Special session begins for Boeing incentives

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Associated Press

Posted on November 7, 2013 at 4:00 PM

OLYMPIA, Wash. (AP) — Lawmakers started returning to the Capitol as a new special session kicked off Thursday to address tax incentives for Boeing that Gov. Jay Inslee says is needed to ensure the company builds the composite wings and fuselage of its new 777X in Washington state.

When he called for the special session earlier in the week, Inslee said he wants lawmakers to complete their work within a week, but by law, he can't limit the timeframe and it could run up to 30 days. Inslee also has called for a $10 billion transportation revenue package to pass as part of the overall plan, but Senate leadership has indicated that it wants to take that up at a later time.

The overall package Inslee proposed Tuesday would extend all commercial airplane tax incentives for 16 more years to 2040. That would save Chicago-based Boeing about $8.7 billion, but state officials say it would bring the state an estimated $17 billion in revenue from economic activity spurred by the new line. That measure will be heard by the House Finance Committee Thursday afternoon.

Inslee is also seeking to streamline the permitting process to help speed up expansion of facilities at large manufacturing sites around the state, which would also benefit Boeing.

Earlier this week, Boeing proposed an eight-year labor agreement with the International Association of Machinists and Aerospace Workers that would guarantee construction of the new 777X in the Puget Sound area. Questions about whether legislative action was actually needed were raised after the Machinists posted a summary of the agreement between the union and Boeing online Wednesday. A letter of understanding that was included indicated the company's commitment hinges solely on the union's vote next week on the eight-year contract, and there was no mention of legislative action as a parallel requirement.

Inslee's office released a letter Thursday written by a Boeing official that states that "transportation infrastructure improvements" and other measures will ensure Boeing's lasting competitiveness in the state.

Larry Brown, the union's legislative and political director, told The Associated Press on Wednesday evening that he believes legislative action is "absolutely essential."

"To not do so would be irresponsible of the Legislature, when tens of thousands of jobs hang in the balance," he said.

He said that while he can't say for certain what Boeing would do if the union accepted the contract, and the Legislature didn't act, "we're trying to not leave any stone unturned."

Brown was leading a union delegation to Olympia on Thursday to lobby for the governor's proposal.

Remy Trupin, executive director of Washington State Budget & Policy Center, noted the tax breaks that were extended to Boeing in 2003 that "didn't stop the company from moving production of the 787 to South Carolina."

"We can't let that happen again," he said in a written statement on Thursday.

The measure that lawmakers will hear in committee says that the tax break is "contingent upon the siting of a significant commercial airplane manufacturing program in the state of Washington."

Even so, Rep. Cary Condotta, a Republican from East Wenatchee who is a member of the House Finance Committee, said that currently, he's not supportive of the tax break plan.

"I'm not going to make a knee-jerk decision based on a threat by a big corporation," he said. "I'm just not going to do it."

Rep. Ross Hunter, a Democrat from Medina who is chairman of the House Appropriations Committee, said that the measure will "help provide a stable tax platform for the aerospace industry in our state."

"It's a logical extension of existing law that will assure we maintain and grow this important driver to our economy," Hunter wrote in statement on House Democrats' website.

Boeing officials joined Inslee at the Tuesday press conference announcing the special session, but wouldn't speak to the media. But Inslee told reporters that the company had told him in "clear, unequivocal and concrete terms" that if the union ratifies the agreement and the Legislature takes action, "we're going to get the largest aerospace economic expansion program of my lifetime."

"You can be quite assured that I wouldn't say that if it wasn't the case," he said.

Inslee is missing the first stop of his previously scheduled trade mission to Japan and China because of the special session. He was set to leave Saturday for Tokyo, but now will not. Spokesman David Postman said that rest of the delegation will leave as planned, and that Inslee hopes to meet up with them soon after, but a date has not yet been settled on due to the session. The original schedule had Inslee arriving in Beijing on Nov. 12.

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The tax incentive bill is House Bill 2089.

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Online:

http://www.leg.wa.gov

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