Governor Proposes Cap & Trade Legislation

The governor proposes raising nearly half of his $12.2 billion transportation upgrade with a tax on industrial carbon emissions.

No gas tax hike. Big charges on industrial carbon emissions. That's how Gov. Jay Inslee proposes to pay for the 12-year, $12.2 billion transportation plan he unveiled on Tuesday in Medina.

The spending portion and projects are roughly similar to what's in the Democratic and Republican packages that have been deadlocked in the Legislature for the past twenty months. But Inslee's proposal drastically changes the debate on how revenue would be raised for the state's long-term transportation needs.

The dueling Democratic and Republican transportation approaches have hinged on 10-12-cent per gallon gas tax increases. (The state's current gas tax rate is 37 1/2 cents per gallon.) Inslee's plan has no increase in gas tax. Instead, the governor proposes carbon emissions "charges" on industrial greenhouse gases.

Such charges would raise a yet-to-be-revealed amount of revenue; $4.8 billion of those dollars would replace a gax tax hike in the governor's transportation package. Inslee calculates that the $4.8 billion would equal the amount of revenue raised by a 12-cent-per-gallon gas tax hike over 12 years.

Inslee was vague about how exactly his plan would work, except to say that Washington's total carbon emissions output would be partitioned into 130 limited segments. Corporations would bid each segment, which would come with an allowance to emit a certain amount of pollutants into the air. Corporations could then swap or sell parts of their legally-capped levels to other firms. "This replaces a gas tax on commuters with a tax on polluters," said the governor.

There is a strong possibility that any carbon emissions revenue over the $4.8 billion might go to education or tax relief. More specifics are expected to emerge on Wednesday and Thursday when the governor makes his climate change and budget plans public.

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