Inslee avoids talk of possible taxes in address to aerospace executives

OLYMPIA — Gov. Jay Inslee on Wednesday steered clear of a contentious effort to impose new rules on aerospace firms receiving tax incentives, including the Boeing Co.

He told a crowd of aerospace executives that he is “monitoring” but not taking positions on two House bills that aim to tie tax breaks with the number of jobs provided and wages paid to employees.

Those bills would amend the 2013 law that extended tax incentives to Boeing worth $8.7 billion in exchange for the company agreeing to build its new 777X jetliner in Everett.

“I do not want to do anything that would jeopardize the growth that we’re experiencing with the 777X program,” Inslee told members of the Aerospace Futures Alliance attending the group’s annual lobbying day in Olympia. Officials of Boeing and roughly three dozen aerospace suppliers took part.

But the governor said people are “rightfully” frustrated at seeing Boeing transfer hundreds of engineering jobs to other states since passage of the law.

“That frustration is real, it’s palpable and it’s deep so I appreciate people are having discussions about how to address that,” he said. “Basically I am monitoring this. That’s as much as I am going to say on this right now.”

While Inslee sought neutral ground, members of the House and Senate who spoke Wednesday did not.

Senate Majority Leader Mark Schoesler, R-Ritzville, said the Legislature made a deal with Boeing in 2013 and his caucus isn’t going to renege on it.

“A deal is a deal. If we tell you we’re going to do something, there’s no claw backs. There are no second thoughts,” he said. “We go forward.”

He described chances of the bills passing in the Senate as, “Slim and none and slim left town.”

The House bills in question are the product of months of work by leaders of the two largest aerospace worker unions in Washington — International Association of Machinists Local 751 and the Society of Professional Engineering Employees in Aerospace.

They and their Democratic supporters in the House contend the state gave Boeing too good a deal when it extended those tax breaks through 2040. While that could save the aerospace giant as much as $8.7 billion in taxes, it doesn’t prevent the firm from shipping jobs out of state.

House Bill 2147 would trim Boeing’s tax break if its statewide workforce declines much below 83,000, the number reportedly employed by them in the fall of 2013. Boeing would lose its break entirely if the total sinks below 78,000, according to the legislation.

A second bill, HB 1786, targets aerospace suppliers by setting an industry-wide wage standard. As written, it requires aerospace companies to pay employees a minimum wage of just under $20 in order to be eligible to receive a tax break.

Both bills are awaiting action in the House Finance Committee.

Rep. Reuven Carlyle, D-Seattle, the panel’s chairman, told executives Wednesday that he’ll conduct hearings on each.

While he thinks the language in the 2013 law is strong enough to hold Boeing accountable for its promises, it’s not “unreasonable” for the unions to want to revisit the terms, given what’s transpired, he said.

The hearings will provide an opportunity for an “authentic conversation” on that “social contract” between taxpayers, companies and their workers, Carlyle said. “It doesn’t mean we’re going in and changing the terms of the deal.”

Wednesday’s event drew one of the larger turnouts of aerospace supplier representatives.

Linda Lanham, the group’s president and executive director, said it demonstrated the high level concern about the potential effect of the bills. “It irritates me no end that this is going on,” she said.

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

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