Boeing is not living up to the intent of massive tax break, which was created to maintain and increase good paying aerospace jobs.
WASHINGTON is bleeding aerospace jobs — more than 3,000 jobs from Boeing since November 2013. Based on Boeing’s own announcements, the company’s Washington workforce will continue to shrink in the months and years ahead.
Many of these jobs would have directly supported Boeing’s new 777X. Others support legacy Boeing Puget Sound divisions, such as Commercial Aviation Support, Research and Technology, aircraft interior design and manufacturing, and 13 other programs that once employed more than 6,000 Washington residents.
November 2013 is significant because it is the month the state Legislature, under intense pressure from a favored company, extended until 2040 the preferential tax incentives for the aerospace industry. The aerospace tax rate is roughly 60 percent of the amount paid by other manufacturers. The projected price tag to Washington tax payers is $8.7 billion. This comes at a time when our state, our schools and our communities cannot meet existing needs.
The intent of the Legislature when extending the incentives was to maintain and grow our state’s aerospace industry with good jobs. The only requirement in the law that grants Boeing the largest corporate tax break in U.S. history is that the 777X wing and final 777X assembly stay in Washington. If either moves out, the tax break ends. At Boeing’s steadfast insistence, the law is not tied to maintaining jobs in Washington or ensuring good wages for employees at aerospace suppliers. Glaringly, it also doesn’t ensure the engineering, design or subassembly work associated with the 777X will remain in Washington.
Boeing’s actions are in stark contrast to that original intent. High-paying engineering, research and technology jobs are being moved out of Washington. Losing this work makes our state less competitive for next-generation airplane programs.
Continuing tax breaks to companies that move good jobs and expertise out of our state makes no sense. South Carolina, Missouri, Alabama, Oklahoma and other states require a specific number of jobs for aerospace companies to qualify for tax incentives. Washington must do the same.
And it’s not just states that have tied incentives to Boeing jobs: The company is currently negotiating with Oklahoma City on an agreement that could give the company a $6 million tax break for relocating 900 jobs, primarily from Washington, to that city.
The result is Washington taxpayers’ dollars are helping Boeing send our jobs to places that require new jobs for tax incentives. By sending Washington jobs to Missouri and Oklahoma City, Boeing gets tax breaks from two entities without creating a single new job.
Sponsored by state Rep. June Robinson, D-Everett, HB 2147 is a reasonable approach to making the aerospace tax preferences accountable to Washington taxpayers. Boeing would still benefit from its full tax incentive by keeping jobs in Washington. However, the incentive would be reduced if Boeing’s Washington employment dropped below benchmarks from the date the extension was granted.
Recent public opinion polling shows strong support for the bill — on both sides of the Cascades. Robinson’s bill also enjoys bipartisan legislative support, but it must first advance out of the House Finance Committee.
Even as some aerospace workers face layoffs and turn to state programs for assistance, we still hear the argument about the incentive: “A deal is a deal.”
But the incentive has been changed many times, at Boeing’s request, since its first iteration in 2003, when the incentive was to continue until 2024. This was certainly the case in November 2013 when Boeing came to the Legislature and requested $8.7 billion then instead of waiting until 2024.
While the law includes a review by the state’s Joint Legislative Audit and Review Committee (JLARC) no later than 2019, thousands more jobs could be lost by then.
A second state measure, SHB 1786, sponsored by state Rep. Mia Gregerson, D-SeaTac, would incentivize aerospace companies to pay a living wage. There are approximately 7,000 aerospace workers in Washington earning less than $15 an hour. Unfortunately, SHB 1786 might not make it out of committee. This could happen despite overwhelming public support across party lines and on both sides of the state.
Adding accountability to the aerospace tax preferences can’t wait. It’s critical to protecting jobs today and Washington’s competitiveness in the future.