OLYMPIA—A new bill in the state legislature is waving tax incentive dollars in Boeing's face with a warning attached: "Keep moving jobs out of Washington, and you'll have to pay up."
The proposal by State Representative Jeff Morris D- Mount Vernon is in direct response to Boeing's decision last Fall to build a second 787 Dreamliner assembly line in South Carolina instead of Everett.
Boeing was lured away, in part, because of a generous incentive package by South Carolina similar to the one passed in Washington back in 2003. The difference, Morris says, is the South Carolina package has safeguards in it if Boeing doesn't spend a certain amount of money or create a certain number of jobs there, and Washington's tax incentive package for Boeing does not.
"The reality is that we thought we were winning the rights to manufacture all of the 787 Dreamliners in Washington state when we put that package together," says Morris. "it seems prudent that the taxpayers of Washington state should up the ante and say we still want the original commitment to have the majority of those planes manufactured here in Washington state."
Under House Bill 3107, any aerospace company, including Boeing, would lose manufacturing tax breaks if it moves more than half the final assembly of any of its planes outside the state.
"We had a partnership, and the move to South Carolina has changed that into a business relationship," says Morris. "For the people of the state of Washington this is a good business decision because what this says to Boeing or any other state that wants to compete against us, is if they are going to throw any money towards Boeing to lure them away, they are going to have to put the money in to get Boeing, but they are going to have to buyout Washington state as well."
Sen. Mike Hewitt, Senate Republican Leader and a member of Gov. Gregoire's Council on Aerospace, is outraged by the bill.
"This bill is simply shocking. It sends the wrong message at exactly the wrong time. Why doesn't the majority party just send Boeing a letter asking it to leave? Aerospace jobs represent three in every ten manufacturing jobs in Washington," said Hewitt in a statement, "Why would the Legislature consider a bill that puts that many good-paying jobs at risk?
Hewitt says the bill would be a job killer, and would threaten the aerospace industry that contributes thirty-six billion dollars to the state's economy.
"If this is part of the Democrats' job-creation program, I'd hate to see what other schemes they have in store for our economy," said Hewitt, "The incomes of working people are at risk here. This bill shouldn't even get a hearing, let alone pass."
Boeing spokesman Bernard Choi said the bill "would take away our ability to run our business" and says the company has met all the detailed conditions in the 2003 tax agreement. But Morris says the bill shouldn't come as a surprise to Boeing.
"I meet with (Boeing) folks in Olympia once every couple months during the interim, and almost once a week during session," says Morris, "and I've been telling them since they started looking at South Carolina that in order to get other things done to make Washington state more cost-competitive, that this claw-back provision is probably something that the legislature and the people are going to want to see, in order to balance the scales."
In 2003, Morris says Boeing came to lawmakers and said to be competitive "we have to see this type of rate" and than last year turned around and moved a manufacturing line to a different state, "so now they are saying that's actually wasn't the key back in 2003." He says Boeing shouldn't assume tax loopholes and credits are guaranteed.
"Instead of Boeing slowly bleeding manufacturing away from Washington state over time to low-cost states where they have basically no benefit packages for workers, have unemployed worker funds that are in bankruptcy and have a whole list of other problems with being a low-cost state as far as hiring people goes," says Morris, "Its not going to be a slow path of walking away, they are going to have to make a decision to be here or not."
But what about Snohomish and other counties that depend on Boeing? Morris says he's been a leader on passing aerospace bills to keep the industry growing, but also that the state needs to be responsible.
"We're just making sure the taxpayers aren't being took," said Morris. "We very much want to see aerospace flourish, but again, the nature of our relationship has changed with the South Carolina decision."
For more information on bill HB 3107 head to leg.wa.gov.