Inslee takes a neutral stance on Boeing tax breaks

Sixteen months ago, Gov. Jay Inslee signed into law the largest tax break any state has ever given a private company.

It extended a bunch of sweet incentives to the Boeing Co. that could save it up to $8.7 billion in tax payments to the state over the next 25 years.

As hoped, the aerospace giant responded by agreeing to carry out the final assembly of the new generation of the 777 and its carbon-fiber wings in Everett. Work is under way to prepare the site where this will happen.

Today, that law is under legislative attack in Olympia, and the governor isn’t publicly defending it.

Freshman Rep. June Robinson, D-Everett, is proposing to rewrite the law in ways that would slice the tax break in half immediately and force Boeing to pay millions — maybe tens of millions — of dollars in additional taxes this year.

She’s introduced House Bill 2147, which would tie Boeing’s incentive to the number of workers it employs in Washington. If that workforce shrinks — and it has since the law was signed in November 2013 — the tax break will, too.

Inslee is doing little to discourage the assault on this signature achievement of his first term, telling executives of Boeing and aerospace suppliers last month that he’s monitoring its progress.

Neither he nor members of his administration will take part Friday when the House Finance Committee holds a public hearing on Robinson’s bill.

“At this point, I do not plan to testify,” Alex Pietsch, the state director of aerospace, wrote in an email.

Asked why, he replied: “I’m afraid there isn’t anything to elaborate upon. As I’ve shared, I’m not working these bills.”

Don’t expect anyone from Boeing to testify, either. The firm views the bill as “harmful and unnecessary,” but it’s not Boeing’s style to engage in hearings, even with $8.7 billion at stake.

Robinson’s bill is the handiwork of the unions representing machinists and aerospace engineers. It stems from frustration that the 2013 law didn’t stop layoffs or prevent Boeing from shifting hundreds of jobs to other states without penalty.

Union leaders estimate the company’s Washington workforce has gone from nearly 83,000 in October 2013 to roughly 80,000 today. A large chunk of those jobs, they say, went to Missouri, where Boeing will snag tax breaks if it creates 2,000 new jobs.

Under Robinson’s bill, Boeing must employ at least 83,295 workers to receive the full tax break. Each drop of 250 jobs below that benchmark shrinks the tax break, and it disappears if the workforce declines to 78,295 or lower.

As written, Boeing stands to get a big tax bill if the bill becomes law.

That’s why Inslee isn’t making friends with aerospace execs by staying neutral on this bill. While it doesn’t appear the bill will reach the governor’s desk this session, those execs would like an idea of what he’ll do if it does.

By staying neutral, Inslee might be trying to make amends with the unions, especially the International Association of Machinists and Aerospace Workers, some of whom are still seething at what they considered undue pressure put on them by the governor to approve a concession-laden labor contract to accompany the tax break. That vote landed the 777X.

The governor will want their support in next year’s re-election campaign, and staying out of this fray now should help in that pursuit.

But if the governor won’t defend the tax break he signed, might enough lawmakers who voted for it in 2013 agree to rewrite it?

This week’s hearing might offer clues to the answer.

Political reporter Jerry Cornfield’s blog, The Petri Dish, is at www.heraldnet.com. Contact him at 360-352-8623; jcornfield@heraldnet.com and on Twitter at @dospueblos.

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