Initiative 912 - Repeal the 9.5 cent Gas Tax failed in 2005

Initiative 912 Fuels Debate Over New Gas Tax
by John Barnes, Policy Analyst
05-08 8/6/05

This election Washington citizens will vote on Initiative 912, a proposal to repeal the new 9.5 cent gas tax recently passed by the legislature. This Policy Note briefly describes the Initiative and summarizes the main arguments for and against it.

In April the state legislature passed and Governor Gregoire signed a bill to increase the state gas tax by 9.5 cents in four stages: raising it by three cents in July 2005 and July 2006, by two cents in July 2007, and 1.5 cents in July 2008. Initiative 912 would repeal about $5.5 billion in new gas tax revenues, leaving in place $3 billion in new revenues from higher vehicle weight taxes, higher drivers’ license fees, and other fees.

More than half of the legislature's 16-year $8.6 billion statewide transportation plan is earmarked for King County. Pierce County comes in second with an allocation of $769 million, with other counties around the state receiving various lesser amounts. Chief among the projects that would receive funding are the Alaskan Way Viaduct ($2 billion), Interstate 405 ($992 million), and the Highway 520 bridge ($500 million). These allocations only partially fund the targeted projects. Localities are expected to raise additional revenue for finishing the projects.

The new tax is the largest single gas tax increase in state history. Washington began taxing gasoline in 1924 at the rate of two cents a gallon. Today that rate is 31 cents per gallon (including the July 2005 phase-in of the recently-passed increase), giving Washington the tenth highest state gas tax in the nation. The federal government taxes gas at 18.4 cents a gallon, making the combined gas tax in Washington 49.4 cents a gallon. Under the Legislature’s plan, by 2008 Washingtonians will be paying a combined state and federal gas tax of 56 cents a gallon. The chart below shows the history of the gas tax in Washington (figure 1.1).

Not long after the new gas tax became law, opponents started a website, www.NoNewGas-Tax.com, and began the push for repeal with Initiative 912. They had no difficulty finding support for their cause. Organizers gathered more than 420,000 signatures in just over 30 days, without the use of paid signature gatherers. The groundswell of support arose in response to what many see as a misguided transportation plan with the wrong priorities.

Initiative 912 supporters say "traffic congestion won't get any better" because of the tax hike and the projects it will fund. "We need to send them [lawmakers] back to the drawing board if we are ever going to solve this problem," says one Initiative backer. Supporters' central argument is that lawmakers should not have enacted an $8.6 billion tax increase that will not relieve traffic congestion. The projects financed through the plan center around infrastructure maintenance, not capacity expansion.

Supporters of Initiative 912 are also angry that the legislature attached an emergency clause to the bill, which prevented the voters from overturning it via referendum. The number of signatures required to put a referendum on the ballot is half the number required for an initiative. This move, many argue, reflects lawmakers' distrust of their own constituency.

Initiative 912 opponents have started their own website, www.KeepWashingtonRolling.com. Several of Washington's largest companies, labor unions and trade associations have thrown their weight behind the effort to defeat Initiative 912. The new tax, they say, is a small price to pay for the increased safety that will come from the more than 200 road projects the new tax would fund, projects such as highway and bridge upgrades for earthquake safety. Congestion relief would have to come above and beyond all of that, and at additional cost. Initiative 912's opponents also argue that these projects will create thousands of new jobs over the next several years, although this assumption does not account for jobs lost due to the higher tax.

While Initiative 912 supporters say the Department of Transportation needs to do a better job of managing the funds it already has, Keep Washington Rolling points out that the gas tax bill includes measures to do just that. To obtain key Republican support for the tax increase bill, lawmakers appropriated $4 million to the state auditor to conduct independent performance audits of the Department of Transportation. Even if Initiative 912 passes, the performance audit provisions would remain in place.

Keep Washington Rolling says the average Washington driver will pay only 41 cents more per week under the new tax increase ("average" in this case means driving 12,070 miles per year in a car that gets 17 miles per gallon). Opponents of the tax increase counter the math by pointing out that when such incremental arguments are used every time the government wants to raise taxes, a little bit here and a little bit there adds up to a significantly larger tax burden in the long run.

Revenue from the state gas tax has increased over the years, as shown in the chart below (figure 1.2).

Gas tax collections increased five percent above inflation between 1995 and 2004. Two factors have contributed to this trend. The state tax rate has gone from two cents per gallon in 1924 to 31 cents today—an increase of more than 1,500%. Additionally, state residents now consume three times as much gasoline as they did in 1960, and the number of vehicle-miles-traveled has doubled since 1980. While a gallon is the same size today as it was in 1924, the fiscal reality is that there are many more vehicles on the road driving more miles, thereby generating more revenue for state coffers.

If Initiative 912 passes in November, it will be the second time in three years citizens voted down a large gas tax increase. In 2002 voters overwhelmingly defeated Referendum 51, which would have raised the tax by nine cents per gallon. Responding to the anti-tax sentiment that killed Referendum 51, the legislature in 2003 approved a lower increase of five cents a gallon.

Off-year elections tend to produce lower voter turnout due to the paucity of measures and candidates on the ballot, but 2005 could very well buck that trend. If the grassroots support behind Initiative 912 and the scale of organizations opposing the measure are any indication, the Initiative is sure to draw large numbers of voters to the polls in November.

For more information, see the Transportation chapter of Agenda 2005: The Guide to Public Policy Issues in Washington State at www.Agenda2005.org.