LEGISLATIVE UPDATE | Week of May 1, 2017

House Finance Committee Holds "Surprise" Hearing on Aerospace Tax Incentives

Special Session Leads with Hearing | Boeing in Crosshairs

AFA members testify

In what can only be termed a surprise development, the House Finance Committee announced late in the afternoon on Thursday (April 27, 2017) their intent to hold a public hearing on HBs 2145 and 2146 on Tuesday, May 2.

AFA Call-to-Action Below

For Capitol watchers, you know these bills were introduced earlier in the regular session, and have everything to do with reducing or eliminating aerospace tax incentives from the state's largest aerospace manufacturer (Boeing), should their jobs numbers fall below prescribed levels (75k and 70k job levels).

Although AFA reported in our last legislative update that it was possible for these measures to be brought to a hearing during the Special Legislative Session due to the fiscal notes attached to them, indications were to the contrary.

 

As reported here last week, for the first time, one proposal saw sponsorship by a prominent Republican, Richard DeBolt of Centralia (HB 2146). A separate proposal was introduced by Democrat Noel Frame of Seattle (HB 2145). 

Aerospace Tax Incentives

Above, Jim Lee of Tool Gauge (Tacoma), Maurizio Miozza of Umbra Cuscinetti (Everett), and Paul Michaels of GMN Aerospace (Seattle), along with numerous other businesses from a variety of industries, were on hand to testify in opposition to the two bills.

AFA convened aerospace leaders to speak in opposition to the bills in public testimony at the House Finance Committee's Hearing on Tuesday, May 2, along with numerous other business leaders in a variety of industries speaking to the value to their businesses and workers from the incentives Boeing uses. 

Highlighted were the investments Boeing has made in compliance with the 2013 tax incentive extension package--including more than $1 billion in the 777X Composite Wing Center in Everett, the commitment to build the 777X in WA, and the expectation that additional inherent benefits--from jobs and investment--are expected by the end of the year when Boeing begins production on the 777X line.

Jim Lee, Tool Gauge (Tacoma), spoke about their company's planned expansion, going from approximately 130 employees to more than double that number in the next several years. 80% of Tool Gauge's work is Boeing, and 100% is aerospace. They are preparing for 777X work, in line with the intent of the incentive package.

Several speaking in support of the bills mentioned the movement of Boeing jobs from WA to other states. This despite data that shows otherwise. A recent article in Flight Global magazine emphasized the ratio of where Boeing's workforce changes are taking place:

Boeing's employment data does not suggest that Washington is being singled-out within

the company for head-count reductions. Overall employment within Boeing has declined

by 15.8% over the same period, or only 2.6 percentage points less than reductions in

Washington alone. By comparison, Boeing's employment in California has plummeted

27% over the same period, as the last C-17 was delivered from Long Beach and the

company reduced activities in Anaheim and Huntington Beach. Other major Boeing

sites, meanwhile, have not gained at Washington's or California's expense, as employment

levels in Missouri and South Carolina have remain essentially unchanged over that period.

 

In the near-term, the company's position in Washington looks relatively stable.

As mentioned above, both measures set employment targets (75k in the Republican bill, 70k in the Democratic bill). If Boeing employment falls below those targets, the incentives no longer apply or are reduced. The money is instead diverted to K-12 funding and small business tax incentives (in the Democratic bills) and small business tax incentives, state need grant and career/technical training (in the Republican bills).

Rep. Kristine Lytton, Chair of the committee, has stated she is not sure whether the bills will be voted on.

 

For more information: 

Read Jerry Cornfield's, HeraldNet, account of the hearing.

Watch TVW coverage of the hearing.

AFA CALL-TO-ACTION

Your voice is needed on this issue. The indirect impact of "clawing back" aerospace tax incentives from Boeing could have  a chilling effect on the industry in WA. Send the House Finance Committee an email letting them know how your business, and your workforce, benefit from your work with Boeing, and how these measures could impact your business (please send a copy of your email to info@afa-wa.com):

House Finance Committee Members

Kristine.lytton@leg.wa.govNoel.frame@leg.wa.goTerry.Nealey@leg.wa.govEd.orcutt@leg.wa.gov

Cary.Condotta@leg.wa.govLaurie.dolan@leg.wa.govGerry.pollet@leg.wa.govlarry.springer@leg.wa.gov

drew.stokesbary@leg.wa.govJT.wilcox@leg.wa.govSharon.wylie@leg.wa.gov

ADDRESS

925 4th Ave, STE 2000

Seattle, WA 98104

WATR Center

3008 100th St SW

Everett, WA 98204

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