Washington State Scraps Bill Linking Jobs To Tax Breaks At Boeing

Washington state lawmakers nixed a bill Friday that proposed to limit the number of jobs U.S. aerospace giant Boeing can move out of the state to continue receiving billions of dollars in tax breaks. The state’s House Finance Committee voted the bill down 7-8, as Boeing’s two largest unions said the state had “bowed to Boeing” by failing to the pass the measure.

House Bill 2638 would have required Boeing to employ at least 83,295 people in Washington — the number of employees the plane maker had when the tax breaks, worth about $8.7 billion, were granted. The bill also proposed that tax benefits be cut in half if Boeing moved more than 4,000 jobs out of the state, and be completely eliminated if the number of its employees in the state fell by more than 5,000.

"The timing is not right, right now," for restricting Boeing, state Rep. Cary Condotta, a Republican who voted against the measure, told Reuters, citing the state's economic weakness.

Boeing had reached a deal with Washington state lawmakers in 2013 to set up a wing assembly plant in return for large state tax breaks. However, according to Boeing’s two largest unions — Machinists District 751 and Society of Professional Engineering Employees in Aerospace (SPEEA) — Boeing began moving jobs out of Washington shortly after securing the tax breaks, shedding 4,057 jobs in the state since then.

"I think the trust with Boeing has been eroding to be honest," Sen. June Robinson, D-Everett, who sponsored the bill said in January, according to media reports.

Unions Unhappy

The original tax incentives — the largest corporate incentive in U.S. history — directed Boeing to “maintain and grow” the state’s aerospace workforce, argued heads of unions, who said Boeing data show it employed 79,238 workers in Washington at the end of 2015, down by more than 4,000 employees from when the credits were approved.

Other states, like South Carolina, Missouri and Oklahoma, required a specific number of jobs for Boeing to receive tax breaks, while Washington did not, SPEEA and the Machinists said in an online statement Friday.

“The vote today demonstrates the power of corporate influence to overcome what is clearly the will of the people and the intent of the legislation,” Machinists President Jon Holden said.

Crucial Victory, Boeing Says

Boeing reportedly called the rejection of the bill a “crucial victory,” and said the tax breaks would spur the economy and generate an estimated $21 billion in state tax revenue over 16 years.

Boeing's Vice President of State and Local Government, and Global Corporate Citizenship at Commercial Airplanes, Bill McSherry testified against the bill in Olympia in January, saying Boeing was creating jobs in Washington and improving the lives of its workers.

"When the inevitable downturn comes, this legislation would prevent the company from expanding and contracting to meet the world's changing needs," he said.

A similar bill introduced in the last legislative session at Olympia was also voted down by the House Finance Committee.