Can a State Fill a Budget Gap with a Price on Carbon? Wash. May Soon Know

On Wednesday, Washington Gov. Jay Inslee will unveil a new plan to lower his state's greenhouse gas emissions.  And while the Democrat hasn't tipped his hand on whether he'll push for a cap-and-trade system or a carbon tax, Inslee and his administration have dropped several hints about how they'll likely frame the carbon pricing plan as a way to help solve the state's budget deficit.

Inslee's budget director recently told reporters that Washington will face a $2.35 billion shortfall over the next two years.  Nearly half of it stems from a court order to increase education funding by more than $1 billion.  And pitching cap and trade or a carbon tax as a budget fix may help sell the proposal to a skeptical Legislature, where the Republicans who control the Senate have raised serious concerns about how either plan would affect energy costs.

In an era where states have legalized everything from gambling to recreational marijuana as a way to raise budget revenue, Washington's upcoming carbon fight may provide a road map for how state legislatures choose to comply with U.S. EPA's Clean Power Plan. Specifically, whether lawmakers otherwise hostile to the idea of lowering greenhouse gas emissions and increasing energy costs may embrace cap-and-trade systems or carbon taxes as a way to fix budget holes or restructure their tax codes.

Can a State Fill a Budget Gap with a Price on Carbon?  Wash. May Soon Know