November 9, 2013 in City

Legislature extends tax breaks, training programs to keep Boeing work in Washington

By The Spokesman-Review
 

OLYMPIA — The Legislature gave overwhelming approval to bills designed to convince Boeing to build a new jetliner in Washington, rejecting calls Saturday to spread the benefits of tax breaks and streamlined permit approvals to all businesses in the state.

Then it adjourned the special session without any public discussion of the other thing mentioned by Gov. Jay Inslee when he called them back to Olympia last Tuesday: a $10 billion transportation package to build new highway projects and restore crumbling roads and bridges.

Inslee called Saturday’s approval of tax breaks and aerospace training “a decision not to hide from international competition” from other states and countries seeking aerospace jobs. The two bills are designed to convince Boeing to assemble its new 777X jetliner in Washington and build a factory to make that plane’s carbon fiber wing.

The company’s decision also depends on its machinists’ union accepting a new labor contract, which raises health care costs and replaces its pension plan with contributions to employees’ retirement accounts. A contract vote is set for Wednesday, and some members of the union denounced the agreement last week.

“The outcome of the machinists’ decision is not certain. The state’s commitment to aerospace is certain,” said Inslee, who declined to urge union members to vote yes but stressed that the 777X project represents jobs for decades.

Progress is being made on a transportation package, he and legislative leaders said. There were no details about what it might contain, but Inslee said he could call another special session later this month when legislators are scheduled to be in Olympia for interim committee meetings. A package of tax increases, project lists and reforms could be “possibly even done by the time of the Apple Cup,” the governor said.

Saturday’s floor sessions were devoted to the aerospace tax breaks and training bills, with debates that were sometimes heated even though the outcome was never in doubt.

On votes of 42-2 in the Senate and 75-11 in the House, tax breaks the aerospace industry currently enjoys for Boeing 787 production were extended through 2040. That’s something state officials say Boeing has told them would convince the company to build the new assembly line and wing factory in Washington.

The tax breaks have an estimated value of more than $8 billion to the aerospace giant, but would be cancelled if the company moves the assembly of the plane, or its derivatives, or any significant part manufacturing to another state. Those conditions were a reflection of anger over Boeing’s 2009 decision to open a second 787 assembly line in South Carolina after winning tax concessions for that jetliner from Washington in 2003.

Boeing is part of the state’s history and DNA, said Rep. Reuven Carlyle, D-Seattle, and the tax break bill represents a partnership and an “authentic marriage” between the company and the state. Other supporters praised the company for paying good wages and its workforce for its skill.

Opposing the tax bill in the House were a mixture of the chamber’s most conservative and most liberal members.

Rep. Matt Shea, R-Spokane Valley, said every Washington business deserves lower taxes, not just Boeing and the aerospace industry. Rep. Chris Reykdahl, D-Olympia, said Boeing shareholders will reap some of the benefits of the tax cuts and that money could be better spent on education in the state. The conditions aren’t iron-clad, Reykdahl added.

The package of training programs for aerospace workers and streamlined permitting for building new aerospace facilities passed with slightly bigger margins. It adds some $8 million and adds 1,000 more students to existing aerospace training programs at Spokane Community College and other technical colleges around the state. The number of slots for each school hasn’t been determined, but state officials said some will be added at SCC. It also has $6 million to build an Aerospace Training Center in Renton and $1.5 million to expand the training center in Everett to handle composite manufacturing that will be key to the new plane’s wing.

That bill passed 44-0 in the Senate and 77-9 in the House, where Rep. Jason Overstreet, R-Lynden, called the expedited process a “kangaroo court.”

Before each bill came to a vote in the Senate, Sen. Janea Holmquist Newbry, R-Moses Lake, tried to add amendments that would cut the state’s business and occupation tax by 40 percent for all businesses and require all counties to process building permits as quickly as the aerospace projects will be handled.

“What’s good for Goliath should be good for David,” she said.

Both amendments failed on voice votes.

Sen. Mike Baumgartner, R-Spokane, who eventually voted for both bills, criticized the way they were rushed through committees outside the normal review process and with little chance for the public to understand what the Legislature was doing.

“I hope the next time there is a special deal for a special company … we do it in the normal way,” he said.


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