Why the Whatcom Business Alliance Opposes Initiative 1631

The Whatcom Business Alliance (WBA) takes positions on issues only after it has cut through the propaganda, vetted the facts and has determined that the issue could impact the success of Whatcom County businesses and/or our local economy.

The WBA board of directors has been thoroughly briefed on I-1631 and voted to oppose the initiative. You’ll find many of the facts relating to I-1631 below, along with footnotes, but we also encourage you to review the initiative itself. A link to the actual initiative is provided on our website.

In short, the WBA board agrees with the editorial published in the Seattle Times on September 21, 2018, with the headline, “Billions in new taxes and no guarantee of carbon reductions”. The editorial went on to say:
“Initiative 1631 is many things, but it is not the climate solution proponents make it out to be. In reality, I-1631 is a flawed, unfair energy tax that would force Washington families, small businesses and consumers to pay billions more in taxes for gasoline, home heating costs, electricity, natural gas and pretty much anything else that requires energy to be manufactured or shipped here in Washington. Every trip to work, every package ordered online and every tick of the thermostat means you pay more.”

In addition, as the Seattle Times points out, voters are expected to “approve a perpetually increasing tax on the promise of reducing greenhouse gas emissions, with no guarantee of meeting that goal, and no public accountability for how billions in taxes would be spent to achieve it.”

According to the Washington State Office of Financial Management, the initiative will cost consumers and businesses at least $2.3 billion in the next five years. I-1631 would also create a new unelected board to oversee spending of the billions in new revenues that would be collected under its new tax plan. I-1631 provides no real accountability or legislative oversight for the multiple “panels” and the unelected board of political appointees that would be in charge of spending funds and making grants to special projects that would be funded under the measure.

And while the intent of the initiative is to tax the largest emitters of CO2e, 8 of the top 12 emitters in the state are exempt. This puts the target primarily on oil refineries, two of which are high wage local employers with a significant direct and indirect economic impact in Whatcom County. 1

For these reasons and many more, the WBA urges you to VOTE NO on I-1631. The initiative will be on your ballot on November 6, 2018.

 

1 Source: Washington Mandatory Greenhouse Gas Reporting Program, Reported Emissions for 2016, Washington State Department of Ecology.

 

Initiative 1631 Facts
The facts and footnotes below come from the No on 1631 campaign. The WBA encourages you to read the actual initiative in its entirety. https://www.sos.wa.gov/_assets/elections/initiatives/finaltext_1482.pdf

I-1631 Imposes a New $2.3 Billion Energy Tax on Washington Consumers – Increasing Each Year with No Set Cap

Washington Initiative 1631 on the November 2018 statewide ballot would impose a new escalating fee of 15 dollars per metric ton on certain carbon emissions within the state. The measure would also create a new unelected public board to disburse revenues collected under the measure for a poorly defined variety of projects, providing little likelihood or assurances that it would significantly reduce greenhouse gases.

This so-called “pollution fee” would apply to certain “large emitters” based on the carbon content of fossil fuels and electricity.1 Beginning January 1, 2020, the tax would be set at $15 per metric ton and would increase each year by an additional $2 per metric ton, plus inflation. The fee would more than quadruple to $66.48 by 2035.2 These annual increases would continue indefinitely with no set cap.3

I-1631 Would Cost Consumers and Small Businesses Billions

The Washington State Office of Financial Management estimates I-1631 would cost consumers and businesses at least $2.3 billion in the first five fiscal years alone.4 I-1631 would essentially be a new tax on energy costs that would be paid by Washington consumers, families, small businesses and farmers in the form of higher prices for fuel, electricity, heating and natural gas as well as higher transportation costs.

I-1631 is Filled With Exemptions That Make No Sense

Although it is being promoted as a fee on “large polluters,” I-1631 would actually exempt many of the state’s largest carbon emitters, including large manufacturers like pulp and paper mills, aircraft manufacturers, steel and aluminum companies, and energy from coal fired power plants.5

In fact, 6 out of 10 of the state’s largest carbon emitters would be exempt under I-1631, including the largest polluter in the state, the Centralia coal plant, as well as hundreds of other large manufacturers .6 Additional exemptions may be added at any time. It is not the WBA position that this initiative would be improved if all emitters were taxed, however, it certainly would be more consistent and fair. It appears it is targeting oil refineries, two of the five of which are located in Whatcom County with two more located in Skagit County.

As a result of I-1631’s broad exclusions and exemptions, a significant portion of Washington’s total carbon emissions would be exempt from I-1631’s new tax, making its effectiveness questionable and leaving the cost burden of the new tax to fall unfairly on Washington families, small businesses and consumers in the form of higher energy and transportation prices. Essentially, many of our state’s largest corporations would be protected – but Washington families and small businesses would pay billions.

I-1631 Would Increase Gasoline Prices for Consumers at the Pump

Independent estimates show that I-1631 would increase gasoline prices by up to 14 cents per gallon7 in the first year, with automatic annual increases thereafter, and no set cap on how high these increases could go.

Washington already has the third highest gasoline prices in nation and 1631 would automatically increase our gas prices every year indefinitely.8

A Regressive Tax That Would Unfairly Hurt Washington Families

I-1631 would also increase the costs Washington families would pay for natural gas, heating fuel and electricity. Combined with increased gasoline prices, initial estimates show that I-1631 would cost the average Washington household as much as $260 more per year to start, with cost increases rising every year, adding up to thousands of dollars in increased energy costs in just the first few years. Cost increases like these are regressive in nature and would disproportionately impact lower and middle-income families, seniors and others on fixed incomes – especially hurting those who can least afford to pay more.

Unfair Impacts on Local Small Businesses

While many large manufacturers, transportation systems and some power plant emitters would be exempt from I-1631’s new taxes, small businesses across the state would have to pay more for higher electricity, fuel and natural gas with price increases that would continue to rise indefinitely. I-1631’s exemptions would place an unfair burden on small and medium-sized businesses, farmers and small manufacturers that don’t qualify for special exclusions. Not only would they pay higher energy costs, but non-exempt businesses would also pay

more for transportation costs, leading to higher operating costs and higher consumer prices, making it harder for Washington small businesses to compete with out-of-state companies.

Billions Would be Spent by a New Bureaucracy with
No Real Accountability

I-1631 would create a new unelected board to oversee spending of the billions in new revenues that would be collected under its new tax plan. I-1631 provides no real accountability or legislative oversight for the multiple “panels” and unelected board of political appointees that would be in charge of spending funds and making grants to special projects that would be funded under the measure.9

I-1631’s new bureaucracy would involve expenditures by 14 separate state agencies, costing an estimated $27 million in the first five years.10 The new unelected board and three new “investment panels” would have broad authority to disperse billions with little legislative oversight, and no requirement to ensure that I-1631’s funds would be used for projects that would directly reduce greenhouse gas (GHG) emissions. The board and multiple appointed panels simply would have authority to approve any expenditure they deem critical to achieving the multiple and vaguely stated purposes of I-1631.

Uncertain Spending Guidelines, No Specific Plan, Little Likelihood of Significantly Reducing Greenhouse Gases

I-1631’s deeply flawed approach to climate policy exempts our state’s largest polluters, imposes a permanently escalating tax on Washington families and consumers, and disproportionately burdens those who can least afford it. I-1631 provides no clear guidelines or accountability for how its unelected board of political appointees would spend billions in taxpayer dollars, and no assurances or likelihood of significantly reducing greenhouse gases.

The deadline to register to vote online is Monday, October 8

CLICK HERE TO REGISTER TO VOTE

Whether you agree with the WBA position or not, we strongly urge you to vote in all elections. If you are not currently registered, you can do it very simply online. The deadline for online voter registration is Monday, Oct. 8th or you may register in-person until 4:30 p.m., Monday, October 29, at the Whatcom County Auditor’s Office, Whatcom County Courthouse, 311 Grand Ave., Suite 103, Bellingham. Click the link below to register to vote online. Election Day is Nov. 6th.

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1 Initiative Measure No. 1631, Section 8 (a) (b), Page 21.
2 Inflation is defined in I-1631 as the consumer price index for all wage earners and clerical workers for the United States (CPI-U). The $66.48 tax in 2035 was calculated based on a forecast of CPI-U from the U.S. Energy Information Administration released as part of its Annual Energy Outlook 2018.
3 Fiscal Impact Summary of I-1631, Washington Office of Fiscal Management, Revised August 24, 2018, Pages 1-2.
4 Fiscal Impact Summary of I-1631, Washington Office of Fiscal Management, Revised August 24, 2018, Page 1.
5 Initiative Measure No. 1631, Section 9 (1) (e), Page 23. Washington Mandatory Greenhouse Gas Reporting Program, Reported Emissions for 2016, Washington State Department of Ecology.
6 Initiative Measure No. 1631, Section 9 (1) (e), Page 23. Washington Mandatory Greenhouse Gas Reporting Program, Reported Emissions for 2016, Washington State Department of Ecology.
7 Based on an initial tax of $15/ton CO2 and the carbon content of motor fuels from U.S. Energy Information Administration which includes 18.9 pounds of CO2/gallon for gasoline and 22.4 pounds of CO2/gallon for diesel. Also as reported by The Seattle Times article, “Fight heats up over Washington state carbon “fee” likely to make fall ballot,” July 2, 2018.
8 AAA, State Gasoline Price Averages, June 30, 2018.
9 Initiative Measure No. 1631, Sections 10 and 11, Pages 24-31.
10 Fiscal Impact Summary of I-1631, Washington Office of Fiscal Management, Revised August 24, 2018.