Gregoire defends aviation tax breaks

Gov. Chris Gregoire signed new tax breaks for the state’s aviation industry Thursday, but insisted they weren’t subsidies like the ones being debated between Boeing and Airbus in the fight over the contract for the Air Force’s new refueling tanker.

The legislation she signed, one of 15 bills autographed during a ceremony at the Northwest Museum of Arts and Culture in Spokane, offers a lower rate on the state’s business and occupation tax to companies that maintain and repair aircraft. It’s the same rate that Boeing and its major in-state suppliers get, but it’s not an unfair subsidy, Gregoire said.

“Airbus gets the same tax break” for their suppliers in the state, she said. All state laws that give incentives to the airplane industry are designed to withstand a challenge of unfair subsidies at the World Trade Organization.

The U.S. government has charged that Airbus receives unfair subsidies from European governments, and the state’s congressional delegation has used those allegations as part of their challenge to the $35 billion federal contract for a new tanker jet awarded to a consortium that includes Airbus, rather than Boeing.

Gregoire was in Everett on Wednesday, at the factory that Boeing was planning to use to build air tankers had it won the contract. She said Thursday she believes Boeing has a good basis to challenge the contract because the Air Force chose a bigger plane than it said it wanted. She also wonders if the Air Force has figured in the cost of enlarging some hangars on its tanker bases to hold the bigger Airbus models.

But the biggest question about awarding the contract to a consortium that includes Airbus involves national defense policy, she said.

“Should you send away our defense contracts to another country?” she asked. “The French aren’t always with us. They weren’t with us on Iraq. That is a policy question the Congress is going to have to step up to.”

While it’s true that Boeing gets some parts from overseas, much more of the Airbus tanker is manufactured and built outside the United States, she said.

At the MAC, Gregoire also signed a bill that drops the fees from $2,000 a year to $100 a year for so-called craft distilleries that use locally grown products. It also allows the distilleries to have sampling and limited retail sales. The bill is designed to help Dry Fly Distilling of Spokane, the first small distillery to sell liquor since Prohibition, and craft distilleries proposed in other parts of the state.

She also signed bills with tax breaks for programs that provide weatherization assistance to the poor, for housing built for the military and for some motion picture projects.

Other bills lowered workers’ compensation fees for employees who work part of the year in another state, offered help to a foundation that provides prescription drugs to the poor and allowed heavier truck traffic on roads between the Canadian border and Oroville.

A bill that supports early releases of water from Lake Roosevelt, through an agreement with the Spokane Tribe of Indians and Confederated Tribes of the Colville Reservation, was also signed.