Boeing’s city tax break: Everett had little choice

Published 9:00 pm Monday, December 29, 2003

When Boeing Co. Chairman Harry Stonecipher announced the final assembly site for the 7E7, his phrasing was curious.

"The 7E7," Stonecipher said, "will be built right here in Puget Sound."

That, of course, meant the airplane would be built in Everett. Was Stonecipher’s choice of "Puget Sound" in the climactic announcement meant as a dig at Everett? Was it a reflection of lingering anger over the millions in mitigation dollars the company had to pay when it expanded its factory here for the 777?

Perhaps that’s just paranoia talking, but Stonecipher’s choice of words wasn’t lost on some city officials. And that’s the understandable mindset that prompted former Mayor Frank Anderson and his election opponent, Ray Stephanson, to sweeten the state’s offer to Boeing by supporting a city tax break for the company. That part of the winning deal, which still needs City Council approval, would give Boeing or any other company a 75 percent break on the city B&O tax on gross sales beyond $6 billion, starting in 2006. That could equal nearly half of the company’s sales of Everett-built airplanes, and figures to cost the city around $34 million over the next 20 years.

Anderson and Stephanson weighed in on the tax break before the November election, while the Boeing site search (or bidding war, if you prefer) was heating up. In that atmosphere, they had little choice but to go along. Competing states were offering up virtually free land, their own tax incentives and cheaper labor.

The B&O tax break, which was contingent on Boeing bringing 7E7 production to Everett, was part of a confidential agreement that was made public only as government and Boeing officials signed the final package earlier this month.

Stephanson, who won the mayoral race, now may take some heat for agreeing to the concession. But he and Anderson did the right thing. The alternative would have sent a strong anti-Boeing message at a critical time, and could have tilted the balance away from Everett. The state made huge tax concessions to keep Boeing here, and the city was under similar pressure to step up.

Not having the 7E7 built here, which would have signaled the beginning of the end of Boeing’s presence here, would have put a much bigger dent in city coffers. This was an investment worth making, one that will more than pay for itself.