The Politics Blog

Legislature approves Boeing tax breaks, adjourns special session

Staff writerNovember 9, 2013 

Gov. Jay Inslee talking with Snohomish County executive John Lovick and Pierce County executive Pat McCarthy on the first day of the special legislative session Thursday in Olympia.

STEVE BLOOM — The Olympian / file photo

The Washington Legislature’s special session ended after three days Saturday, producing the big favors that the Boeing Co. needed from state taxpayers if it is to build its next-generation 777X jet in the Northwest.

The next move is up to Machinists District 751 members, who must ratify a contract Wednesday amid recent signs that the rank and file is reluctant and angry. The contract requires pension cuts and other givebacks over its eight-year term, and Boeing says it will look out of state without that deal.

Icing on the cake for Boeing would come later in the month if lawmakers can finally agree on a transportation package of up to $10 billion. A key Republican, Sen. Curtis King, said Saturday that a deal might be brokered as soon as Nov. 21-22, leading to what could become the fourth special session of the year.

Whatever else happens, Gov. Jay Inslee and lawmakers of both parties were celebrating what they saw Saturday as clear, firm steps by the state toward gluing Boeing’s high-tech future to the state where Bill Boeing started the company 97 years ago.

“We’re making sure that we can say we’re going to make the next great Boeing jet made by the same great Boeing Machinists. We have made a decision not to hide from international competition, but to be successful in international competition,” Inslee said at a late afternoon news conference in the Capitol’s ornate State Reception Room. “This happened because we had a group of legislators that buckled down on a bipartisan basis, and in very short order they did a great job producing a great product.”

The warp-speed work by the Legislature provides about $10.5 million for aerospace training and environmental work in the next 18 months to speed aerospace industry construction permits, and other training benefits longer term. Most important, an $8.7 billion tax incentive ensures that tax breaks adopted a decade ago can stay in effect until 2040 — or 16 years past their 2024 expiration date.

Boeing is pledging to keep its new 777X jet assembly in the Northwest long term as well as to put its new carbon-fiber wing plant in Washington. The two developments are expected to retain 56,000 jobs and add a few thousand workers in the future.

In the end, only 13 members of the state House and Senate voted against the tax deal — two Democrats in the Senate and near-equal numbers of Democrats and Republicans in the House. All opponents from South Sound were Democrats: Reps. Chris Reykdal of Tumwater, David Sawyer of Tacoma and Steve Kirby of Tacoma.

In floor speeches, many critics said the Legislature’s fast action trampled on legislative rules requiring five days’ notice before acting on bills. Others questioned why small businesses were not getting the same consideration as Boeing — which flexed its muscles and got what it wanted, even while none of its personnel actually testified before any legislative committee on the bills.

“What’s good for Goliath should be good for David,” Republican Sen. Janea Holmquist Newbry of Moses Lake said in a floor speech.

But the majority was clearly on giving a hand to the state’s aerospace industry. Despite the size of the $8.7 billion tax incentive, some pointed to an economic analysis showing it will repay the state $21.3 billion in new tax revenues over the 16-year period it is in effect — from 2025 to 2040.

“This goes far beyond any specific company or even the aerospace industry,” said Senate Majority Leader Rodney Tom, a Democrat from Medina who leads the mostly Republican majority coalition. “This package could position Washington as the leader in new carbon-fiber composite technology and make us the center of excellence for research, design and manufacturing of composite materials — for potentially decades to come.”

Senate Republican Leader Mark Schoesler of Ritzville said in a statement that the Boeing measures should serve as a “wakeup call to make changes for the entire employer community, not just a single sector.” Like other Republicans who spoke on either side of the Boeing bills, Schoesler said the Legislature should take steps to speed permitting for all businesses by getting environmental reviews done quicker.

The special session landed on lawmakers last week like a bombshell with Inslee announcing on Tuesday he wanted lawmakers back in town by Thursday morning to adopt a package of bills — including the transportation plan that lawmakers have been working on all year and possibly the biggest tax break in state history.

Although the general public was caught by surprise by the bills’ contents, they actually grew out of a task force Inslee set up months ago to improve the economic climate for aerospace. Members of that task force included Republican Sen. Barbara Bailey of Oak Harbor, Republican Rep. Drew MacEwen and Democratic Rep. Larry Springer of Kirkland, and all voted in favor of the package and touted its benefits.

Bailey said the bills capture the biggest pieces of the task force effort — namely the tax breaks, training and permits. But she said additional work still needs to be done on a transportation package that lawmakers left town without completing.

Springer said the benefits are felt almost statewide. “This will have a positive effect on the 1,350 other aerospace (firms) in Washington state,” Springer said. “Those 1,350 businesses are in 34 of Washington’s 39 counties, and over 100 of them employ fewer than five people.”

MacEwen agreed with the bills but said the task force had never coalesced around the transportation ideas.

Several rural lawmakers, including Rep. Jason Overstreet, R-Lynden, attacked the measures. In comments that echoed complaints of the lobbyists for the state’s small-business federation, Overstreet questioned the rush to help a corporate titan like Boeing without offering help to others. He also questioned why state taxpayers had to pony up for such a wealthy company.

“This entire process is kangaroo court,’’ Overstreet said.

Reykdal, D-Tumwater, also questioned why Boeing wasn’t asked to help pay for training in the short term. He also complained that much of the tax concession — $300 million by his count — goes to Wall Street in the form of dividend to owners of Boeing stock.

Brad Shannon: 360-753-1688


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