coal lumpEfforts to close a tax loophole for Washington’s largest greenhouse gas polluter got a second life in the Legislature today. Bills to eliminate a sales tax exemption on coal burned at the Centralia power plant didn’t go anywhere this session. But the Senate budget proposed today would effectively end the tax subsidy for the state’s only coal-fired power plant, raising about $4 million in new revenue each year. (To find out why Washington stopped collecting sales tax on millions of tons of a polluting fuel that’s mined a thousand miles away, see our earlier post on the topic.)

And Publicola reports this morning that this relatively small-potatoes tax subsidy also has the potential to complicate the overall budget picture, since Gov. Christine Gregoire threatened to veto legislation that would end the tax break.

Why would a governor who has come out swinging to close corporate tax loopholes care so much to preserve one? Gregoire and her staff have been negotiating with Centralia’s owners – the Canadian TransAlta Corp. – to wean the plant off coal and replace that power with cleaner energy sources over the next 15 years. It seems clear that Gregoire doesn’t want to aggravate TransAlta by taking aim at the state’s sales tax exemption on coal. It also seems clear Senate leaders want every dollar they can find to plug the state’s massive budget hole. It’ll be interesting to see whose argument holds up longer.

Also of note: In Olympia this Saturday (Feb. 27), the Coal Free Washington campaign is delivering public comments on the governor’s negotiations with TransAlta (which have been conducted largely behind closed doors so far) and holding a rally and panel on moving the state beyond coal. It starts at noon at the Capitol building.

Lump of coal photo courtesy of Flickr user ittybittiesforyou under a Creative Commons license