As Biden urges federal gas tax holiday, Inslee opposes state tax break

Gov. Jay Inslee and Democratic legislators say suspending the state’s 49-cent tax will only enrich oil companies.

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OLYMPIA — President Joe Biden on Wednesday urged Congress to suspend collection of federal taxes on gas and diesel for three months.

And he called on state leaders to do the same, or something similar, to further help drivers cope with soaring pump prices.

“I fully understand that a gas tax holiday alone is not going to fix the problem, but it will provide families some immediate relief — just a little bit of breathing room — as we continue working to bring down prices for the long haul,” Biden said. Federal taxes are 18 cents for gas and 24 cents for diesel.

Not going to happen in Washington, where the tax on gas and diesel is 49 cents a gallon.

Gov. Jay Inslee is steadfastly opposed.

“Pausing the gas tax provides yet another opportunity for oil companies to pocket more profit while significantly hindering our ability to put people to work fixing and building roads and bridges,’” said Jaime Smith, Inslee’s executive director of communications.

Majority Democrats in the Legislature aren’t supportive either for much the same reasons.

“We will definitely take a look,” said Sen. Marko Liias, D-Everett, chair of the Senate Transportation Committee. “Based on what I’ve seen the benefits aren’t enough to warrant the costs to critical projects. But I know families are really struggling so I’m definitely focused on finding ways to help.”

Republican lawmakers want something tangible done to help consumers reeling from the one-two punch of rising inflation and gas prices, which reached an average of $5.66 a gallon in the Seattle area this past week.

“They’re feeling the crunch. I suggest … we exempt the gas tax at least through the end of the year,” said Sen. Lynda Wilson, R-Vancouver, ranking Republican on the Senate Ways and Means Committee.

The president called on states to enact some form of temporary, across-the-board tax relief as a new revenue forecast was released by Washington’s chief economist predicting tax collections by the state will be $1.46 billion higher than the February forecast.

Revenues for the current budget cycle that ends mid-2023 are now projected to be nearly $63.2 billion, according to the report. And projected revenues for the next two-year budget cycle that starts July 1, 2023 are projected to be almost $66 billion.

Consumer spending coupled with inflation and homes sales drove much of the increase. The surge comes as a growing number of economists across the country warn of a possible recession if the Federal Reserve is unsuccessful in slowing inflation with interest rate hikes.

“We have a lot of concerns where the economy is headed,” Steve Lerch, the chief economist, told the bipartisan Economic and Revenue Forecast Council on Wednesday. “We do not have a recession forecast in our economic forecast but we do see slower growth.”

That anticipated slowdown has Democrats reticent to consider cutting any major tax, even briefly.

“We’ve been in this situation before,” David Schumacher, director of the Office of Financial Management. A big upturn in revenues is followed by a sudden downturn in collections, leaving the state unable to meet its obligations without paring programs, he said.

Rep. Timm Ormsby, D-Spokane, chair of the House Appropriations Committee, said he was “reticent to make commitments. I think the risks are definitely skewed to the downside.”

Republicans on the forecast council acknowledged the uncertainty of the economy. They expressed frustration at Democrats general unwillingness to consider any general tax relief ever.

In the past when the state faced cuts, “the response of the Legislature has been, ‘Let’s go raise taxes,’” said Rep. Ed Orcutt, ranking Republican on the House Finance Committee. “(It’s) never reciprocated. When does the taxpayer get their turn? Why we can’t look at some form of tax relief is beyond me.”

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com; Twitter: @dospueblos.

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