For all its allegiance to tax cuts, the Bush administration is curiously uninhibited in its proposal to inflict a back-door tax hike on the Pacific Northwest.
Its 2006 budget outline, released Monday, includes an unconscionable remaking of how hydropower produced at federally owned dams is paid for. Under the plan, the Bonneville Power Administration, the federal agency which since its inception in the 1930s has charged its customers just enough to recover its costs, would be required to charge much higher market-based rates. The new rules would apply to power marketing agencies elsewhere in the country, too.
The effect would be to suck an estimated $2.5 billion out of the Northwest economy over the next three years, and much more over the long haul.
That’s why lawmakers from both parties rose up immediately to oppose the Bush plan. Importantly, Senate Energy Committee Chairman Pete Domenici of New Mexico has said he won’t support it. Republicans and Democrats from the Northwest congressional delegation are united in their opposition. They recognize that it’s unfair to target only particular regions for deficit reduction.
This idea has surfaced before. Other parts of the country that pay higher power rates are jealous of regions that take advantage of cheaper hydropower. But there are historic and economic reasons behind this rate structure that remain valid today.
BPA was created in part to feed economic growth in the Northwest, and it worked. Many industries came here because of the favorable rates, which helped offset higher costs for things like shipping and labor. Without relatively cheap power, Boeing likely wouldn’t have built a plant in Everett, and Kimberly-Clark wouldn’t be providing hundreds of good-paying jobs on the Everett waterfront. Essentially doubling power rates would break the economic backbone of the Northwest.
And “cheap” power isn’t what it used to be. Rates charged by the Snohomish County PUD, which buys roughly 80 percent of its power from BPA, are 50 percent higher than they were at the beginning of the decade. Higher power rates are the chief reason the Northwest’s economic recovery has lagged behind the rest of the nation. Another big hit is unthinkable.
Federal deficit reduction is a clear necessity, but it must be done fairly. Taking billions out of the pockets of Northwest families and industries is an unacceptable step. If the administration is interested in meaningful deficit reduction, it should look first at whether the more than $1 trillion in tax cuts it has planned over the next 10 years is really in the nation’s best interest.
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