The final score: Boeing tax breaks, 1; transportation package, 0.
A bill to give Boeing $8.7 billion worth of tax incentives for the upcoming 777X airliner project zipped through the Washington Senate 42-2 and through the House 73-11 on Saturday.
But the Legislature ended the three-day special session without a transportation package, which Gov. Jay Inslee wanted passed along with the Boeing tax-break bill. Mixed signals were given Saturday on whether a transportation package could finally reach public debate during a Nov. 21-22 mini-session after six months of behind-the-scenes talks.
The tax-incentive bill was one of three items that Boeing has told Inslee it wanted in return for guaranteeing the 777X production would stay in Washington. Boeing also wants its Machinists union to ratify a contract next week that the members are unhappy with. Also, Boeing wants the Legislature to pass a potentially $10 billion transportation construction package, although none of the parties have explained what exactly Boeing wants in it.
Senators and representatives overwhelming approved extending tax breaks for the corporation from their scheduled 2024 expiration date to 2040. Legislators believe the 777X with its tens of thousands of jobs is important for the state's long-term economic health.
"We cannot afford to let the aerospace industry to slip through our fingers," said Sen. James Hargrove, D-Hoquiam. "We are guaranteeing jobs for kids who are in middle school today," said Sen. Andy Hill, R-Redmond.
Inslee said, "We made the decision not to hide from international competition, but to buckle down to face that competition."
But legislators — from both parties, and both for and against the tax-break bill — grumbled about the unexplained need for the bill to be passed in three days, plus about being unable to study it and to amend it.
The handful of opponents cited the quick, rigid process for their nay votes. The nay votes ranged from Seattle ultra-liberal Democrat Sens. Bob Hasegawa and Adam Kline to ultra-conservative Republican Reps. Matt Shea of Spokane Valley and Jason Overstreet of Lynden.
"Virtually every procedural rule here was waived," Shea said.
"Why do we need to do this so quickly? ... I don't think we fully thought out the uses of that $9 billion," Hasegawa said. Hasegawa was also suspicious about claims that each dollar granted on a tax break turns into $3 pumped back into the economy. "No one has ever shown the data to support the claim," he said.
A bill supporter, Rep. Jeff Morris, D-Mount Vernon, said, "I'm troubled by a process that reaches an outcome that I agree with." Most legislators followed Morris' stance to vote for the tax-incentive bill.
Olympia has a bitter memory of $3.2 billion worth of tax breaks being granted to Boeing in 2003 — the same eight exemptions that will be extended from 2024 to 2040 in the current bill. Those exemptions were granted to Boeing to build the 787 Dreamliner in Washington. That did not prevent Boeing from building a second 787 plant in South Carolina and using that facility to play Washington against South Carolina, with the Evergreen state usually losing since.
The new bill says that if Boeing moves any 777X work to another state, the biggest tax break — trimming in half the preferential business-and-occupation tax rate on the 777X's gross receipts — would disappear. That tax break is estimated to be worth $3.5 billion from 2024 to 2040.
"Now we have some clauses to truly protect the public interest. .... We learned our lesson," said Sen. Karen Keiser, D-Kent.
Hasegawa did not like the tax-incentive bill passing without a transportation package receiving approval. "I have real concerns that delinking this from the transportation packager removes the impetus to pass the transportation package," he said.
Sen. Tracey Eide, D-Federal Way, one of the lead Democratic transportation negotiators, was unhappy that no agreement was reached during the three-day special session. Democrats and the 23-Republican-two-Democrat Senate Majority Coalition Caucus have wrangled over the package for at least six months behind closed doors with neither side willing to say what specifically is keeping them apart.
Democrats want a gas tax hike to pay for roughly $10 billion worth of transportation projects during the next 10 years. Republicans like transportation construction and maintenance, but hate the idea of a gas tax increase. Republicans have not been able to say how they would pay for billions of dollars worth of work without a gas tax hike. The state's business community, labor interests and local governments have almost universally supported passing a transportation package with a 10.5-cents-per-gallon gas tax increase as soon as possible. They want the jobs, the economic boosts and the fix-it work that a package would produce.
The Senate majority coalition held 10 hearings in September and October to find out what the public wants with a transportation package. At those hearings, the public, local governments and businesses overwhelmingly wanted new construction tackled as soon as possible. There was small, scattered opposition to a gas tax hike. The majority coalition has had at least three weeks to ponder that feedback.
“We spent weeks earlier this year, traveling around the state on a listening tour to confirm what our constituents need," Eide said. "We have spent weeks negotiating the components of a fair, common-sense transportation package that works for Washington. We know what our communities need. We know how to make it work. All we need now is to reach agreement.
"Our constituents don’t want more delay. They don’t want more hearings and meetings and debates. They want safe roads, they want better transit options and they want reliable movement of freight."
Majority coalition leaders Sens. Rodney Tom, D-Medina, and Mark Schoesler, R-Ritzville, were unable to say when a transportation plan would be agreed on. They declined to say if it could be ready by a Nov. 21-22 gathering of legislators or by January. "This is one of the most complex things that the Legislature has worked on in a long time," Schoesler said. "You've got a lot of moving pieces in this thing," Tom said.
However, Inslee was optimistic that a package could be ready by Nov. 21-22. "This should be done by the time of the Apple Cup, Sen. King also said that," Inslee said. Sen. Curtis King, R-Yakima, is the majority coalition's lead negotiator in the transportation talks.
Inslee said major progress was made behind the scenes in the past two days "That gives me 300 percent more confidence than I had a week or 10 days ago," he said.
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