Gas tax panned by business

Last weekend, the Washington legislature approved a 9.5-cent-per-gallon gas tax that will be phased in over the next four years to pay for billions of dollars of transportation improvements around the state.

The new tax is expected to affect how business is done around the state and on South Whidbey. Whether it is furniture, landscape stones or taking people to Sea Tac airport, items and people are constantly moving about to and from Whidbey Island. However, that reliance on transportation comes at a price, as near record gas prices for the last several months cut into the businesses bottom lines.

So when the owners of Sun Orr Shade and Murphy’s Home Furnishings and the general manager of Whidbey SeaTac Shuttle heard the state Legislature approved raising gas prices nearly 10 cents by 2008, they were not pleased.

“Why don’t you kick us while we’re down?” asked Barb Muntis, owner of Murphy’s Home Furnishings.

The gas tax is part of a $8.47 billion, 16-year transportation package the Legislature approved Sunday. The package awaits approval from Gov. Christine Gregoire. Legislators estimate the 9.5-cent tax will pay $5.45 billion of the $8.47 billion package.

The majority of the money will go toward replacing the Alaskan Way viaduct, the Highway 520 bridge, Highway 405, and congestion relief projects. In addition, the new tax will pay for more funding for ferries, city and county governments and railroads and bridges.

Several projects will also benefit Island County residents and commuters. Sen. Mary Margaret Haugen (D-Camano Island) said the Legislature earmarked $4.5 million for road safety projects, road maintenance and traffic relief on Whidbey Island.

“The package also funds new park and ride lots, new overhead loading facilities at the (Clinton) ferry dock, funding for Island Transit and a new Sounder passenger rail station in Mukilteo that will serve people coming off the island,” Haugen said Thursday. “Island County does very well in this package.”

Haugen is the chairwoman of the Senate Transportation Committee.

Additional vehicle weight fees for passenger vehicles and light trucks, along with fees for driver’s licenses and license plate fees, will raise funding for the transportation package not covered by the gas tax.

Haugen said that when the entire 9.5 cents is tacked on in 2008, the typical driver will pay $5 more a month due to the tax.

Islanders oppose tax

The new gas tax is not popular with Whidbey islanders. Michael Orr, owner of Sun Orr Shade, said what he charges per hour has risen from $29 in 2002 to $35 an hour this year, due in part to the price of fuel. The gas prices effect his employees, as well.

“Our employees can’t afford to drive their cars from job to job,” he said. Rather, his eight-member staff must drive company vehicles everywhere.

To keep costs down, Orr said he plans to keep eight to nine skilled people employed year round and only bring the amount of stone and other materials to his Freeland business needed for jobs on hand. He said he eventually plans to switch to diesel fuel in all his vehicles.

Some vehicle-dependent businesses have no way to defer the cost of fuel as increased by the new tax.

“The timing was poor,” said Michael Lauver, vice president and general manager of the Oak Harbor-based Whidbey SeaTac shuttle.

The tax passed this week is the second gas tax in two years. The previous Legislature passed a 5-cent-per-gallon gas tax in 2003.

Because of regulations imposed on the shuttle industry by the state’s Utility and Transportation Commission, Lauver cannot pass on the additional cost of fuel to shuttle users. He will now have a smaller profit margin and must hold off replacing one of the 10-seat vans he uses. By keeping the vans another year, Lauver said, maintenance costs will make it impossible to save the $40,000 needed to buy a new van.

Murphy’s Furniture’s Barb Muntis said the Legislature’s decision disappointed her. She said the high price of fuel on the island and high shipping and freight costs due to out-of-state fuel costs have already forced her to raise the price of some merchandise and to raise prices for home delivery. The gas tax might cause her to make additional changes.

Muntis said Washington is the most unfriendly state for small business in the country.

Sen. Haugen disagreed, however, and said the pending gas tax will help small business. The transportation package the tax funds helps business by boosting economic growth through safer roads and reducing traffic. Performance audits on the funding will also ensure the money goes where it is supposed to, she said.

Alternatives to a gas tax

Local business owners were not the only ones opposed to the bill. Republican legislators Barbara Bailey and Chris Strow, who both represent Whidbey Island, opposed the bill.

“It is too much and we are obligating ourselves too far into the future,” Bailey said of the transportation bill Monday.

She said the funding should have been easier to understand. Many of the projects require additional funding to complete, which the package leaves to local communities, Bailey said.

Sen. Haugen said some projects, including the Alaskan Way viaduct, need partnerships with local or regional entities to complete the work.

Michael Orr said state and local governments should have adopted growth plans similar to Vancouver B.C. He said high rise condominiums and other high-density construction has kept many people within the Vancouver city limits.

If Seattle did that, more people would pay taxes to Seattle, rather than moving out of the city and paying taxes elsewhere.

Sea-Tac Shuttle’s Lauver said if the state managed and applied taxes better, the additional gas tax would not have been a problem. He was unhappy with where most of the money went.

“The entire state is paying for a King County problem,” he said.

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