April 6, 2017
The Honorable House Speaker Frank Chopp
The Honorable House Majority Leader Pat Sullivan
The Honorable Senate Majority Leader Mark Schoesler
The Honorable Lieutenant Governor Cyrus Habib
The Honorable Senate Minority Leader Sharon Nelson
The Honorable House Minority Leader Dan Kristiansen
Washington State Legislature
PO Box 40600
Olympia, WA 98504
Re: Please Oppose House Bill 2182, a Tax Increase on Farmers and Drivers
Dear Legislative Leadership,
Please consider opposing House Bill 2182. The proposal would increase the tax rate on the
wholesale value of hazardous substances—primarily petroleum, agricultural inputs and
chemicals used in manufacturing.
There are currently over 8,000 different hazardous substances identified as being subject to the
tax, which is levied primarily on price-takers: farmers with tight margins, drivers and employers
that rely on fuel to operate.
House Bill 2182 would attempt to “smooth” revenues by increasing the Hazardous Substance
Tax (HST) when gasoline and agricultural input prices are low, and would reduce the tax when
prices are high. However, when prices are expected to fall again—in roughly six years—the bill
is scheduled to sunset. As such, HB 2182 is only a tax increase. The Department of Revenue
expects this tax increase to raise $92 million in the next two biennia alone.
House Bill 2182 is only a smoothing mechanism for government, not taxpayers. Month-to-month
tax changes would create incredible regulatory uncertainty for employers and farmers.
Additionally, the seasonality of agricultural inputs could shift a disproportionate burden to
agriculture, and could even interfere with lending and planning.
HB 2182 would not address the issue of overspending. When forecasted, Model Toxics Control
Act (MTCA) spending outpaces revenue collection under both current law and HB 2182 by as
much as 21 percent. Spending has increased dramatically because, over time, the Legislature
introduced new uses of MTCA funds. Stormwater financial assistance, for example, was not an
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original use of the account when MTCA’s authorizing legislation was contemplated by voters in
1988, but has consumed over $200 million MTCA dollars in recent years.
Stormwater pollution prevention is the ongoing, operating-style revenue dispersal that demands
stability. Capital projects such as cleanups, on the other hand, can be nimble to fluctuations in
revenue. Adopting an increase to the HST will not fix this problem. According to the Office of
Financial Management’s 2016 report, “combined with toxics cleanup and prevention activities,
the need for stormwater infrastructure far exceeds the capacity of the MTCA accounts.”
The HST is not the only revenue source to manage water quality issues. In fact, the Washington
state Department of Ecology is authorized to recover its operating costs via permit fees, and the
agency is scheduled to adopt a fee increase by rulemaking on water quality permits on July 28,
2017. Many HST taxpayers will also be subject to this new fee increase, and local governments
were cited as an underpaying category.
Increasing permit fees, then backfilling budgets with MTCA financial assistance, neither makes
fiscal sense nor serves the environmental-stewardship goals envisioned by voters when they
passed Initiative 97.
Businesses care deeply for our state’s environmental integrity—it is an essential component to
our economy’s success. MTCA dollars should be invested in clean water and soil, but $54 million
in HST funds have backfilled the Department of Ecology’s General Fund spending, and nearly
$270 million was swept to the state General Fund for other purposes. Energy taxes are regressive:
they hit farmers, the low-income and rural economies hardest by increasing the cost of food and
gasoline.
Please protect businesses and the customers we serve by opposing House Bill 2182.
Sincerely,
Gary Chandler
Vice President, Government Affairs
Association of Washington Business
Greg Hanon
Western States Petroleum Association
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Dan Coyne
Executive Director
Washington State Council of Farmer Cooperatives
Tom Davis
Director, Government Relations
Washington State Farm Bureau
Heather Hansen
Executive Director
Washington Friends of Farms and Forests
Jerry VanderWood
Chief Lobbyist
Associated General Contractors
Michelle Hennings
Executive Director
Washington Wheat Growers
Ian Tolleson
Director, Government Affairs
Northwest Food Processors Association
Linda Hendricksen
SVP-Marketing and Public Affairs
Northwest Farm Credit Services
Matt Solak
Executive Director
Pacific Propane Gas Association
Roman Daniels-Brown
Western Wood Preservers Institute
Cc:
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Nicole Macri
Joan McBride
Jeff Morris
Timm Ormsby
Lillian Ortiz-Self
Tina Orwall
Mike Pellicciotti
Strom Peterson
Eric Pettigrew
Gerry Pollet
Kristine Reeves
Marcus Riccelli
June Robinson
Cindy Ryu
Sharon Tomiko Santos
David Sawyer
Mike Sells
Tana Senn
Vandana Slatter
Larry Springer
Derek Stanford
Monica Jurado Stonier
Gael Tarleton
Steve Tharinger
Sharon Wylie
Andrew Barkis
Vincent Buys
Michelle Caldier
Bruce Chandler
Cary Condotta
Richard DeBolt
Tom Dent
Mary Dye
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Dan Griffey
Larry Haler
Mark Hargrove
Mark Harmsworth
Paul Harris
Dave Hayes
Jeff Holy
Morgan Irwin
Bill Jenkin
Norm Johnson
Brad Klippert
John Koster
Vicki Kraft
Joel Kretz
Drew MacEwen
Matt Manweller
Jacquelin Maycumber
Gina McCabe
Bob McCaslin
Joyce McDonald
Dick Muri
Terry Nealey
Ed Orcutt
Liz Pike
Jay Rodne
Joe Schmick
Matt Shea
Norma Smith
Melanie Stambaugh
Mike Steele
Drew Stokesbary
David Taylor
Luanne Van Werven
Brandon Vick
Mike Volz
Jim Walsh
J.T. Wilcox
Jesse Young
Andy Billig
Reuven Carlyle
Maralyn Chase
Sen. Annette Cleveland
Sen. Steve Conway
Sen. Jeannie Darneille
Sen. David Frockt
Sen. Bob Hasegawa
Sen. Steve Hobbs
Sen. Sam Hunt
Sen. Karen Keiser
Sen. Patty Kuderer
Sen. Marko Liias
Sen. John McCoy
Sen. Mark Mullet
Sen. Guy Palumbo
Sen. Jamie Pedersen
Sen. Kevin Ranker
Sen. Christine Rolfes
Rebecca Saldaña
Sen. Tim Sheldon
Sen. Dean Takko
Sen. Kevin Van De Wege
Sen. Lisa Wellman
Sen. Jan Angel
Sen. Barbara Bailey
Sen. Michael Baumgartner
Sen. Randi Becker
Sen. John Braun
Sen. Sharon Brown
Sen. Doug Ericksen
Sen. Joe Fain
Sen. Phil Fortunato
Sen. Brad Hawkins
Sen. Jim Honeyford
Sen. Curtis King
Sen. Mark Miloscia
Sen. Steve O'Ban
Sen. Mike Padden
Sen. Kirk Pearson
Sen. Ann Rivers
Sen. Dino Rossi
Sen. Shelly Short
Sen. Maureen Walsh
Sen. Judy Warnick
Sen. Lynda Wilson
Sen. Hans Zeiger
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