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March 19, 2010 at 11:17 AM

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Alaska Airlines may get break from new fuel tax

Posted by Jim Brunner

OLYMPIA -- Legislation to boost the state's hazardous-substances tax on oil, fertilizer and other chemicals could come up for a vote in the state House some time Friday.

The tax bill -- which would raise about $100 million a year for clean-water projects -- has prompted a last-minute frenzy of lobbying and deal making.

Oil refineries, which would pay most of the tab, have been trying to kill the proposal all session.

Friday morning, 47 agricultural groups chimed in, from the Asparagus Council to the Turfgrass Seed Commission. They argued in a letter to lawmakers the extra tax would unfairly raise prices of diesel fuel and fertilizers.

Meanwhile, Alaska Airlines wants lawmakers to protect its bottom line from the tax.

Amendments in the works would cap the amount of tax paid by the company at $500,000 a year. That's the amount Alaska lobbyists have been telling legislators it pays under the existing hazardous-substances tax.

The Alaska amendment was raised during a Senate Ways and Means Committee vote earlier this month by Sen. Karen Keiser, D-Kent, whose district includes Seattle-Tacoma International Airport, where Alaska is headquartered.

In introducing the exemption, Keiser called it a tax credit "for a certain air carrier that happens to be headquartered in Washington state."

Sen. Cheryl Pflug, R-Maple Valley, made sure everyone knew what company they were talking about.

"I'm getting a little tired of the cat-and-mouse games, guys. Alaska Air's representative is sitting in the audience," Pflug said, looking at the company's lobbyist, Dan Coyne.

That drew a quick gavel and rebuke from Ways and Means Chairwoman Margarita Prentice, D-Renton. "We're not here to disparage anybody or to question each other's motives," Prentice said.

The Ways and Means panel rejected the amendment, but it will be on the table again when the bill comes up for the House vote.

In an interview, Keiser said Alaska, a major employer in her district, requested relief from the possible tax increase, which would raise the cost of its aviation fuel.

"I'm not trying to create problems here but I think it is important to consider the impact on a major employer," Keiser said.

Keiser said Sea-Tac already spends millions of dollars treating stormwater that flows off its runways -- and airlines such as Alaska pay for that as part of their leases.

The exact provisions of the Alaska amendment could change, she said. But the idea would be to blunt the impact of the tax increase on the company.

Other amendments in the works would offer relief to diesel logging trucks and exempt refinery fuel destined for export to other states.

Cliff Traisman, an environmental lobbyist who has been pushing for the bill, said the tax is worth passing despite the legislative sausage-making.

"When you get right down to it, even with all these exemptions, this bill will create a sustainable revenue source to deal with the state's number one water-pollution problem and create jobs," Traisman said.

The proposal, House Bill 3181 has gone through several iterations. The latest version would add .85 percent to the existing .7 percent hazardous-substances tax.

The extra money -- about $100 million a year -- would be dedicated to cleaning up polluted stormwater regarded as the top threat to the health of Puget Sound and other waterways.

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Jim Brunner
Covers politics.

Keith Ervin
Covers the Eastside.

Andrew Garber
Covers politics and state government from Olympia.

Emily Heffter
Covers local government.

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Covers transportation.

Kyung Song
Covers politics and regional issues from Washington, D.C.

Lynn Thompson
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Bob Young
Covers King County and urban affairs.