Governor moves to make a Boeing deal

Jay Inslee is calling a special session of the Legislature to craft a transportation package and approve tax-break extensions for Boeing.
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Boeing's Everett factory: What else will we have to do to keep it here?

Jay Inslee is calling a special session of the Legislature to craft a transportation package and approve tax-break extensions for Boeing.

Boeing wants the Washington Legislature to pass a transportation package this month. And in return, the company will likely put construction of the new 777X airliner and its carbon-fiber wing in Washington.

Gov. Jay Inslee and legislative leaders agreed to do that. They announced at a Tuesday press conference that a special legislative session will begin Thursday to tackle the matter.

But ...

Democrats and Republicans have not agreed yet on what construction projects will be put into the transportation package. And they have not agreed yet on how raise money for that package — and on how much needs to be raised. That includes not having any agreement yet on whether a gas tax hike will be implemented, and how much that would be,

Inslee believes the Legislature can accomplish this task in a week. "That's a lot to do in one week. ... We're not on the two-yard line, but we're on the 12-yard line," ex-quarterback Inslee said.

Senate Majority Coalition Leader Rodney Tom, D- Medina and House Speaker Frank Chopp, D-Seattle, dodged questions Tuesday about whether that is possible. .

Inslee, Boeing leaders, union leaders and legislative leaders have met behind closed doors  and hammered out an agreement under which Boeing will conduct the 777X airliner work in Washington if:

  • The Washington's local of the International Association of Machinists and Aerospace Workers approves next week a tentative contract agreement between Boeing and the union. The Seattle Times described the proposed contract as a hardball one against the machinists.
  • The Legislature passes a transportation package this month that includes extending all of the current airplane-construction-related tax incentives to 2040. The legislation is supposed to also include expanding the current sales-and-use tax exemption on construction of buildings to include those used to manufacture commercials airplanes and those for suppliers of wings and fuselages.

Boeing CEO Ray Conner was at Tuesday' press conference. Two press requests to get him to speak about the deals were turned down, despite him standing about 12 feet from Inslee.

Inslee said Boeing has unequivocally committed to putting the 777X work in Washington if the machinists' contract is ratified and the Legislature passes a transportation package. "I wouldn't say [unequivocally] if it wasn't the case," Inslee said. Conner did not contradict the governor.

Beyond the Boeing tax incentives and setting up some aircraft-related training programs, legislative leaders have not yet mapped out projects, price tags and fund-raising plans for the package, which Inslee speculated could reach up to $10 billion over 10 years. The controversial and semi-dead proposal for replacement of the Interstate 5 bridge between Portland and Vancouver won't be in the package, Inslee said. Boeing has not told the state what it wants in the package beyond the incentives, training programs and a few other items.

A potential major stumbling block is that a gas tax increase will likely be needed to put more than a small token transportation package into action.

Since last December, the Senate's majority coalition — 23 Republicans and two Democrats — has taken a stance of not raising any taxes for almost any reason. On Tuesday, Tom said: "We're still working through what the increase would be." Tom also said that a "second phase" might occur in the transportation package talks, essentially hinting that controversial items such as a gas tax hike might be punted from November's special session to sometime in 2014.

The majority coalition includes five moderates — Tom and four Republican — in Puget Sound suburban districts. So far, those moderates have solidly stuck with the coalition's conservatives in combating all tax-increase plans.

The majority coalition recently held 10 public hearings across the state on what should be in transportation across the state. The hearings included ones in Bellevue, Everett, Seattle and Tacoma. Very little opposition to a gas tax hike surfaced in those four hearings, which would cover the districts of the five majority coalition suburban moderate — Sens. Tom, Andy Hill, R- Redmond, Joe Fain, R- Auburn, Bruce Dammeier, R- Puyallup, and Steve Litzow, R-Mercer Island. Those five might end up being torn between their constituents wanting projects begun soon and loyalty to the conservative-dominated coalition, which has had strict caucus discipline on all major votes.

Business interests, including the normally tax-adverse Association of Washington Business, support a transportation package with a gas tax hike. Pierce County businesses and governments strongly want State Route 167 extended to support the Port of Tacoma. That area includes Dammeier's turf.

One wrinkle is that the Legislature passed a bill last session that requires specific job-related goals and expiration dates on new and extended tax exemptions. Companies seeking tax exemptions must assume that their financial information sent to the Washington Department of Revenue will be automatically made public, except when they can convince the department that such disclosure would cause economic harm to a firm. So the Boeing tax incentive legislation will have to go through that process.

The proposed tax breaks would save Boeing roughly $8 billion through 2040, said David Schumacher, director of Washington's Office of Financial Management

An unknown is whether the Legislature will put language in the package to allow King County to continue to levy current fees as a way to raise revenue and avoid a projected 17 percent cut in Metro transit service in 2014.

Another unknown is the Boeing-fish debate. A peripheral budget deadlock occurred n the 2013 legislative session in which the Boeing Co. did not like an upcoming change in state regulations on the level of pollutants that industrial facilities are allowed to discharge into the water. The stricter discharge requirements could lead to expensive upgrades to discharge systems.

Boeing sought a study on the numbers and types of fish consumed in Washington, and an accounting of who caught the fish and where. (InvestigateWest ran a story on Boeing's opposition to the new regulations in March.) House Democrats wanted the new regulations installed because of concerns about Boeing's discharges potentially affecting the health of the fish eaten by local tribes and others whose diets are heavily fish-oriented. Eventually, Republicans and Democrats decided to put that dispute aside into order to reach a compromise on the 2013-2015 operating budget.

On Tuesday, Inslee said the dispute would be resolved with sound science. That reply leaves open a pro-Boeing or a pro-tribal solution or a compromise between the two stances.

For exclusive coverage of the state government, check out Crosscut's Olympia 2013 page.


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About the Authors & Contributors

John Stang

John Stang

John Stang is a freelance writer who often covers state government and the environment. He can be reached on email at and on Twitter at @johnstang_8