Tax break would create state aerospace jobs, supporters say
Supporters of a bill in the Legislature say it would create 1,200 jobs in outfitting luxury jet interiors.
The bill reads like a tax break for foreign dignitaries and the wealthy. But proponents of House Bill 1707 say the state won't lose money if the legislation is approved. Private jet owners are flying their aircraft for work out of state to avoid steep taxes associated with modifying airplanes here.
Companies like Everett's Aviation Technical Services at Paine Field are "losing a lot of work to other states and other countries," said Alex Pietsch, director of the governor's office of aerospace.
HB 1707 would eliminate the 6.5 percent sales and use tax for delivery and modifications to private, large jets. It would also exempt large aircraft that are in storage from property tax, possibly creating a boon for companies that provide storage.
The Aerospace Futures Alliance (AFA), an industry-based lobbying group, suggests that 1,195 new aerospace jobs could be created in the state by passing HB 1707. The legislation was included in Gov. Jay Inslee's budget, which he released Thursday.
"It's one that I think has a demonstrative impact on job creation," Inslee said last week. "You get a bang for the buck."
The legislation isn't expected to cost the state any tax revenue but could drum up business for local aerospace companies.
"The state isn't getting the taxes anyway," Pietsch said. "Private owners are just flying their planes elsewhere for the work."
The installation of lavish interiors -- bedroom suites, theaters, showers and conference rooms -- on private jets can require more than a year to complete, depending on the aircraft size and interior configuration. For example, Boeing delivered the first 747-8 passenger plane in early 2012 to a private Qatar-based customer, who flew the aircraft to Wichita, Kan., to install the interior. That job was expected to last two years. Texas is another state where such work is done under a reduced tax burden.
That interior includes an elevator, called an Aerolift that allows passengers to be taken from the ground to the aircraft's main cabin. It's designed by Kirkland-based Greenpoint Technologies. Nima Seyedall, director-legal for Greenpoint, told lawmakers at an aerospace event Wednesday that the company does work out of state that it could do in Washington if the bill is passed.
AFA estimates that many 747-8 projects for private customers could employ 70 people per airplane for up to 18 months. The interest group says there could be as many as five such 747 projects each year, employing as many as 350 people.
Boeing also is selling 787s to business and VIP customers. And private customers also sometimes upgrade older aircraft with VIP interiors. The bill would apply to those projects, as well.
Aviation Technical Services, like Greenpoint, would benefit if HB 1707 is enacted. The maintenance, repair and overhaul company employs 1,000 workers at Paine Field. On Friday, ATS celebrated the opening of a new site in Moses Lake.
"Several of our customers have shown interest in our plans to grow," Bret Burnside, ATS's chief operating officer, said in a statement. "We're excited about offering maintenance in Eastern Washington to the right mix of customers and projects."
The legislation has the support of House Speaker Frank Chopp, D-Seattle. At an aerospace event in Olympia on Wednesday, Chopp expressed some skepticism over whether the bill would pass, pointing out that there are members who are reticent to approve new tax breaks. With this one, he said, there is a "perception problem" of what it does and who it serves.
Sen. Janea Holmquist Newbry, R-Moses Lake, is very supportive and said it "would come in really handy in Moses Lake," where there are businesses which could do the work and warehouses where it can be done. She said the tax break "has a nexus with job creation," which should help sell undecided members.
Herald reporter Jerry Cornfield contributed to this report.
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