War of words between Boeing, unions at tax-break hearing

OLYMPIA — The Boeing Co. and some of its employees squared off Tuesday on whether state lawmakers should impose new conditions on the massive tax break that helped land the 777X program in Everett.

In a two-hour hearing, a Boeing executive and Everett’s mayor led the opposition to a bill requiring the aerospace company maintain a certain number of jobs in Washington or risk losing some — or all — of the tax incentives that were extended by lawmakers in 2013.

Bill McSherry, the company’s vice president of state, local and global corporate citizenship, and Everett Mayor Ray Stephanson insisted to the House Finance Committee that the aerospace giant is holding up its end of the two-year-old bargain.

“Boeing has kept its word to Washington. We are investing more than a billion dollars in the massive 777X composite wing center in Everett, as promised,” McSherry said. “Do not allow proponents of this bill to drive a wedge between this company and this state. We all have too much to lose.”

Machinists, engineers and the prime sponsor of House Bill 2638 argued that the company is not upholding its end of the deal. They said lawmakers presumed Boeing would maintain and add jobs but the company has pared 4,057 jobs — some going to other states in order to qualify for their tax breaks.

“Everyone who voted on it thought it was going to keep and grow jobs in the state of Washington,” said Rep. June Robinson, D-Everett. “In fact no one at that time imagined that in two short years we would be sitting here with Boeing having moved 4,000 jobs out of state.”

James Raskob, of Lake Stevens, an engineer who works for Boeing in Tukwila, said the depleted ranks in his office are a cause of constant worry.

“Those of us who are here look at the empty desks and wonder who is going to be next,” he said.

Tuesday’s hearing marked the second in two years on legislation sponsored by Robinson. The bill has two Republican co-sponsors: Rep. Cary Condotta, of Wenatchee, and Rep. Richard DeBolt, of Chehalis. Robinson and Condotta serve together on the finance committee.

House Bill 2638 targets the incentives which could result in $8.7 billion in tax savings through 2040 for the aerospace industry, including Boeing. The tax incentive legislation does not prevent Boeing from shipping jobs out of state.

It would tie the amount of incentive with the size of Boeing’s workforce in Washington. It sets a baseline of 83,295 jobs, which is the number Boeing reported employing in the state at the time the tax break extension was approved.

If the company’s total employment here drops between 4,000 and 5,000 below that baseline, it loses half of its preferential business and occupation tax rate and tax credit. If employment declines by more than 5,000 jobs, the tax break goes away.

The first threshold has already been crossed. Boeing’s latest workforce report shows 79,238 jobs in Washington as of Dec. 31 — which is 4,057 fewer than when the tax break got extended.

The International Association of Machinists and Aerospace Workers District 751 and the Society of Professional Engineering Employees in Aerospace helped Robinson craft the bill, as they did with last year’s version.

The two unions contend the state gave Boeing too good a deal by not clawing back any of the tax breaks when the firm ships jobs out of state.

Jon Holden, president of IAM 751, said they supported extending the tax breaks in 2013 as a means of boosting jobs and promoting economic development. They didn’t expect job losses, he said.

“Unless we address the lack of job guarantees in the current legislation we are at risk of continuing that trend,” he said.

Opponents, meanwhile, worried that while the bill applies only to Boeing, it poses a threat to hundreds of aerospace suppliers that do business with the firm. And, they said, passage would cause businesses to consider leaving the state and deter others from locating here because of worries that the state will renege on any deals it makes.

“Every business is asking … where do the clawbacks stop,” said Tim Morgan, chief executive officer of TTF Aerospace in Auburn.

Following the two-hour hearing, the committee’s chairwoman said she’ll advance the bill “if the votes are there.”

“We had bipartisan sponsorship of the bill. We will see if we have bipartisan support to get it out of the committee,” said Rep. Kristine Lytton, D-Anacortes.

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

Talk to us

More in Local News

An example of the Malicious Women Co. products (left) vs. the Malicious Mermaid's products (right). (U.S. District Court in Florida)
Judge: Cheeky candle copycat must pay Snohomish company over $800K

The owner of the Malicious Women Co. doesn’t expect to receive any money from the Malicious Mermaid, a Florida-based copycat.

A grave marker for Blaze the horse. (Photo provided)
After Darrington woman’s horse died, she didn’t know what to do

Sidney Montooth boarded her horse Blaze. When he died, she was “a wreck” — and at a loss as to what to do with his remains.

A fatal accident the afternoon of Dec. 18 near Clinton ended with one of the cars involved bursting into flames. The driver of the fully engulfed car was outside of the vehicle by the time first responders arrived at the scene. (Whidbey News-Times/Submitted photo)
Driver sentenced in 2021 crash that killed Everett couple

Danielle Cruz, formerly of Lynnwood, gets 17½ years in prison. She was impaired by drugs when she caused the crash that killed Sharon Gamble and Kenneth Weikle.

A person walks out of the Everett Clinic on Thursday, Sept. 7, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
The Everett Clinic changing name to parent company Optum in 2024

The parent company says the name change will not affect quality of care for patients in Snohomish County.

Tirhas Tesfatsion (GoFundMe) 20210727
Lynnwood settles for $1.7 million after 2021 suicide at city jail

Jail staff reportedly committed 16 safety check violations before they found Tirhas Tesfatsion, 47, unresponsive in her cell.

A semi-truck rolled over blocking all traffic lanes Thursday morning on I-5 north just south of Arlington on Sept. 21, 2023. (Washington State Patrol)
Overturned trailer spills fish onto I-5 near Arlington, closing lanes

The crash blocked all lanes, forcing drivers going north during rush hour to use the left shoulder.

The Marysville Municipal Jail is pictured Thursday, Sept. 14, 2023, in Marysville, Washington. (Ryan Berry / The Herald)
Marysville weighs mandatory jail time for repeated ‘public disorder’

The “three strikes” proposal sets a minimum sentence of 30 days in jail for crimes like public drug use and trespassing.

Everett police on patrol heard gunshots near 26th Street and Lombard Avenue and closed off multiple roads as they investigated on Wednesday, Sept. 20, 2023. (Everett Police Department)
3 teens arrested after gunfire in downtown Everett

No one was injured. Police heard gunfire in the area of 26th Street and Lombard Avenue.

It’s time to celebrate and say thanks

Local journalism — and community support — will be the stars of Behind the News Stories on Oct. 24 in Edmonds.

Most Read