State's gas tax increases by a nickel; new budget takes effect

OLYMPIA — Washington's gas tax increases a nickel a gallon today — the first increase in more than a decade — pumping money into a 10-year, $4.2 billion plan to improve the state's congested highway system.

Also taking effect today: other recently passed legislation, as well as the austere new state operating budget and an ambitious construction program.

Gov. Gary Locke and the Legislature patched together a new $23 billion, two-year state budget without raising general taxes. But they concluded that the separate transportation budget was at crisis point and needed new revenue, despite the lingering recession and voters' emphatic rejection last fall of a 9-cent-a-gallon gas tax increase.

In the end, they promoted a multibillion-dollar highway plan as a way to help the economy — in the near term by generating thousands of construction jobs and in the longer term by fixing an impediment to growth.

The solution, eventually embraced by lawmakers from both parties, Boeing and other business giants, labor and community leaders, was to boost transportation taxes.

The taxes kick in today, as does the first wave of the spending. Three projects in Clark County are at the head of the line.

The taxes:

GAS TAX. Motorists will pay an extra nickel per gallon, up from 23 cents. At 28 cents per gallon, Washington's gas tax will be the eighth highest in the nation. Increases are pending in some other states.

Oregon is at 27 cents and Idaho at 25 cents.

Washington's last increase, also a nickel, was approved by the 1990 Legislature and implemented over two years.

The state estimates that the newest tax will cost an average driver an added $27 a year.

Motorists also pay a federal tax of 18.4 cents a gallon.

SALES TAX. The state also will charge a surtax of 0.3 percent on sales of new and used vehicles. For a $20,000 car, that will be $60.

On Aug. 1, a third tax hike will take effect: a 15 percent increase in trucking fees for commercial rigs.

In signing the revenue package, Locke said the new transportation projects will ease traffic congestion, boost the economy and make the state more attractive to Boeing as it considers where to assemble its proposed new 7E7 Dreamliner jet.

The 10-year package includes $3.4 billion for highways, $605 million for public transportation and $100 million for new four new auto ferries and work on existing vessels and terminals.

The gas tax can be used only for roads and ferries. The extra nickel is projected to bring in more than $1.7 billion over 10 years.

The sales tax increase, which will pay for public transportation projects, is expected to generate $350 million.

The trucking fees, which will pay for freight mobility projects, will bring in $118 million.

The package also includes nearly $2 billion in bond proceeds and $40 million from allowing motorists to pay $20 to keep their old license plates, instead of turning them in for new ones every seven years.

Locke spokesman Roger Nyhus said yesterday the governor's office hasn't heard a peep of protest.

"It's a user fee and it's dedicated funding — people accept it," he said in an interview. "They know that roads need to be improved and they're willing to pay a marginal amount to improve them."

He said Locke will happily pay the extra nickel when he tanks up his private car. He quoted the governor as saying it's easy to find a price variance of more than a nickel by just driving down the road to the next gas station.

Today also marked the opening of the new fiscal year — and the new state operating and construction budgets. The $2.7 billion construction budget, as usual, relies heavily on borrowed money to pay for an array of construction and repairs at school, colleges, parks, state buildings and other projects.

Locke and lawmakers say the construction plan will generate at least 12,000 jobs.

"It's unlikely we'll be able to borrow money at a cheaper rate in our lifetime," said Sen. Joe Zarelli, R-Ridgefield. "By building these projects now, we're not only strengthening the infrastructure of our state, but also are providing thousands of jobs during these tough economic times."

The operating budget, signed by the governor last week, pays for state aid to education, higher education, health care, welfare, parks, prisons, the courts, the Legislature and other agencies.

It presumes layoff of about 1,150 employees, some reduction in health care coverage, slower growth in class-size-reduction grants to local school districts and a pay freeze for state workers and most teachers.

Although budget writers closed a $2.6 billion spending gap without general tax hikes, state colleges are allowed to boost tuition by up to 7 percent a year, starting this fall. Liquor prices are going up slightly and a daily $6.50 "bed tax" will be imposed in many nursing homes.