Hazardous Substance Tax Proposal Would Ease Recession’s Impact on State Budget

Legislators are currently considering a range of revenue enhancements needed to preserve education, environmental protection, and vital supports for working families.  As part of her recent revenue proposal, Governor Gregoire called for increasing the Hazardous Substance Tax – a tax on levied on petroleum products, pesticides and other toxic substances.  This option has been endorsed by members of the State House and Senate as well. In the long run, increasing the Hazardous Substance Tax would help fund efforts to clean up rivers, streams, and other water ways that are contaminated by toxics.  And in the midst of the current recession, doing so would help preserve core public services that are essential to our economic recovery.

What is the Hazardous Substance Tax?

The Hazardous Substance Tax was approved by voters in 1988 via Initiative 97.  Levied on over 8,000 toxic substances, the tax generates about $120 million per year in revenue. (About 85 percent of this revenue comes from petroleum products.)  All of the revenue from the Hazardous Substance Tax is currently dedicated to cleaning up toxic sites and other environment protection efforts.

It’s important to note that many of the petroleum products, pesticides, and other toxics substances that are subject to the tax are responsible for extensive damage to Washington’s environment.  A recent analysis from the Sightline Institute describes how:  “What falls as rain reaches Puget Sound loaded with deadly chemicals.  Petroleum is the Sound’s largest pollutant from stormwater runoff.  But the runoff is also chock-full of other chemicals, including copper from the brakes on cars and pesticides sprinkled on roofs and lawns that threaten salmon at very low concentrations.”

Current legislative proposals

Two measures under consideration in the State legislature – HB 3181 and SB 6851 – would increase the tax to 2.0 from 0.7 percent of the wholesale value.  This action would generate about $225 million each year in additional resources.  Initially, most of this new revenue ($156 million per year) would be dedicated to the state general fund where it would be used to maintain essential state services like education and health care while the economy recovers. Beginning in fiscal year 2014, revenues from the tax would gradually be redirected to fund efforts to clean up Puget Sound, reduce toxic storm water pollution, prevent oil spills, and other important environmental protection initiatives.

For more information on these proposals see the blog series “Fair Funding for Stormwater Cleanup” from the Sightline Institute.