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Inslee signs Boeing tax break bill

Governor Jay Inslee signs Boeing bill, flanked By Sen. Patty Murray, Boeing CEO Ray Conner (second from left) and other state officials. Credit: John Stang

One piece done, another to go.

When Gov. Jay Inslee signed a $8.7 billion tax break bill for Boeing on Monday at the Museum of Flight (see Robert Mak video below) it was the state's opening gesture to keep the upcoming 777X airliner project in Washington State.

Boeing now awaits the second action it seeks in order to guarantee that work on the 777X won't go elsewhere: a yes vote from its Machinists' union on an eight-year contract that requires significant concessions from roughly 30,000 workers. "It's not a bluff," said Ray Conner, Boeing's Commercial Airlines CEO just after the Inslee bill signing. The union will vote this week.

Tom Wroblewski, president of the International Association of Machinists and Aerospace Workers Local No. 751, refused to say how he thinks his union vote will go or what course of action he will recommend to its members. "They have to do what's right for them," Wroblewski said at the signing.

"There's more work to be done in the next few days,” allowed Sen. Patty Murray, D-Wash., also at the bill signing. “It's critical for everyone to work together,"

During the special (Thursday-Saturday) session called specifically for this legislation, state lawmakers rammed through a bill extending the expiration date on eight Boeing-related tax breaks from 2024 to 2040. Inslee and legislators believe the 777X with its tens of thousands of jobs is important for the state's long-term economic health.

"What happened in Olympia in the last few days allowed us to continue a great Washington tradition,” said the governorr: “To lead the country in aerospace.”

On Monday, Boeing's Ray Conner insisted that the bill’s speedy passage was necessary to ensure that Boeing was able to select a manufacturing site in a timely matter. He declined to say how quickly Boeing will make its 777X location decision, and did not elaborate on why the matter had to be taken care of prior to an already-scheduled (Nov. 21-22) legislative session. Conner was whisked away before the press could ask follow-up questions.

On Friday and Saturday, legislators from both parties grumbled about the unexplained need for the bill’s hasty three-day turnaround, and about having no time to study or amend it.

In 2003, Olympia gave Boeing $3.2 billion in tax breaks by granting the same eight exemptions that will be extended in the current bill. Those exemptions were supposed to ensure that the 787 Dreamliner would be built in Washington. But that didn’t prevent Boeing from building a second 787 plant in South Carolina and using that facility to play the two states against each other, with Washington usually coming out on the losing end.


Video by Robert Mak, SeattleTopStory.com

With that memory fresh in mind, this new law comes with a caveat: If Boeing moves any 777X work to another state, the company loses its biggest tax break — 50 percent off the preferential business-and-occupation tax rate on the 777X's gross receipts. The estimated cost of that one preferential B&O tax discount? $3.5 billion over 16 years.

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