Pro & con: Should Boeing tax breaks be revoked if jobs are cut?

Tie tax break to jobs (Jump to the con argument)

Legislation seeks to hold Boeing to deal

By June Robinson

We have a problem. In November 2013, the state Legislature gave Boeing the biggest tax break in history with the promise that it would lead directly to more jobs in the state. But, almost immediately afterward, Boeing began moving jobs out of Washington and the job losses have continued ever since. In fact, recently I learned Boeing has notified another 319 Washington employees that they will be laid off.

If Boeing took the tax break and turned around and created the promised jobs, those jobs would have more than repaid the people of Washington for their generosity. Instead, Boeing cut an estimated 7,000 jobs and sent them out of state while still collecting on all those tax breaks.

This isn’t fair to employees and it isn’t fair to you and me, the taxpayers of Washington.

We have enormous needs in our state. Our schools need funding to be able to provide quality education to our children. Public colleges and universities need support to make a college education affordable for young people and their families. Our mental health system is broken and desperately in need of resources. The list goes on and on.

While our middle-class families are struggling to make ends meet, we simply cannot afford to give away public resources and not receive the agreed upon benefit in return.

I support Boeing. Boeing and Washington state have prospered together for more than 100 years. They make the best airplanes in the world, and good jobs at Boeing support thousands of workers and their families in my legislative district.

However, supporting workers and their families means holding Boeing accountable for the deal we struck.

If you pay a mechanic to fix your car, and they don’t do it, the mechanic doesn’t keep your money, you get a refund. And you can be sure that if an airline refused to pay for planes that Boeing delivered, Boeing would not just shrug and forget about it. Boeing would have their attorneys enforce the deal.

Lawmakers have to stand up for taxpayers and workers and enforce the good faith deal we made.

I believe the people of Washington deserve to be treated fairly, which is why I introduced legislation that will provide accountability for the Boeing tax breaks. House Bill 2147 will tie the tax break to jobs in Washington state. If Boeing jobs leave the state, the tax break will gradually go away. If the jobs stay in Washington, Boeing keeps the tax break. It’s simple and it’s fair.

Opponents will claim that this common sense measure to hold Boeing accountable will force more jobs out of Washington. But Boeing is already moving jobs from Washington to places that have tied tax breaks to jobs like Missouri and South Carolina. Job growth is occurring in these states despite holding Boeing accountable for tax breaks. Washington deserves the same.

We must stand up and demand accountability for all of us. We must demand that Boeing maintains and grows jobs in Washington for the tax breaks they’ve received. For every Boeing job created in Washington, there is a multiplier effect of nearly 2 to 1 in other job creation and economic value. It is this economic growth that justified the tax break back in 2013. Conversely, for every Boeing job that leaves the state, a reverse multiplier is also in effect that results in a net job loss that is greater than the actual number.

Boeing has helped shape Washington, and I would like to believe Boeing wants to work with us to build a strong economy that invests in future generations of aerospace machinists and engineers. But, just as Boeing requires formal contracts with airplane purchasers, we need to get something in writing, so to speak, to make sure that Boeing is holding up their end of the bargain.

It is time to hold Boeing accountable. House Bill 2147 is fair to Boeing and other aerospace companies, fair to workers and fair to taxpayers.

State Rep. June Robinson, D-Everett, represents the 38th District in the state House of Representatives. Her email address is june.robinson@leg.wa.gov.

Con

Bills jeopardize jobs they seek to preserve

By Chris Knapp and Troy McClelland

There are many strong reasons to not tamper with Washington state’s aerospace industry tax incentives. If House Bills 1786 and 2147 are passed, they would place needless constraints on the leader of that industry, the Boeing Co., the state’s No. 1 corporate job creator and other aerospace companies vital to the state economy.

Economic Alliance Snohomish County has similar goals to those outlined in these bills, including maximizing highly skilled family wage jobs in Snohomish County. It is our approaches that differ. We believe that passing this constrictive legislation would significantly restrict or modify the state’s aerospace tax incentives and industry in ways that would have negative impacts on both state and local community economies.

Why? It is, first important to note that the tax incentives in question are working as they were intended. They’ve already proved to be a valuable, important economic growth engine for our communities and state, even during the nation’s worst recession on record. According to the state’s own estimate the incentives, introduced in November 2013, will generate more than $21.3 billion in state and local tax revenue over 16 years. That’s an average of $1.33 billion a year; nearly a 3-to-1 ratio of increased revenue for each dollar of incentives. Think about that $1.33 billion and the negative impact we would see on our public services, including education, social services and infrastructure, if that was significantly reduced.

Second, we need to acknowledge that The Boeing Co. has met its obligation.

Receiving the incentives required that Boeing locate the 777X final assembly and 777X wing fabrication and assembly in Washington. It has done that. Washington state and Snohomish County are benefiting in major ways, including a $1 billion investment in a new 777X facility that is already under construction at the Everett plant. That work involves approximately 1,200 construction jobs that have benefited our local construction trades, energizing that important and essential job sector.

The tax incentives have also meant Boeing production activity, the 777X aircraft design, administration and related work for its suppliers will continue into the future insuring that Boeing’s remarkable job and tax growth in our state in recent years will benefit the people of Washington, not other states where the company might have gone.

And this isn’t just about Boeing. The proposed constrictive legislative changes would hurt employers other than Boeing. In 2013 alone, 458 other Washington aerospace companies used one or more of the existing incentives to help create or retain thousands of jobs in our state, ensuring a strong future for our local aerospace industry.

According to a recent study by Community Attributes and the Washington Aerospace Partnership, there already has been significant growth from 2012-14 in aerospace:

Job growth: Aerospace industry jobs increased from 253,400 to 267,200;

Labor income growth: Labor income rose from $20.4 billion to $22.4 billion;

Tax revenue growth: Tax revenue grew from $559.6 million to $635.2 million.

Finally, this legislation would have negative impacts on our state reaching far beyond our borders. Think about the damaging messages such tinkering would send to all of the other states, as well as global companies interested in Washington investments.

If efforts in reversing solid legislation that already works as it was intended were successful, business would lose confidence in Washington state’s ability to provide a stable environment for them to establish, grow and expand. Clearly, what is at stake here is confidence in the stability of the state’s business environment, confidence in the state’s business legislation.

Economic Alliance Snohomish County works with a diverse group of industry clusters, trying to convince them that the state of Washington is a great place to live and work.

From clean tech firms, to those involved in medical devices, robotics, packaged foods, advanced manufacturing, pharmaceuticals and many others, the alliance works to encourage them all to locate here. If the state reneges on a commitment that is delivering so positively, as promised, why would Boeing or for that matter any industry regardless of cluster, trust our future commitments? Simply put, they would not.

The negative approach of House Bills 1786 and 2147 will not result in maximizing highly skilled family wage jobs in Snohomish County but rather will constrain the largest aerospace growth engine that provides those jobs. And, changing the prior tax incentive agreement will negatively impact future negotiations between the state and Boeing and other businesses.

Trust binds people, businesses and legislators together. These proposed legislative constraints would do the opposite.

Chris Knapp is chairman of the Board of Trustees for Economic Alliance Snohomish County and chief legal officer for The Everett Clinic. Troy McClelland is president and CEO of Economic Alliance Snohomish County.

Clarification: Because of an editing error, some words were omitted from the following sentence in an earlier version of Knapp and McClelland’s commentary. The sentence, which has been restored above, should have read: “Clearly, what is at stake here is confidence in the stability of the state’s business environment, confidence in the state’s business legislation. Economic Alliance Snohomish County works with a diverse group of industry clusters, trying to convince them that the state of Washington is a great place to live and work.”