State lawmakers pass Boeing 777X tax incentives

  • By Jerry Cornfield Herald Writer
  • Saturday, November 9, 2013 4:15pm
  • Business

OLYMPIA — State senators and House members on Saturday overwhelmingly approved a multibillion-dollar tax break and expanded aerospace worker training, moves they hope will convince the Boeing Co. to place final assembly and wing work of the future 777X jetliner in the state. The bills were expected to be swiftly signed by Gov. Jay Inslee.

“This is a big deal,” said Sen. Andy Hill, R-Redmond, before near-unanimous passage of the tax-break bill in the House. “This is a generational opportunity.”

That tax-break bill is worth an estimated $8.7 billion over 16 years. It extends existing tax breaks, due to expire in 2024, into 2040. The extension is contingent on “a significant commercial airplane manufacturing program” getting sited in Washington by June 30, 2017. Translated, that means Boeing must be turning dirt on some aspect of the program or it will lose the tax-break extension.

It also makes clear that the preferential business-and-occupation tax rate would go away if final assembly, wing assembly or wing fabrication of the 777X and future versions are moved outside Washington.

The second bill pumps $17 million into education and training of future aerospace workers. It includes $8 million for 1,000 new enrollment slots in community and technical colleges and $1.5 million for enlarging the Washington Aerospace Training and Research Center at Paine Field in Everett.

Boeing has committed to building the 777X in Washington if the International Association of Machinists and Aerospace Workers (IAM) vote on Wednesday to ratify an eight-year contract extension that is laced with concessions on pension and health-care benefits.

Boeing lobbyists watched the votes from the galleries of both chambers. Labor leaders, including some Machinists leaders, were on hand during parts of the day.

Snohomish County Executive John Lovick and county Councilmembers Stephanie Wright and Brian Sullivan arrived in Olympia shortly before the House acted in the afternoon.

“This is the first step to win the 777X, but there is still more to do,” said Sen. Steve Hobbs, D-Lake Stevens. “We have to wait to see the contract vote and we still have transportation.”

Boeing has said it wants lawmakers to approve a multibillion-dollar transportation tax package. That’s been a tough issue all year. Democrats and Republicans have been unable to reach agreement on the content or the size and scope of a package.

Democrats and Inslee are pushing a $10 billion package that would include a 10-cent-a-gallon increase in the gas tax. Republicans are insisting the package include reforms of transportation policy.

Negotiations progressed Saturday, and lawmakers said a transportation deal might be reached later this month.

Attention now shifts to the the 22,000 members of District 751 of the Machinists union and their vote at various locations on Wednesday.

Many union members are outraged at the content and urgency of the offer, which was negotiated without their knowledge by leaders of the IAM. Some would like to postpone a vote and negotiate the offer.

Boeing offered Machinists a $10,000 signing bonus and an early retirement option, but union members don’t like the elimination of a traditional pension, increased health-care costs or the tight timeline for approving the offer, among other things.

Wright and Sullivan both said they’ve spoken with union members who have expressed their displeasure at the terms of the contract extension.

“We’re just going to do everything in our power to make sure this is successful,” Wright said.

Not everyone in Olympia on Saturday was on board.

Several Republicans expressed concern during debate Saturday that lawmakers would rush to aid Boeing but wouldn’t provide tax or permitting benefits to other industries or businesses. Republican Rep. Joel Kretz of Omak said his district has very little aerospace business and that some businesses in his area spend years trying to get permits for work.

“We’ve got to fix it all over the state,” Kretz said.

Democratic Sen. Bob Hasegawa of Seattle was one of two senators to oppose the tax-break extension. He was concerned that the bill didn’t provide enough protections, that Boeing could use the 777X work to supplant work being done on the 787 and that it was “unconscionable” for the Legislature to essentially pressure union workers to accept a contract that may not be beneficial to them.

Hasegawa was also concerned that lawmakers would approve such a large tax break after considering the issue for just a couple days. “We haven’t, I don’t think, fully thought out the uses of that $9 billion,” Hasegawa said.

The Associated Press contributed. Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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