Inslee vetoes Boeing-like tax break for manufacturers

By Rachel La Corte / Associated Press

OLYMPIA — A plan to give manufacturers the same tax cut that the Legislature previously gave to Boeing was vetoed by Gov. Jay Inslee on Friday, drawing outrage from Republicans who said the measure was part of an agreed-to deal on the overall state budget.

The tax break was one of two Inslee, a Democrat, used his veto pen on: In addition to nixing the lower manufacturing business and occupation tax rate, he also vetoed sales and tax use exemptions for TransAlta as it converts its coal plant to natural gas.

He signed the overall bill that included several other tax incentives, including one to encourage more film and television industry projects to the state.

But the manufacturing rate exemption was the largest of the group, reducing state coffers by about $64 million over the next four years. The Department of Revenue said that about 20 percent of the tax cut would benefit oil refineries, something Inslee noted after the veto.

“This was a bad provision,” Inslee said. “It was grossly unfair to taxpayers, it was done in the middle of the night, it has zero accountability, there’s not a single job that they can prove will be produced from this and, as a result, I exercised my constitutional duty.”

The rate would have lowered manufacturer’s rate from .484 percent to .2904 percent. The Legislature first approved that lower rate for Boeing and the aerospace sector in 2003 and in 2013 extended the rate until 2040 as part of a nearly $9 billion tax break to ensure that the 777X was produced in Everett.

Republicans argued that the manufacturing tax break was part of an overall state budget deal that ultimately avoided a partial government shutdown. That budget deal included the repeal of the sales tax exemption on bottled water, repeal of tax preference on extracted fuels that benefited oil refineries, and expansion of online sales tax collection — which was also signed by Inslee on Friday. Inslee said he was never directly asked about — and never agreed to — the tax cut for manufacturers.

“We never offered any assurance that there would be no veto,” he said.

Senate Majority Leader Mark Schoesler said that small manufacturers across the state “were just slapped down by this veto that would have put them on a level playing field with other industries.”

He said that the tax break was part of a carefully brokered deal, and that its veto has “jeopardized the credibility of dealing with this administration.”

The bill that included the manufacturing tax rated passed with bipartisan support in both chambers late last week, clearing the Senate on a 33-16 vote and the House on a 83-10 vote.

On Monday, 23 House Democrats wrote to Inslee encouraging him to veto the section, saying that “the politics of policy of giving the business community a massive tax cut, while hiking property taxes on middle-class individuals to fully fund public schools, is unacceptable and dangerous.”

In turn, House Republicans in a letter Thursday said that “future negotiations would become impossible if parties to the deal were allowed to unilaterally reconstruct the deal on terms more favorable to their party’s base by pressuring you to veto isolated terms of a comprehensive agreement.”

Inslee signed the $43.7 billion state operating budget last week less than an hour before a partial shutdown would have begun, and Thursday signed into law a plan that increases the statewide property tax to try to bring the state into compliance with a state Supreme Court mandate to increase state dollars to basic education.

“At a time when homeowners will have to pay more in their property taxes for our children’s education, this part would mean that businesses paid less,” Inslee said. “There is a fairness question here that cannot be ignored.”

Democratic House Majority Leader Pat Sullivan, who was part of the budget negotiations, said that while Democratic budget negotiators stuck by what they negotiated with Republicans, the veto is the governor’s prerogative.

“If there’s a lesson to be learned from all of this, we have to get things done more quickly so that the public can see it and there’s an opportunity to weigh in on the final product,” he said.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Olivia Vanni / The Herald 
The Mukilteo Lighthouse. Built in 1906, it’s one of the most iconic landmarks in Snohomish County.
The Mukilteo Lighthouse. Built in 1906, it’s one of the most iconic landmarks in Snohomish County. (Olivia Vanni / The Herald)
Mukilteo mayor vetoes council-approved sales tax

The tax would have helped pay for transportation infrastructure, but was also set to give Mukilteo the highest sales tax rate in the state.

Marysville Mayor Jon Nehring gives the state of the city address at the Marysville Civic Center on Wednesday, Jan. 31, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Marysville council approves interim middle housing law

The council passed the regulations to prevent a state model code from taking effect by default. It expects to approve final rules by October.

x
State audit takes issue with Edmonds COVID grant monitoring

The audit report covered 2023 and is the third since 2020 that found similar issues with COVID-19 recovery grant documentation.

Bothell
Bothell man pleads guilty to sexual abuse of Marysville middle schoolers

The man allegedly sexually assaulted three students in exchange for vapes and edibles in 2022. His sentencing is set for Aug. 29.

Larsen talks proposed Medicaid cuts during Compass Health stop in Everett

Compass Health plans to open its new behavioral health center in August. Nearly all of the nonprofit’s patients rely on Medicaid.

Snohomish County Health Department Director Dennis Worsham on Tuesday, June 11, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Snohomish County Health Department director tapped as WA health secretary

Dennis Worsham became the first director of the county health department in January 2023. His last day will be July 3.

Community members gather for the dedication of the Oso Landslide Memorial following the ten-year remembrance of the slide on Friday, March 22, 2024, at the Oso Landslide Memorial in Oso, Washington. (Ryan Berry / The Herald)
The Daily Herald garners 6 awards from regional journalism competition

The awards recognize the best in journalism from media outlets across Alaska, Idaho, Montana, Oregon and Washington.

Missing Marysville boy, 10, found safe and sound

Police said the boy was last seen Sunday morning before leaving to go for a run at a nearby middle school.

Red tape hangs in the front of the entrance to a burned down Center for Human Services building along 204th Street on Monday, July 7, 2025 in Lynnwood, Washington. (Olivia Vanni / The Herald)
Lynnwood fire destroys behavioral health nonprofit building

The cause of the fire is under investigation. The building housed an intensive mental health support program for youth and families.

Logo for news use featuring the municipality of Gold Bar in Snohomish County, Washington. 220118
Lynnwood man dies in fatal crash on US 2 near Gold Bar

The Washington State Patrol said the driver was street racing prior to the crash on Friday afternoon.

Thousands gather to watch fireworks over Lake Ballinger from Nile Shrine Golf Course and Lake Ballinger Park on Thursday, July 3, 2025 in Mountlake Terrace, Washington. (Olivia Vanni / The Herald)
Thousands ‘ooh’ and ‘aah’ at Mountlake Terrace fireworks show

The city hosts its Independence Day celebrations the day before the July 4 holiday.

Liam Shakya, 3, waves at a float passing by during the Fourth of July Parade on Friday, July 4, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Everett celebrates Fourth of July with traditional parade

Thousands celebrated Independence Day by going to the annual parade, which traveled through the the city’s downtown core.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.