Gregoire says oil-refinery charge would aid transportation system

Gov. Chris Gregoire asked state lawmakers Tuesday to tap the oil industry for the money to keep ferries running and roads in good repair.

In the last of her annual speeches to the Legislature, Gregoire also drew attention to bottlenecks that need “serious attention,” such as like the freight route from the Port of Tacoma and the Interstate 5 section near Joint Base Lewis-McChord – but she didn’t say how to pay for them.

“We’re better than the other guys. If we aren’t, our businesses and our workers are going to go elsewhere,” Gregoire said in calling attention to impending shortfalls in the money to pay for highways, buses and ferries. “Let’s build a better transportation system than the other guys.”

But building isn’t the focus of the proposal Gregoire outlined Tuesday. Instead, a $1.50-per-barrel charge on refineries in Tacoma and northwest Washington and some smaller fee increases would raise $3.6 billion over 10 years for operations and maintenance.

It would be a patch intended to fund the basics, not an expansion – much like the proposed half-cent sales-tax increase for the main budget that Gregoire also plugged in her State of the State speech.

The transportation package hinges on $2.75 billion in revenue from oil intended for cars, boats and planes or for asphalt. But the oil industry is sure to line up its formidable lobbying muscle. Its members argue the Legislature would be indirectly raising drivers’ costs at the pump because companies would pass much of the cost to their customers.

If past trends hold up, lawmakers will be hearing from workers at the refineries, such as BP near Blaine, which can refine up to 234,000 barrels a day, or U.S. Oil in Tacoma, with a capacity of 39,000 barrels a day. Both sides say some 5,000 jobs are at stake – with Gregoire touting construction jobs on road projects and oil companies pointing to their workers and contractors.

FEE OR TAX?

The most important question will likely be answered by Lt. Gov. Brad Owen: Is the charge a fee or a tax?

There’s a legal difference. Fees typically are supposed to benefit whoever is paying them, while taxes can have a more general purpose. State lawmakers can raise fees with majority votes, but under voter-imposed handcuffs, they need to find supermajorities for taxes or ask voters for their endorsement.

Democrats argue it’s a fee. Gregoire’s office said oil companies benefit from a transportation system that keeps drivers on the roads and ferries in the water, all using gas and oil. They also contribute to pollution, and some of the money would go to clean up stormwater.

“Our oil companies are getting all the profit and leaving us with the bill,” Gregoire said.

The oil industry said it’s a tax. There’s no tie between a barrel of oil and how much the state’s highway system is being used, they say, especially when about half of the oil they refine is headed out of state.

“We expect that there will be a coalition of folks that see this as in essence a hidden gas tax, and that we’ll continue to oppose it as such,” said Dave Fisher, a consultant for the Western States Petroleum Association.

Republicans agree and vow to ask for a legal ruling from Owen, who presides over the Senate.

Rep. Mike Armstrong, R-Wenatchee, and Sen. Joe Zarelli, R-Ridgefield, complained the oil charge could be diverted from roads, unlike gas taxes, which are restricted by the state constitution. While some Republicans have been open to asking voters for new transportation revenue such as gas taxes, Armstrong said Tuesday that this year, in a sour economy, isn’t the right time.

FOCUS ON MAIN BUDGET

House Transportation Committee Chairwoman Judy Clibborn, a Mercer Island Democrat, said she would still push for a November vote on transportation projects. But Democratic leaders say they are focused on finding new revenue for the main budget, such as the sales tax.

Gregoire proposed the sales-tax increase to raise nearly $500 million a year and offset some proposed cuts – particularly in education. In Tuesday’s speech, the governor urged lawmakers to not delay completing the work they began in December’s special session, when the Legislature made some adjustments to the state budget.

“You made a down payment in December,” Gregoire said. “I know these will be some of the most difficult decisions of your career. But I ask you to finish quickly because every day the problem gets bigger and the choices harder.”

Gregoire’s sales-tax proposal has a referendum clause, so if it’s passed by the Legislature, it would have to ultimately be approved by the voters in November.

Jordan Schrader: 360-786-1826

jordan.schrader@thenews tribune.com

The Associated Press contributed to this story.