Hello carbon tax friends: We had about 80 folks turn out for Lobby Day on Tuesday (!), so if you came then Thank You and if you didn’t then you can still contact your legislator directly! Read on for more news from Olympia, for a Fiscal Note update, and for media stories about I-732 and beyond.
On Friday Feb 19 we had a hearing in the House Finance Committee (here’s the 2-hour video on TVW) and a work session in the House Environment Committee (video here) and then on Tuesday Feb 23 we had Lobby Day, so we are continuing to get the word out and push forward with our agenda. Although the legislature is by all accounts too hamstrung to pass I-732 outright, one piece of very good news is that lawmakers on both sides of the aisle (!) as well as key business groups (!!) are very actively engaged in discussing how best to implement a price on carbon. That alone is a big step forward. And although there are plenty of questions about I-732 and plenty of rumors about possible I-732B alternatives, the fact remains that so far—with two weeks left before the legislative session is supposed to end on Th March 10—the only way to take action in support of smart climate policy is to support I-732!
News reports include an op-ed in the Spokane Spokesman-Review by Ed Mahlum and Joe Ryan (“Carbon tax is best climate change solution”), an op-ed in the Moscow-Pullman Daily News by Joe Ryan (here behind a paywall, or here on our website), Planetizen’s “Citizen’s Carbon Tax Initiative Goes Before Washington State Senate”, and shout-outs to CarbonWA in the Union of Concerned Scientists newsletter (thanks to Jack Rice in Olympia) and by Richard Heinberg at the Post Carbon Institute: “Carbon Tax: The Low Oil Price Opportunity”. There was also a Seattle Times article that focused on the fiscal note, so let’s tackle that head-on:
In brief: The fiscal note dispute is likely to continue, but we are still in position to pass the best climate policy in the USA—a policy that is also a hugely progressive tax shift!—and our analysis continues to be that I-732 is approximately revenue neutral. Even in the worst case scenario, the legislature can easily adjust our policy in the years ahead, which is just the kind of thing we elect and pay legislators to do. We’ll keep working on it, but let’s not take our eye off the ball over a relatively small revenue dispute.
In length: Earlier this month the Department of Revenue responded to our concerns (summarized in this op-ed in the Olympian, with details here) about the OFM Fiscal Note. DOR’s response is here, and the upshot is that we have different interpretations of how I-732 will work. To summarize one important example, we believe that the text of our initiative, starting with the very first sentence, makes it clear that the I-732 carbon tax covers all fossil fuels used for the “generation in this state of electricity”, including electricity that is sold out-of-state… but DOR’s view is that “[t]he overall framework of the tax imposition supports a conclusion that the Initiative is not designed to tax exported energy”. We estimate that the difference amounts to $375 million over 4 years, which is a significant chunk of the 4-year revenue shortfall in the OFM fiscal note.
To be perfectly honest this has been a learning experience—one that at times has been quite painful—but sometimes there is no alternative to learning by doing. Beyond that we have three key take-aways:
It’s relatively small: The current biennial budget is $93 billion, so the numbers in question are about one-half of one percent of that: $900 million over four years. By comparison, the sales tax exemption for grocery store food is valued at over $1 billion a year. (Why did former state Democratic party chair Dwight Pelz call his work on this 1977 ballot measure his “greatest achievement in public life”? Because it was the right thing to do. And so is I-732.)
It’s easily fixed. Even in the worst case scenario, lawmakers could easily clarify the intent of I-732 regarding exported power ($375 million over 4 years), regarding the Working Families Rebate in the first year ($300 million), regarding B&O tax reductions for aerospace ($800 million over 4 years), etc.
It’s getting better. Forecasts change, and they are likely to change in our favor. For example, the state just released a new Economic and Revenue Forecast, with projected General Fund revenue for the 2017-2019 biennium that is $442 million (1.1%) lower than the forecast from just three months ago. Those new projections should lower the imbalance in the OFM fiscal note for I-732, and when the next Annual Energy Outlook comes out in June there will be changes in the CTAM spreadsheet that is used to estimate carbon tax revenue, and those should also lower the imbalance in the OFM fiscal note. And of course we will continue to make the case that the current fiscal note does not accurately reflect the language of I-732.
As evidence that climate policy is often contentious, read “Could Puget Sound Energy Replace Its Coal with Coal?” by Sara Bernard in the Seattle Weekly and also “State utility regulators were silenced by governor on big energy bill” in the Oregonian. (The counter-argument in Oregon is here.) And in late-breaking news, Governor Inslee has withdrawn his carbon rule and will re-issue it in the spring. (See also the op-ed from the Cardinal Glass company in the Olympian: “Some state businesses lead way on low carbon”.)
Nationally, Adele Morris of the Brookings Institution co-authors “How Should We Use the Revenue from Taxing Carbon?” Two of her Brookings colleagues write “Time for a carbon tax”, Irwin Stelzer has “A Deal over Climate Change” in the conservative Weekly Standard (“Why not a carbon tax? Both sides could do a lot worse”), and Jeremy Deaton has “The Grand Climate Bargain That Some Conservatives Could Get Behind” in ClimateProgress. The Earned Income Tax Credit (which is the basis for the state Working Families Rebate in I-732) gets a shout-out in Nicholas Kristof’s NYT column, and also in “How Trump is forcing Republicans to rethink poverty” in the Christian Science Monitor. Writing about “co-benefits” in Wired, Nick Stockton has “Lower CO2 emissions could save the US billions”. On KPLU, David Shaper has “Cheap Gas Means More Driving And Getting Stuck In Traffic”. The Sacramento Bee reports on “A carbon tax Jerry Brown thinks could have potential”.
And there’s a ton of (bad) news about oceans: “Seas Are Rising at Fastest Rate in Last 28 Centuries” in the NYT (see also the great graphics and discussion on RealClimate: “Millennia of sea-level change”), “Scientists now link massive starfish die-off, warming ocean” in the Seattle Times, and the Tampa Bay Times has an amazing editorial on “Florida’s climate challenge“: “The message is clear: Humans caused this mess and now need to fix it… That’s why the simplest solution — a tax on carbon — needs to be on the table.”
Finally, please read David Brooks’s NYT column in the event that a 732B proposal does emerge from the legislature this session ?
Talk to your friends and neighbors about I-732