Published on Apr 29, 2019

Late-breaking MTCA bill a big win for cities, but it is not without risk

Contact: Carl Schroeder, Shannon McClelland

When the Model Toxics Control Act (MTCA) bill (SB 5993) was introduced three months into session, it would be understandable for observers of the Legislature to question how viable it was to pass such a major bill with so little time left. The bill shifts the hazardous substances tax (primarily from oil) from a value-based tax of seven-tenths of a percent on the value of a barrel of crude oil, to one based on a flat $1.09 fee per barrel of oil. That shift results in a tax increase of roughly 53%, raising projected revenues from $310 million this biennium to $475 million.

The change to a volume-based tax is intended to prevent the major swings in revenues that have affected this account when oil prices drop, which in recent years caused city projects (which had been approved by the Legislature) to go unfunded because resources were not available. Although there was a big fight late into the night, ultimately the House approved an inflation adjuster on the per barrel rate. Over time, this will mean significantly more resources coming into the account. This approval occurred despite the House Finance Committee removing the inflation adjuster just hours before.

Even better for cities than just more resources and more stability for a critical fund source for toxic cleanups, brownfields, and stormwater work, the proposal also dedicated 15% of revenues to stormwater projects. AWC has supported and worked for dedicated stormwater funding since at least 2009, so this a very exciting achievement. At this point, this dedication amounts to more than $63 million per biennium dedicated to stormwater, which will increase with inflation.

On the toxic cleanup side, the bill dedicates 25% to capital investments—including remedial action grants that support large cleanup projects around the state. This component of the bill amounts to a dedication of $106 million per biennium, which again will increase with inflation.

Unfortunately, it’s not all good news. The state did continue their recent trend of investments in natural resource programs that have traditionally been funded with general fund dollars and moved them to draw on MTCA funds instead, in order to save general fund dollars. Even more disturbingly, the Senate needed to create a new $50 million diversion to address stormwater needs for the state Department of Transportation in order to secure support to pass the bill in the first place.

Despite those frustrating elements, we believe this bill will be of significant benefit for cities, especially over time. The passage of this bill promises more and growing resources for cleanups and, for the first time, dedicated funds for local stormwater projects. We are pleased that so many stars aligned and this bill was able to make it across the finish line despite the late start.

 

The passage of this bill promises more and growing resources for cleanups and, for the first time, dedicated funds for local stormwater projects.

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