Missouri may hand Boeing $1.7B in incentives

JEFFERSON CITY, Mo. — Missouri’s bid for a Boeing assembly plant could include more than $1.7 billion of incentives over two decades if the airplane manufacturer adds thousands of jobs, according to new details given to lawmakers Tuesday.

Gov. Jay Nixon distributed a long-range costs-and-benefits analysis of the proposed incentives — which are largely based on job creation — while also announcing that labor leaders in the St. Louis area had agreed to a construction compact that could speed up completion of a potential Boeing facility.

Nixon first must convince lawmakers to approve the incentives before the proposal is due to Boeing by Dec. 10 — a task complicated by some reluctant Republican senators. He then hopes to persuade Boeing officials to pick Missouri over Washington and numerous other states competing to build the company’s next-generation commercial airplane, known as the 777X.

“Missouri brings a lot to the table when it comes to competing for this massive manufacturing project,” Nixon told reporters Tuesday.

He said the “historic agreement” by St. Louis labor councils should “help make Missouri an even more attractive place for Boeing to build the 777X.”

Boeing sent out a request for proposals to more than a dozen locations after union machinists in Washington state rejected a proposed contract that would have ended a traditional pension plan and increased their health care costs.

Nixon called Missouri lawmakers into a special session, and legislative committees were to hear public testimony on the incentives Tuesday evening.

The more people Boeing hires, the more incentives it would receive under the Missouri proposal. The company already employs about 15,000 people in Missouri and makes military aircraft in the St. Louis area.

If Boeing were to add 2,000 jobs in Missouri for its commercial passenger jet, the company could get an aggregate of up to $435 million of state incentives by 2040. An additional 4,000 jobs could yield nearly $871 million of incentives; 6,000 jobs could result in up to $1.3 billion of incentives; and 8,000 jobs could result in as much as $1.74 billion of state incentives, according to several scenarios analyzed by the governor’s office.

The analysis also assumes the employees would be paid an average of $95,000 starting in 2018 with an annual pay raise of 3 percent.

All of the scenarios project that Missouri would reap more in new tax revenues than it would give away in incentives. The projections by Nixon’s administration show a net financial benefit to the state of $264 million by 2040 if Boeing were to add 2,000 jobs. That rises to a net benefit of $550 million if Boeing adds 4,000 jobs; nearly $832 million for 6,000 jobs; and almost $1.1 billion for 8,000 jobs.

Though the plan has general support from legislative leaders, some Republican lawmakers remained skeptical Tuesday. Opponents cited their general dislike of tax breaks targeted at specific companies while begrudging Nixon’s veto of a broad-based income tax cut earlier this year for businesses and individuals.

Sen. Rob Schaaf, R-St. Joseph, said he wants to secure a commitment that the Legislature will curtail other tax credits — specifically those benefiting developers of low-income housing and historic buildings — when the annual regular session starts Jan. 8.

As a conservative, Schaaf said, the Boeing proposal is something he would “probably not support, but maybe not filibuster.”

The labor agreement announced Tuesday was signed by leaders of the St. Louis Building and Construction Trades Council, the Eastern Missouri Laborers’ District Council and the Carpenters District Council of Greater St. Louis.

The union leaders pledged to make workers available to Boeing for 24 hours a day in three, eight-hour shifts that would eliminate the need for overtime pay. They said that should speed up construction of the Boeing facilities by at least a year, thus saving money for the company.

U.S. Sens. Claire McCaskill and Roy Blunt also sent a letter Tuesday to Boeing praising their home state’s workforce and transportation infrastructure.

“Without a doubt, Missouri is the right location to select,” the senators wrote.

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