Bill ties Boeing tax breaks to maintaining jobs in state

OLYMPIA — An Everett lawmaker said Monday she is introducing a bill to reduce Boeing’s generous tax break if the aerospace giant trims its workforce in the next 25 years.

Democratic Rep. June Robinson said her aim is to ensure the incentives sustain good-paying jobs in this state, rather than seeing Boeing ship them elsewhere. The tax breaks are worth an estimated $8.7 billion in savings to the Boeing Co. through 2040

“We want to keep the jobs. We want them to keep the tax incentives. This is about fairness,” Robinson said. “Other states require Boeing to bring jobs to receive tax breaks and it’s only fair that the citizens of Washington demand the same treatment.”

Under the bill, which she intended to file late Monday, Boeing would lose a little of its tax break — and thus begin paying more taxes — when its workforce falls below certain levels. The greater the decline, the less tax break the company receives.

The Boeing Co., in a statement, repeated its opposition to changing the laws, enacted in 2013, which extended the suite of incentives through 2040 in exchange for the company’s pledge to build the 777X in Everett.

“Attaching arbitrary job creation numbers to an industry that is already boosting Washington’s economy is harmful and unnecessary, and Boeing strongly opposes such a change,” reads the statement. “The 2013 incentives require Boeing to build the 777X exclusively in the state. This is an unprecedented safeguard for taxpayers.”

Everett Mayor Ray Stephanson issued a statement also criticizing the bill.

“The proposed legislation would be detrimental to the hundreds of aerospace companies in Washington state, including those that make up the state’s largest job center here in Snohomish County,” the statement said. “It’s critical that the state stand by its commitments to businesses who invest in our economy.”

Robinson made her announcement at a news conference in Renton where leaders of two aerospace worker unions released results of a statewide survey they say shows that the general public backs tying the tax breaks to jobs.

The poll found 67 percent of those surveyed either strongly support or somewhat support linking the amount of a tax break with the number of jobs a company provides in the state. EMC Research conducted the survey of 771 people from Feb. 2-8 on behalf of the International Association of Machinists Local 751 and the Society of Professional Engineering Employees in Aerospace (SPEEA).

Robinson’s bill is one of two measures drawn up by the unions that would claw back some of the state’s generous incentives if aerospace companies don’t create and retain union jobs. The other bill requires aerospace companies pay their employees at least the state median wage in order to be eligible to receive a tax break.

Union leaders, and lawmakers like Robinson, say the state gave Boeing too good a deal in 2013 because it did not stop the company from shifting hundreds of jobs to other states without penalty. Some of those jobs, unions point out, went to Missouri, which offered Boeing tax breaks as long as the firm created 2,000 new jobs.

“Lawmakers need to correct the legislation so it puts Washington state on an even playing field with other states,” said Ray Goforth, SPEEA executive director.

Jon Holden, president of the Machinists Lodge 751, said lawmakers could not have envisioned Boeing’s workforce would shrink after they voted on the tax break.

“This was meant to strengthen the aerospace industry and that is what these bills are meant to do,” he said.

Robinson’s bill does not name the Boeing Co. but rather applies to a “significant aerospace firm” — which she said is intended to be Boeing.

As written, it establishes a baseline for the number of jobs in Boeing’s statewide workforce. The tax rate paid by the company would rise incrementally each time there is a drop of 250 jobs below the baseline.

If the total number of jobs lost hits 5,000 or more, the tax break would end.

The bill is expected to be referred to the House Finance Committee.

Rep. Reuven Carlyle, D-Seattle, chairman of the panel, said he’ll hold a hearing on it.

“It deserves public voice. I think it’s a legitimate policy conversation,” he said. “I think the aerospace community deserves to have a healthy constructive dialogue.”

House Minority Leader Dan Kristiansen, R-Snohomish, isn’t supportive. He told union representatives when he met with them Friday.

He said he understood the importance of not wanting to see any reduction of jobs in the company. But Boeing is launching the 777X in Everett and ramping up its 737 operation in Renton, and that work should produce an increase in jobs over time, he said.

“I think at the end of the day we’re gong to see growth here and I can’t support a bill that is going to carve out one company and tell them exactly how they have to run their biz,” Kristiansen said.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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