Will we ever say “no” to Boeing?
by Knute Berger
Are the state's fortunes rising with Boeing's? Credit: ThierryB/Flickr
The "win" of keeping Boeing's 777X project in-state was ugly, but a win nonetheless, and Gov. Jay Inslee and other lawmakers are breathing a sigh of relief that Boeing wasn't "lost" on their watch.
No one seems ready to plunge into the next round of Boeing's sure-to-come demands. As one official told me last week, those who worked so hard to keep Boeing happy want to take at least a few moments to enjoy their victory. But as Dominic Gates, a Seattle Times writer on the Boeing beat, pointed out in his after-the-deal overview, there will be a lot of future opportunities for the aerospace giant to strong-arm the state.
Quoting aerospace consultant Scott Hamilton, Gates writes: "When the jet-maker launches its next new airplanes, likely a 757 replacement around 2019 or a 737 replacement around 2020, 'Boeing will take us through this all over again.' "
Consider these odds and ends:
A governor's task force is still looking at revising the so-called "fish consumption" water quality standards. Boeing and other industries have pressed for lower standards regarding pollutants that can be released. The Department of Ecology is expected to announce new rules sometime early in the year.
The new, stalled state transportation plan? While it wasn't locked in to keep the 777X here, the company does want to see road improvements both in Everett and Paine Field. Alex Pietsch, who heads the state's Office of Aerospace, says Boeing employees travel 8.5 million miles on Washington roads every year; the 777X promises to increase that traffic statewide. Thus, Boeing has a vested interest in improvements on I-405, SR-520 and elsewhere.
Getting the 777X plant permitted rapidly is also on the front burner. The supplemental budget request contains about $1 million in funds for advanced materials research and training programs for the University of Washington and Washington State University.
Other agenda items that pro-business legislators have pushed under the auspices of pleasing Boeing include workers' compensation reform (a GOP priority) and streamlining permitting processes statewide. Sen. Mike Baumgartner, R-Spokane, has also pushed "right to work" legislation aimed at making Washington more competitive with states like South Carolina, where Boeing has already moved a significant amount of work. Inslee doesn't support right to work legislation. Baumgartner's view, according to the Spokesman-Review: "Boeing is the bell cow for the state, but we still need to consider the rest of the herd."
To that end, there might be other concessions made to other businesses in an effort both to please and appease Boeing and do similar favors elsewhere. While the governor and others have argued for dealing with revenue issues by closing tax breaks, Boeing's whopper of a deal (nearly $9 billion in said breaks) makes that a tough barn door to close. In fact, there is talk of spreading some of the Boeing-style B&O tax relief around — to other companies within the aerospace industry. One example: expanding the tax exemptions beyond aircraft manufacturers to include at least some of the more than 1,000 companies doing a wider range of aerospace-related work, such as Planetary Resources, the Bellevue-based asteroid-mining company, or Blue Origin, the Jeff Bezos spacecraft operation in Kent.
Part of the rationale for expansion tax breaks is to grow the Washington aerospace business beyond Boeing, and to support not only the Boeing supply chain but also the new startup ventures that might become the next Boeing — or the Boeing after that. But it's a double-edged proposition: How do you get beyond the aerospace giant without locking in tax breaks and subsidies for a small number of select companies at the expense of bigger, underfunded needs like, say, public education.
And how do you break the extortion cycle?
Even Inslee is talking about that. While he is entitled to take a victory trot, the governor's also expressing exasperation. Last week, referencing the inter-state competition Boeing set off for the 777X, and the multi-billion dollar package Washington was forced to come up with, Inslee told the Associated Press that he "would like to see a national agreement among states to make that sort of subsidy escalation illegal." Inslee would make that so, he said, when he becomes "czar." Some states on the losing side of the Boeing bid expressed disappointment — the governor of Alabama said he felt used — but don't expect any regulations stopping such competition soon.
A reporter at the AP session in Olympia last week asked Inslee if there was a point at which Boeing would not get what it wanted. "Obviously, there are some lines that can't be crossed, " said the governor. Pressed about where the line is, Inslee replied: "The line is where it doesn't make sense to cross the line."
In other words, we'll cross that line when we come to it.
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