Washington State Lawmakers OK Gas Tax Hike, GO Bonds for Roads

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DALLAS — Washington State's gasoline tax will rise by 7 cents a gallon on Aug. 1 as the first step in an eventual 11.9 cent increase to fund a new 16-year, $16 billion transportation plan along with up to $5.3 billion of state general obligation bonds.

The compromise plan adopted late Wednesday by the state Senate raises the fuels tax, already one of the highest in the nation at 37.5 cents per gallon of gasoline and diesel, by an additional 4.9 cents per gallon on July 1, 2016.

The total increase of 11.9 cents per gallon will generate an additional $6.18 billion over the next 16 years.

The legislative package also allows Seattle's Central Puget Sound Regional Transit Authority to ask voters for up to $15 billion of new revenue to fund an expansion of its light-rail system.

Gov. Jay Inslee said he would "sign [the legislation] as soon as possible."

The legislative package that includes a bond bill and a revenue bill specifying which projects will be funded is a compromise between the Republican-controlled Senate and the Democratic-controlled House. The final package provides the House's full $15 billion authorization sought by Sound Transit rather than the $11.5 billion in the Senate's original plan. It doesn't include Inslee's proposed carbon tax, which was opposed by Senate Republicans.

"It's the price of how you get to an agreement," said Rep. Judy Clibborn, the Democratic chairwoman of the House Transportation Committee.

The mixture of tax and fee hikes in the revenue plan includes $6.18 billion from the higher fuels tax, $2 billion from an increase in passenger car weight fees, and $4.8 billion of bond proceeds.

The 16-year spending plan includes $8.8 billion for local and state highway improvements, $1.2 billion for state highway preservation, $600 million for ferry boat acquisition and operations, $375 million distributed to cities and counties, and $111 million for transit.

Debt service for the newly authorized GO bonds over the 16 years is estimated at $2.75 billion.

Washington's $18.9 billion of outstanding GO bonds, including $7.5 billion of debt supported by fuel tax and toll revenues, are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's.

Washington's state gasoline tax of 44.5 cents as of Aug. 1 plus the federal gasoline tax of 18.4 cents per gallon will put the state into a tie with New York for the third-highest fuel tax load in the nation at 62.9 cents per gallon, the American Petroleum Institute said. Only Pennsylvania (52 cents state tax) and California (48 cents) have higher fuel taxes.

The scheduled 2016 increase will push the Washington state fuel tax to 49.4 cents per gallon.

The state House approved the fuel tax hike late on June 30, 54-44, after rejecting, 52-46, a proposal to put the tax increase to a statewide vote.

State Rep. Norman Smith, a Republican on the House Capital Budget Committee, criticized the late-night vote on the tax increase.

"There are some good projects in the transportation package, but we should've allowed voters to decide if they wanted to have the second-highest gas tax in the nation in order to fund them," Smith said. "Passing one of the largest tax increases in state history in the dead of night while most folks were sleeping is simply wrong."

The Sound Transit board said soon after the authorizing bill was approved by lawmakers that it will put the revenue measures on the November 2016 ballot in Snohomish, King and Pierce counties.

Voters will be asked to approve a property tax rate of up to 25 cents per $1,000 of assessed valuation, a 0.5% sales tax, and an annual motor vehicle tax of up to 0.8% of vehicle value to fund a 15-year expansion project.

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