House passes cap-and-trade with a link for a gas tax hike

OLYMPIA — State lawmakers won’t be passing a massive transportation package this legislative session.

But they are closing in on a major carbon emission reduction program — contingent on a boost in the gas tax to pay for future highway improvements.

A retooled cap-and-trade proposal cleared the House on Friday. It ties the start of enforcement of the long-sought program with enactment of a nickel increase in the gas tax.

This linkage is one of several changes contained in a sweeping revision of Senate Bill 5126, also known as the Climate Commitment Act, which aims to cap and reduce greenhouse gas emissions from some of the state’s largest polluters.

“We have to take on the existential threat that is climate change,” said Rep. Strom Peterson, D-Edmonds, before the 54-43 vote in the Democrat-led House.

Three Democrats joined Republicans in opposing the bill, which now returns to the Senate. If the Senate concurs with changes, the bill will be sent to Gov. Jay Inslee. Once signed, Washington would join California as the only two states in the nation with such a program.

And for Inslee, it would be a significant policy win. He’s pushed various versions of a carbon emission cap-and-trade program throughout his tenure without success.

“It’s not the silver bullet but it will be the policy that drives the largest greenhouse gas reduction in the state,” said Rep. Joe Fitzgibbon, D-Burien, following the vote.

Fitzgibbon, who authored the major rewrite, didn’t think it could happen this session. It is a complicated bill, it had much opposition and the House had little time to work on it — it only arrived from the Senate on April 8.

Republicans on Friday assailed the policy as unproven, expensive and regressive because it will drive up the cost of gas, hurting those with lower incomes the most.

“This is a bad bill,” said Rep. Robert Sutherland, R-Granite Falls, adding that there are other ways to achieve the goal of reducing greenhouse gas emissions without hurting working families.

And it wasn’t an easy vote for every Democrat.

Rep. Emily Wicks, D-Everett, had favored an approach of putting a straight tax on carbon emissions.

“This legislation wasn’t my first choice but I am thankful we made a statement on climate change,” she said.

As designed, the Climate Commitment Act would require the state to set limits on emissions and reduce those limits over time. The state would create a market in which companies can buy allowances for emissions. Revenue for sales of allowances would be used in a range of ways, including to reduce the number of vehicles on roads and to offset the negative impacts of pollution on communities. It is estimated the program will generate $4 billion in the next 10 years.

The bill that passed the House no longer contains a provision restricting use of some of the revenue if the state fails to approve a low carbon fuel standard by 2027. It adds new details on who would be subject to the rules and how to deal with those who would be initially exempt.

Restoring the link between cap-and-trade and transportation revenue result from negotiations among House and Senate Democrats, and Inslee, over how best to address climate change and the state’s pressing infrastructure needs.

As it now stands, enforcement of the cap-and-invest program would start Jan. 1, 2023 — as long as new revenue for transportation is approved by then.

“I think this is a positive step,” said Sen. Steve Hobbs, D-Lake Stevens, chairman of the Senate Transportation Committee. “It shows transportation is a critical part of dealing with climate change and a transportation package has to go hand-in-hand with carbon pricing.”

Hobbs is among a small group of Democrats unwilling to back the cap-and-trade bill without a firm pledge for action to come up with billions of dollars to maintain the existing statewide transportation system.

He’s spent the session pushing his 16-year, $17.8 billion undertaking known as Forward Washington, which counts on $5.2 billion of cap-and-invest revenue. Hence the interest in the linkage.

It contained money to rebuild the U.S. 2 trestle in Snohomish County, pay Washington’s share of a new I-5 bridge across the Columbia River, build new state ferries and bolster public transit.

But on Friday Hobbs acknowledged the package is dead this session— a pronouncement made earlier this week by several legislative leaders.

Conversations will continue, he said, and should be fruitful if the linkage is retained. He’s still hoping for success “sometime this year” or next session.

Inslee, who requested the cap-and-trade bill, has said he wants a transportation package but opposes linking it with the emission reduction program in the same legislation.

“We are reviewing the developments,” said Tara Lee, Inslee’s executive director for communications. “As with everything in the last few days prior to the end of the legislative session, we need to wait and see what the final outcome will be.”

Environmentalists think this could be the path to success on cap-and-trade after years of setbacks in the Legislature and on the ballot.

“We are confident that the changes to the Climate Commitment Act will ensure its likely implementation in the urgent time frame that is needed,” said Clifford Traisman, lobbyist for the Washington Conservation Voters and Washington Environmental Council.

“We will continuously work for passage of a transportation package, as it is urgently needed to fund transit, fund ways to reduce carbon emissions, and to serve people,” he said. “It is with our hope that the next phase of the transportation revenue debate will more robustly involve the public in order to build the needed momentum for a package”

Meanwhile Friday, a new two-year, $11.8 billion state transportation budget won support from a bipartisan panel. The spending plan approved by the conference committee of House and Senate members now awaits final action in each chamber.

It counts on $1 billion of federal COVID funds to cope with reduced collection of gas taxes, tolls and ferry fares during the pandemic and to comply with a court order to replace culverts that hamper fish migration.

It also takes advantage of the state Supreme Court ruling in October to invalidate a $30 car license fee initiative in October. Roughly $300 million in payments set aside during litigation are used to make ends meet.

Without those unexpected dollars, the state would have been forced to sharply reduce aid for transit and delay numerous highway projects around the state, said lawmakers involved in negotiating the final spending blueprint.

“I think we lucked out this session,” said Rep. Jake Fey, D-Tacoma, chairman of the House Transportation Committee and one of the budget conferees. “We’ve got challenges ahead. I think they’re obvious. We need additional resources.”

Hobbs, another conferee, echoed the theme in his comments.

“This budget is held together with bailing wire, Bondo and duct tape,” he said. “We have to do something for transportation.”

Of the federal funds, $600 million is penciled in to backfill revenue losses due to the pandemic in accounts for transit programs, Washington State Ferries operations, and Connecting Washington projects. Also, some funds go to offset a dip in receipts on the Highway 520 and Tacoma Narrows bridges, and the I-405 toll lanes.

The proposed budget steers roughly $726 million toward continued removal of culverts that block salmon from miles of habitat. A federal court set a 2030 deadline to complete the work, which involves hundreds of culverts and carries an estimated $3 billion price tag. The amount matches what Gov. Jay Inslee requested in the budget he proposed in December.

Of the total, $400 million is from federal aid. As a precaution, an equal sum of state dollars is set aside for culverts if it turns out those federal dollars cannot be spent on culverts, as hoped.

The legislative session is scheduled to end Sunday.

Reporter Jerry Cornfield: jcornfield@heraldnet.com | @dospueblos