Increasing taxes for any reason is politically unpopular. There is never a right time to do so, and the only good tax is the one the other guy pays.
In times past, politicians would tax corporations and let them take the heat when they passed those costs onto their customers. In fact, the “Cagey Cajun” Louisiana Governor Huey P. Long taxed local corporations in 1928 to extend that state’s highway system from 331 to over 3,000 miles.
That approach doesn’t work anymore. In today’s highly cost-sensitive global economy, businesses don’t have the margins they once did to either swallow the new taxes or cut product costs to match their competitors in other parts of the world.
Gov. Gregoire and the Washington State Legislature understand that. The multi-billion dollar funding increase for highways, bridges and roads they enacted this year is broad-based and painful to all.
When the bill was signed last spring, no one knew that Hurricane Katrina would send gas prices to $3 a gallon. Thankfully, Katrina’s sister, Rita, didn’t wipe out the Texas refineries, or we’d be paying over $4.
Many Washingtonians were not only upset by the tax and fee increases, but by the Legislature’s use of an emergency clause that prevented voters from mounting a referendum. However, opponents launched an initiative campaign which gathered 400,000 signatures in just over a month.
Now Initiative 912 is on the ballot.
I-912 is bitterly divisive. It pits employer against employer and neighbor against neighbor. When we polled our members in July, precisely half our members strongly supported keeping the gas tax increases and wanted us to oppose the initiative, and the other half felt just as strongly the opposite way and wanted us to support the repeal by endorsing I-912.
In the end, our Board decided to oppose I-912 for five reasons:
1. Roads, highways and bridges will never be less expensive. If we delay, construction costs will continue to grow while gas tax revenues decrease as cars and trucks become more fuel efficient.
2. Currently, gas taxes are set to increase nine cents over four years. But the cost to truckers and others stuck in traffic is more than that. In fact, Greg Tisdel, owner of Tiz Doors, Everett, figures traffic jams cost him an additional 23 cents a gallon last year alone. And when snow storms or rockslides close I-90, commerce across the state literally grinds to a halt.
3. Hurricane Katrina is a valuable lesson. Ignoring essential public works projects is unwise and, in the long run, more costly. Just as there are failed water containment levies in New Orleans, there are unsafe roads, bridges and highways in our state. A collapse of the Alaska Way Viaduct in Seattle would be catastrophic, and as we learned in the 1994 Northridge earthquake in California, even massive freeway bridges fall if they are not retrofitted and strengthened.
4. The funding package is not just about Seattle. It is statewide with over 250 projects included.
5. Today, the state is better at road and bridge construction. In Vancouver, people know that I-5 is being widened because of gas tax money the Legislature earmarked for that project a couple years ago and replacement sections of the Hood Canal Bridge were in place ahead of schedule.
We’d all like to pay less for gas and diesel.
High fuel prices hit each of us in the wallet and make it more difficult for businesses in the state to be competitive. But at the same time, we need money from the gas tax to maintain our roads and bridges and keep them safe.
The longer we wait to make those repairs and improvements, the more extensive – and expensive – they will be.
Don Brunell is the president of the Association of Washington Businesses.