fee on road usage have returned as well. Many Democrats, meanwhile, argue the state needs more taxes based on income or capital gains.

The Democrats’ $17 billion transportation package, passed during this year’s legislative session, did not raise the gas tax.

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