$1.50 Oil Barrel Tax probably dead
Is the Governor’s proposed oil barrel tax dead? Senator Mary Margaret Haugen, Chair of the Senate Transportation Committee thinks it is.
During her remarks this morning at the Washington State Good Roads and Transportation Association in Olympia, Sen. Haugen bucked most in her party who think the charge is a fee and said she believes it is actually a tax.
She also said it will be challenged on the floor and based on Lt. Governor Brad Owen’s past rulings on tax vs. fee issues, he will likely also rule the $1.50 charge is a tax.
This is important because ruling the oil barrel charge as a tax triggers a supermajority requirement…meaning two-thirds of the entire Senate would need to vote for it. No one believes the Senate has that level of support.
Here is a list of the Lt. Governor’s previous rulings on tax vs. fee issues, starting on pg. 110. In one of these rulings, the Lt. Gov. said:
Calling something a fee when there is no nexus between its collection and how it is to be spent does not make it a fee for purposes of this analysis, regardless of the name of the account into which the proceeds are placed. Simply put, there must be a reasonable connection between the fee, those paying it, and the purpose on which its proceeds may be spent. Failing this, it is a tax, and a supermajority vote is required.
There was ample testimony in both the Senate and House from various organizations that questioned the Governor’s characterization of the $1.50 oil barrel charge as a fee because the oil companies who would pay it would not receive any benefit…the money would be used for statewide road maintenance instead…thus there is no nexus.
I asked Sen. Haugen how the legislature would proceed if the oil barrel tax dies and she said they would strip it out of the bill and move forward with the remaining fees and local options. Presumably, this would leave the $1.50 oil barrel tax to voters.
But Rep. Clibborn, also in attendance and Chair of the House Transportation Committee, said the legislature would not place both a transportation tax and a sales tax increase on the ballot in the same year, so any transportation tax hikes will take a back seat to the Governor’s current sales tax proposal and be kicked to 2013.
She went on to say the legislature will only pass what they can on their own, which limits any new transportation revenue in 2012 to local options and state-imposed fees.
Interestingly, Rep. Clibborn also said she will propose a bill that amends the State Constitution to place the oil barrel tax under the protection of the 18th Amendment, which means the revenue can only be used for highway purposes. Both the House and Senate versions of the bill say the barrel charge can only be spent on highway purposes, which effectively creates a statutory protection. But to Rep. Clibborn’s credit, she said she wants to go further to ensure there is no confusion by adding the full blown constitutional protection.
