What is the CCA ‘gas tax’ & what happens if it is repealed?

In May 2021, Washington Gov. Jay Inslee signed Senate Bill 5126, or the Climate Commitment Act (CCA), into law.

The legislation created Washington's cap-and-invest program and was intended to reduce greenhouse gas emissions in Washington to 45% below 1990 levels by 2030, 70% by 2040, and 95% by 2050. By law, the funds collected under CCA were to be used to address pollution, create jobs and assist communities in addressing climate change. Much of the funding has been used to buy electric school buses, provide free public transit, install electric vehicle chargers and monitor air quality.

The program launched on Jan. 1, 2023, and the first emissions allowance auction took place on Feb. 28, 2023. Almost immediately after CCA went into effect, Washington saw gas prices soar more than 50 cents per gallon. To make matters more difficult at the pump for Washingtonians, CCA’s launch coincided with news that Washington had the highest cost of gas in the country.

What is Initiative 2117 & why is it on the ballot this November?

Initiative 2117 would repeal the CCA, prohibiting state agencies from implementing programs that involve trading carbon tax credits.

In November 2023, 466,072 Washingtonians signed petitions to put CCA repeal on the ballot. The initiative is sponsored by Let's Go Washington, a political committee funded by hedge fund manager Brian Heywood. Supporters of the initiative say the Climate Commitment Act and its cap-and-trade program don't actually impact climate change, but CCA is forcing gasoline, food, and energy prices to increase and putting the squeeze on Washington household budgets.

Even though nearly half-a-million Washington residents signed the petitions, the state Legislature declined to bring the measure to a vote during the 2023 legislative session.

Does CCA actually help improve the environment & fight climate change?

Proponents of CCA repeal (Yes on Initiative 2117) warn that the program doesn't actually require any proof that it's reducing our carbon footprint. Washington's House Republicans issued the following statement regarding this concern:

FACT: CCA funds are awarded without requiring measurement of emissions reduction or environmental improvement. The vast majority of CCA-funded programs and projects do not require data collection or reporting on emission reductions or environmental benefit.

Grants for public transit agencies do not require any reporting about whether transit ridership increases over levels that existed prior to enactment of the CCA.

Grants for rooftop solar at schools, community centers, and public buildings are being awarded without any reporting on whether the solar panels are displacing electricity generated from emissions-free energy sources like hydroelectric, wind, and solar or from fossil-fuel sources.

Grants for electric vehicle charging stations will be awarded without requiring any reporting on the number of vehicles that will be charged by those stations or the fuel mix of the electricity that serves those charging units.

CCA's critics also argue that the funds are not being used to support vulnerable communities, as had been promised.

"The CCA included a promise that 40 percent of funding would be directed to 'overburdened communities,' but advocacy groups representing these communities say this is not the case — the CCA is falling well short of its commitments to vulnerable populations," House Republicans argue. "To make matters worse, overburdened communities have not been mapped or identified definitively across state agencies, further complicating efforts to validate any claims that these communities are being served."

The lawmakers also say CCA has grown the size of state government considerably. As of December 2023, CCA had been funding 256 full-time staffers to administer the program and draft regulations. And that count doesn't include additional staff funded from the 2024 supplemental operating, capital, and transportation budgets.

Higher gas prices & the resulting economic death spiral

While Washington currently has the third most expensive gas in the country, the state’s residents are getting hit with a double-whammy, paying some of the nation’s highest food prices. And it’s a recipe for food insecurity.

Washington state ranks Number 4 in having the most expensive groceries in America.

Washingtonians’ average weekly spending on groceries totals $287.67. Contributing to this figure is Seattle, where weekly grocery expenditures average $289.23, surpassing prices in cities such as New York and Boston. The average U.S. household spends $270.21 on groceries every week.

As Enumclaw City Councilman Chris Gruner explained: “The Climate Commitment Act affects much more than joust our natural gas utility; it increases gas prices, food prices, and even the cost of electricity. The law makes compliance more expensive each year, so the impact on people’s budget will continue to get worse by design.”

Likewise, Washington Rep. April Connors, R-Kennewick, told the Tri-City Herald: “High gas prices are draining the budgets of those who can least afford it. Many of my constituents have had to cut back on groceries, cancel family trips or make other painful sacrifices.”

Hallie Balch, spokesperson for Let’s Go Washington, said: "It's important that we remember who is bearing the brunt of hidden gas taxes in the first place. It is going to be those lower-income homes, people [who] are working multiple jobs, and they’re driving to and fro."

The organization Feeding America estimates that 11.5% of people in Washington, or 891,960 people, are food insecure, meaning they don’t know where their next meal is coming from. The average meal cost in the state is $4.28.

When CCA supporters launched a doomsday campaign alleging repeal of the program will cut $848.6 million in environmental programs, Seattle resident Phil Vandervort took to social media to offer an alternative headline: “Repeal of CCA would lower grocery prices and transportation costs for both commuters and small business owners by $846 million.”

While the immediate impact of higher gas prices is felt at the pump, the broader implications extend to various sectors of the economy, affecting prices for goods and services and contributing to inflationary pressures.

Transportation Costs: Higher gas prices directly impact transportation costs for businesses that rely on vehicles, such as delivery services and logistics companies. These increased costs may be passed on to consumers through higher prices for goods and services.
Consumer Goods: Many consumer goods require transportation, whether by trucks, ships, or planes. Increased transportation costs due to higher fuel prices can lead to higher prices for groceries, clothing, electronics and other products.
Travel Costs: Higher fuel prices often result in increased costs for airline tickets, train fares, and other forms of transportation, affecting travel expenses for individuals and families.
Energy Costs: Gasoline and diesel are forms of energy, so an increase in their prices can lead to higher costs for heating homes and businesses, especially where people rely on heating oil.
Food Prices: Agriculture relies heavily on fuel for machinery, transportation of goods, and sometimes for irrigation systems. Increased fuel costs contribute to higher prices for food products, particularly those that are heavily reliant on transportation.
Inflation: Overall, higher fuel prices can contribute to inflationary pressures in the economy. When transportation and production costs rise, businesses may raise prices across the board to maintain profit margins, leading to a broader increase in the cost of living.
Business Costs & Unemployment: Businesses that rely on fuel-intensive operations, such as construction and manufacturing, see their operating costs rise, leading to higher prices for products or services. Increasing costs can also lead to workforce reductions and higher unemployment levels. In just the last year, Washington state’s unemployment rate has risen 1.1 percent, from 3.8% in June 2023 to 4.9% in June 2024, according to data from the S. Bureau of Labor Statistics. (The U.S. unemployment increased by only 0.5% in the same timeframe.)

The average household in Washington is paying $1,075 more per month to buy the same goods as they purchased in January 2021, according to the U.S. Congress Joint Economic Committee state inflation tracker. The average Washington household has $26,202 more due to inflation since the beginning of 2021.

Microsoft executives and a flood of Big Money donors are supporting the No On 2117 campaign, including:

Former Microsoft CEO Steve Ballmer and wife, Connie ($2.5 million)
Microsoft co-founder Bill Gates ($1 million)
Software developer Chris Stolte, founder of Tableau and co-inventor on five software patents ($1 million)
Far Star Action Fund – founded by former Microsoft executives David and Linda Cornfield ($500,000)
Software developers and husband-and-wife Craig McKibben and Sarah Merner ($500,000 each for a total of $1 million)
Venture capitalist David Thatcher, who worked for Microsoft from 1988 to 2007 ($350,000)
Seattle Kraken co-owner Samantha Holloway ($250,000)
Jabe Blumenthal, a board member of various climate and progressive groups who designed the first version of Excel for Microsoft and became Microsoft’s first Program manager ($250,000)
Microsoft – ($250,000)
Brian Arbogast of the Bill & Melinda Gates Foundation, founded by Microsoft founder Bill Gates ($100,000)
The Washington Federation of State Employees ($100,000)
Rich Barton, former Microsoft general manager, and Sarah Barton ($100,000)
Director Brian Arbogast ($100,000)
MaryAnn Tagney, partner of 30-year Microsoft employee David Jones ($50,000)
Puyallup Tribe of Indians ($600,000)