Washington Gov. Bob Ferguson, right, shakes hands with state Rep. Tom Dent, R-Moses Lake, at a bill signing ceremony May 16 in Kennewick. (Courtesy Washington Office of Governor)

Washington farmers hit with cap-and-trade taxes are losing the chance to get partial refunds, as a rebate program created but then abandoned by the Legislature comes to an end.

To date, the Department of Licensing has distributed $7.9 million out of a $28.5 million pot lawmakers set up in 2024 to rebate cap-and-trade taxes to farmers and haulers of farm goods.

The department stopped taking refund applications June 2 to give it time to process the applications and close the program June 30, the end of the state’s fiscal year.

As much as $20.5 million could remain in the pot, but the department won’t be able to distribute it to farmers. Majority Democrats didn’t authorize continuing the rebates when the new budget takes effect July 1.

In his inauguration speech, Gov. Bob Ferguson, a Democrat, pointed to the rebate program as an example of bipartisanship and said he supported the refunds.

“We couldn’t get it in the budget and even the governor couldn’t get it back,” said Moses Lake Rep. Tom Dent, the top-ranking Republican on the House Agriculture and Natural Resources Committee. “It frustrated me to no end and it frustrated the governor’s office.

“We negotiated it down to $3 million, and we couldn’t even get that,” he said.

Cap-and-trade taxes carbon emissions from gasoline and diesel. Fuel suppliers and distributors pay the tax, but can pass it down the supply chain. By the best estimate available, the tax currently is adding 46 cents a gallon to gasoline and 58 cents to diesel.

Emissions from fuel used on farms or to transport farm goods are purportedly exempt from cap-and-trade taxes. The Lawmakers acknowledged some farmers — at the end of a complicated supply chain — are paying the tax and created the refund program to address that situation.

The Licensing Department began distributing refunds last fall. The program was not as popular as anticipated. Nevertheless, farm lobbyists hoped to keep some money in the new state budget to continue the rebates.

“I didn’t think it’d go all the way to zero,” said lobbyist Mark Streuli, who represents several agricultural organizations. “In my opinion, this is something we’re likely to push for in the supplement budget (next year).”

The House and Senate even passed a bill this year with a provision directing the Licensing Department to continue the rebate program. Without money, however, the provision is moot.

The bill also extended the tax exemption for fuel used to haul farm goods by two years to 2029. The bill directed the Department of Ecology to compile a directory of stations selling tax-free fuel to farmers.

Farm groups supported the bill, with the exception of the Washington Farm Bureau. The Farm Bureau said the bill fell short of keeping lawmakers’ promise to exempt all farm fuel from cap-and-trade taxes.

The Farm Bureau is suing Ecology, alleging the agency failed to write a rule implementing the exemption. The Washington Supreme Court has agreed to take the case. No hearing date has been set.