Editor’s note: Later posts in this series revise the loophole’s size to $59 million, according to newly available 2014 data from the WA OFM. The $41 million noted below is based on earlier calculations.
It’s game on. Washington state representative Reuven Carlyle introduced a bill (HB 2465) yesterday that would close big oil’s tax loophole and redirect the money to public education. Properly referred to as the “extracted fuel use tax exemption,” the loophole—an outdated accident from decades ago—confers a $41 million benefit to oil refineries each budget cycle.
Sightline has written extensively about the loophole. When it was created in 1949, the tax break was intended to benefit sawmills. In the years that followed, however, oil refiners moved into the state and took advantage of the law’s broad language—so much so that they now claim fully 98 percent of the value of the loophole. It’s money that could be put to better use in classrooms.
Even as Rep. Carlyle was introducing the bill in the House, the state Senate held a “work session” on the tax loophole that centered on Sightline’s research and analysis of the issue. For a taste of what it’s like to take on Big Oil in the state legislature—or for those who simply enjoy looking at the back of my head—you can watch the 45 minute session here:
My slide deck is here. If you follow along with the slides, my presentation and the subsequent questions from the committee will make a lot more sense.
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Several members of the Republican-dominated Senate committee are overtly hostile to closing the loophole, none more so than committee chair Senator Doug Ericksen, who is probably the oil industry’s biggest champion in Olympia. So watching yesterday’s work session is a good way to hear the opposition’s best arguments. (Big thanks, by the way, to Cliff Traisman of Washington Environmental Council and Jessica Finn Coven of Climate Solutions for joining the work session and helping me reply.)
It is relevant, I think, that no other elected official in Olympia is lavished with more spending from lobbyists than Sen. Ericksen. As Austin Jenkins reported:
If there were a frequent flyer program for lawmakers who allow lobbyists to entertain them, State Senator Doug Ericksen would be racking up the miles. In the first four months of this year, lobbyists report the Republican chair of the Senate Energy Committee attended 62 meals, receptions and other lobbyist paid events…
…he often fills those early evening hours by dining out with lobbyists. This year that included 14 outings with Greg Hanon, lobbyist for, among others, the Western States Petroleum Association…
Needless to say, Sen. Ericksen and I have different views about the merits of maintaining an accidental tax break for some of the most profitable corporations on earth.