What a waste: State keeping secrets with our gas tax

What a waste: State keeping secrets with our gas tax »Play Video
While we're all feeling extra pain at the gas pump these days, a KOMO 4 Problem Solver investigation has discovered the state is keeping some million-dollar secrets about your gas taxes. Our investigation found the state is paying out millions from the state gas tax, and they won't tell us how the majority of it is being spent.

For whatever financial pinch you might feel when filling up, at least there's consolation knowing that for each gallon purchased, 35 cents goes to the state. That money adds up to the Motor Vehicle Fuel Tax Fund and it all pays for new highways, filling potholes, and fixing roads, right?

Wrong. This year alone, more than $22 million of state gas tax money is heading off the books. It's going straight to local tribes operating their own gas stations.

"Now that just flap dab is wrong," says Tim Hamilton, Executive Director of AUTO, a gasoline retailers organization. "It's not only morally wrong, it's financially wrong."

In 2006, the state lost a local court battle that ruled tribes, as sovereign nations, don't have to pay the gas tax. To end future court battles, the legislature and Governor Gregoire signed off on a deal: for every gallon a tribe sells, the state pays them back 75 percent of the gas tax, or 28 cents a gallon.

As part of the deal, there's no limit on how many stations the tribes can own or how much gas they can sell. It's bad news for non-tribal stations.

"There's no way we can compete"

"For the first time in our lives, we have become scared," says Chris Angwood, who with her husband Larry run a mom-and-pop gas station in Grand Mound. "We are in survival mode."

The Angwood's business has been in the family for decades. But Larry Angwood says the nearby tribal stations undercut their prices by 9-to-10 cents a gallon.

"There's no way we can compete...we've gone down as low as I can go," Larry Angwood said. They've laid off employees and are working seven days a week themselves. But there's too few customers, and an uncertain future. "I mean if we lose this business," Chris Angwood said, "we lose everything we own."

Hamilton says it's the largest raid on a public treasury that he could ever imagine can happen.

"Hundreds of millions are on their way out of here," he said. In fact, over the next 17 years, the state Department of Transportation estimates it will give 22 tribes well over half a billion dollars of gas tax revenue - $620,676,200.

Puyallup Tribal Attorney Kelly Croman says this is about the tribe being able to have a tax base to be able to perform governmental functions. She adds the state, "gained a lot of concessions from the tribes by making that compact."

Details kept secret

As part of the deal, the tribes are supposed to spend all the money on transportation. But when the Problem Solvers tried to check, we uncovered a disturbing fact: The state agreed to keep almost all the information about how that money is spent - secret.

"They have a duty to show us what they did with that money, and they won't," Hamilton said.

The tribes do provide audits to Department of Licensing, which administers the agreements. But when we asked for a copy of the audits, "unfortunately we can't release those," DOL Spokesman Brad Benfield told us. The tribal deals also keep those audits secret.

The state does release an annual report to the legislature, including background information on the number of tribes with agreements and the overall amount of money refunded to them. Some of the tribes do allow the state to include some information about the projects they're spending the money on but there is little detail and, in most cases, almost no way for an outsider to verify the expenditures.

One of the few projects we did find specifics for is first listed in the state's 2008 annual report. The Puyallup Tribe reportedly spent $4 million to design and build a 3-lane arterial road on 59th Ave East between the Pacific Highway and 12th St East in Fife. The 2008 report said the construction would be finished in 2009. When we visited the site last month, it was a gravel road that ended in a field with a road closure sign. No sign of any construction. A Puyallup spokesman says the project was delayed because they couldn't acquire the land, but it showed up in reports to the state legislature in 2008, 2009 and 2010, each year with fewer details.

We also found that construction of another road, Grandview Avenue, was supposed to start in 2010. But again when we visited the site last month, it was littered with potholes and some of it was still just a gravel road. And we found no sign that any construction had begun.

We found two projects that the Puyallup Tribe did get finished: a parking lot for the tribe's headquarters and sidewalks and landscaping at their new mega gas station off I-5.

Good deal for taxpayers?

We asked DOL how their oversight has provided any guarantee to taxpayers that the gas tax money is being used appropriately.

"Well, I think that we are doing what we need to do under the law," Benfield said.

In reviewing the past three annual reports, the Problem Solvers found that other tribes don't give much more detail. Among other things, the gas tax money is paying for logging roads, a probation officer, transportation planners and road design work. Again we asked DOL how that's a good deal for taxpayers.

"I think that this allows taxpayers to know that the fuel taxes that are collected on tribal lands are being used for transportation projects," Benfield said.

As mentioned earlier, a state court ruled tribes don't have to pay the gas tax. However, a U.S. Supreme Court ruling seems to say the opposite. Because of that, Hamilton's AUTO organization is suing the state to end the rebate program.

And twice, Republicans in the state legislature have tried, but failed, to pass a law requiring more transparency to this program.