The Politics Blog

Here are numbers behind tax deal Gov. Inslee wants Legislature to OK in Thursday special session

OlympianNovember 5, 2013 

Gov. Jay Inslee announces a special session to start Thursday that is designed to pass a package of bills that would secure Boeing's commitment to build a 777X plane and a carbon-fiber jet wing plant in the Northwest.

BRAD SHANNON — The Olympian

Gov. Jay Inslee announced a bombshell agreement between Boeing, the Machinists labor union - and eventually the Legislature - that would keep Boeing's 777X plane manufacturing in the Northwest for decades, while preserving some 56,000 high-paying jobs in the region.

The first-year Democrat stood with House and Senate leaders along with Boeing Commercial Airplanes chief executive Ray Conner and Machinists vice president Rich Michalski to announce a special legislative session that starts Thursday at 9 a.m. in Olympia. The goal will be to pass a package of tax breaks, investments in workforce education and a major transportation-tax package.

Inslee's aides filled in some of the financial blanks about the tax deal later. Inslee aerospace adviser Alex Pietsch said the agreements would give the Boeing Commercial Airplanes Co. and other regional aerospace firms about $8.7 billion in tax breaks over 16 years.

That in effect is an expansion and extension of business-occupations tax breaks awarded to Boeing in 2003 as part of a 20-year deal that eventually landed a share of the Boeing Dreamliner production here.

But that earlier agreement was valued at just over $3 billion. Under the pending agreement, the Legislature would approve the tax relief and also pass a bipartisan transportation tax package worth potentially $10 billion for projects all over the state, authorize new investments in aerospace training at community colleges and also exempt the construction of wing-manufacturing buildings from sales taxes.

But Inslee said the tax breaks won't actually cost taxpayers, because the package would assure more than 50,000 jobs stay in the region.

Pietsch said the net gain for taxpayers would be close to $17 billion in state and local tax revenues over 16 years - with additional economic benefit from keeping about 56,000 of the company's 84,000 employees in the region.

Inslee outlined some aspects of the agreements during a press conference, and his office provides other details here.

As part of the agreement that Boeing officials did not dispute in their press conference with Inslee, Boeing would build its new 777X jet in the Northwest as well as its next-generation carbon fiber wing plant. 

Senate Majority Leader Rodney Tom, a Medina Democrat who leads a Republican dominated coalition, suggested that a transportation tax deal might not get done right away or could be done in a second "phase" of legislative action.

But whether that could mean a vote in the Legislature early next year or a public vote late next year was not clear.

Sen. Karen Fraser, D-Thurston County and chairman of the Senate's minority caucus, said she believes it is the job of the Legislature to act on a tax package in Olympia. Putting something on the ballot would delay a vote until 2014, she said, adding that the value of aerospace to the region's economy makes it important for lawmakers to act.

The tax package would build on an agreement former Gov. Gary Locke, Boeing and the Legislature reached in 2003 - at a time Boeing was considering building its future 787 Dreamliner jet out of state. Washington was one of many states in competition for that work, and in the end landed some of the manufacturing after the tax package - then described by one lawmakers as a "big gulp" - passed into law.

What is significantly different in this case, according to Inslee spokesman David Postman, is that Washington can lock down the work with passage of the legislative passage - rather than enhance its position in relation to other states competing for Boeing's attentions as was the case in 2003.

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