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Originally published Saturday, November 9, 2013 at 7:30 PM

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Legislature approves tax breaks to secure Boeing 777X

The Legislature on Saturday approved aerospace-training programs and billions in tax incentives to help secure Boeing’s 777X jet. The union vote is next.


Seattle Times Olympia bureau

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OLYMPIA — Now the state waits.

With unusual speed, the Legislature on Saturday boosted aerospace-training programs and approved $8.7 billion in tax breaks to try to secure Boeing’s 777X jet.

But that meets only half of Boeing’s requirements to keep production of the aircraft in Washington state. The company also wants the Machinists union to accept a new eight-year contract with big cuts in future pension and health-care benefits.

That’s far from a given, considering the angry reception Boeing’s contract proposal got from the union. The union is expected to vote on the contract Wednesday.

Gov. Jay Inslee was asked repeatedly during a news conference Saturday if he wanted the Machinists to approve the contract. He said that’s up to union members, but sent a strong signal about Boeing’s role in the state economy.

“People are going to make individual decisions and I don’t think any of us should prejudge what that decision will be,” Inslee said, adding later that “the one thing I know, as a father and a working person, is it’s a great thing to bring a job home. This is bringing 54,000 jobs home to the state of Washington.”

That’s been the promise from the beginning, that securing the 777X means thousands of jobs for the state.

An independent analysis released by the governor’s office projected that keeping production in Washington would produce $21 billion in tax revenue for the state over 16 years.

“This is a generational opportunity,” Senate Ways and Means Chairman Andy Hill, R-Redmond, said on the Senate floor Saturday. “This is about our aerospace economy.”

Not everyone saw it that way.

Democratic Sen. Bob Hasegawa, of Renton, voted against the tax breaks.

“I have a philosophical issue with putting this economic development strategy on the backs of the Machinists,” he said. “We’re asking them to sacrifice the future of the next generation of Boeing workers. That is not a sustainable economic development strategy for the state.”

Hasegawa was far in the minority on this one. Senate Bill 5952 passed the Senate 44-2, — Sen. Adam Kline, D-Seattle, also voted no — and in the House it passed 75-11.

Inslee called the three-day special session, which ended Saturday, to fulfill the state’s side of the bargain to keep the 777X.

The tax-incentives measure extends commercial-airplane tax breaks — due to expire in 2024 — until 2040 and expands a sales-and-use tax exemption for construction of buildings used to manufacture airplanes, among other things.

Lawmakers included provisions in the bill that take away the preferential tax rates for Boeing if it moves production of the 777X out of state.

That’s a lesson learned from 2003 when the Legislature approved big tax breaks for Boeing and other aerospace companies with the expectation that all 787 Dreamliners would be built in the state. But the legislation had enough maneuvering room for Boeing to put a second 787 Dreamliner assembly line in South Carolina in 2009.

The aerospace-training legislation, House Bill 2088, passed both chambers by equally large margins.

The training bill, among other things, would spend $8 million to increase high-demand aerospace enrollments by the equivalent of 1,000 additional full-time students for the 2014-15 academic year.

“It is the intent of the Legislature that this funding be ongoing or until there is no longer a demonstrated need,” according to a bill report.

It also includes $2 million for grants to local governments to advance permitting for large aerospace manufacturing sites.

Inslee is expected to sign both bills into law as early as Monday.

One item on Boeing’s Olympia shopping list remains — passing a multibillion-dollar tax package to pay for transportation improvements around the state, including the highways Boeing uses to move its people and products.

Lawmakers said talks were progressing, but had no immediate timeline for reaching an agreement.

When it comes to the union, Inslee’s spokesman, David Postman, said the governor has been in contact with Machinists leaders every day.

Although the governor isn’t advising union members how to vote, he is saying “what’s being done here (in Olympia) supports a long-term contract if that’s where they go. And those Machinists, like every Washingtonian, should feel confident that this work is really going to be done here and we’re not going to have a second line go to South Carolina or a wing go to Japan.”

Andrew Garber: 360-236-8266 or agarber@seattletimes.com. On Twitter @awgarber



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