Posted on 06/19/2003 11:39:35 AM PDT by xrp
OLYMPIA -- Gov. Gary Locke yesterday proposed an estimated $3.2 billion in tax breaks over 20 years for The Boeing Co. and its in-state contractors -- if the state's largest private employer agrees to assemble its next commercial jet in Washington.
"If they decide not to do the 7E7 here, we stand to lose much more," Locke said at a news conference.
On the eve of legislative adjournment, Locke and other politicians scrambled yesterday to gather political support for the tax breaks and changes to the unemployment insurance and workers compensation systems that would benefit Boeing. But all three proposals were apparently riding on the controversial proposal to cut unemployment benefits and eligibility.
"It appears to be the linchpin for the entire package," Fred Kiga, Locke's chief of staff, said yesterday. The GOP, which controls the Senate, wants the unemployment reform to pass first, Kiga said.
While legislators completed relatively little floor action, leaders met behind closed doors with representatives of Boeing, labor and other groups. The 30-day special legislative session must adjourn by midnight tonight.
Some leading lawmakers doubted they could bridge gaps over the unemployment and other measures in time. Locke yesterday declined to say whether he'd call lawmakers back for a second overtime session if they fail to pass the Boeing measures by tonight; the state must submit its bid to the company by June 20.
Last week, lawmakers passed a $23 billion, two-year state budget, completing their primary duty.
Some legislators are still pushing for other unfinished business, including reforms to education and water laws. But the Boeing issues are the clearly the highest priority left.
Washington is competing with other states for the assembly work of its next line of commercial jets. Locke said yesterday that future Boeing work could go to whichever state wins the bid for the 7E7s.
The unemployment and workers compensation proposals could affect a broader range of businesses. Locke indicated yesterday that he thinks his tax-break package would have the most direct impact on Boeing's decision.
The Boeing tax breaks would be phased in over time. Locke's package would save Boeing and other Washington aerospace companies relatively little in the first years. But it could save them $120 million a year once Boeing begins full assembly of the 7E7, projected for 2007. The savings would grow from there.
Locke said an estimated 17,300 direct and indirect jobs ride on the 7E7.
The Democratic governor said his tax package was generally well received by legislative leaders in a private meeting yesterday. His package would cut Boeing's business and operation taxes by 40 percent, and reduce related property and research-and-development taxes.
"Other states will outright give them cash, perhaps even build the buildings for them, buy the land for them," Locke said. Washington is constitutionally forbidden from offering cash incentives.
Business lobbyists, labor union interests and Locke have each floated their own unemployment insurance reform proposals.
Last week, business was seeking eligibility changes that would have knocked 30,000 people -- mostly seasonal workers -- off of the system. Locke said he wanted a more modest and gradual reduction. He said his proposals would eliminate about 9,000 beneficiaries.
But yesterday, business lobbyists had focused instead on a proposal to base benefits on a worker's average wage over a longer period of time. Senate Republicans had planned to pass an unemployment proposal yesterday but said they held off at Locke's request.
Because of the tax system's structure, some businesses, including Boeing, pay more than their workers use in benefits.
Leaders said a scaled-back proposal for reform to the worker's compensation system had strong enough support for passage.
Rather than a broad overhaul, the final package would likely focus on rules for collecting benefits for hearing loss, said House Majority Leader Lynn Kesser, D-Hoquiam.
Locke said he would support changes to the benefits for injured workers. Claims for hearing loss have skyrocketed in recent years. In 1992, there were 884 claims that paid $3 million, he said. In 2001, there were 4,200 claims costing $4.3 million, he said.
COUNTING DOWN
Several substantial measures before the Legislature remain unresolved as the clock ticks toward tonight's midnight deadline for adjournment. They include:
Gov. Gary Locke's new proposal to grant Boeing and its contractors $3.2 billion in tax breaks over 20 years, if Boeing assembles the 7E7 here.
Proposals to reduce unemployment benefits and eligibility.
Changes in workers compensation laws: Broader reform proposals to this program for injured workers will likely be dropped in favor of a measure that would limit how long victims of hearing loss can collect benefits.
Beyond Boeing
Education: A package of four bills is still on the table, including authorizing independent charter schools.
Water law: Some still hold out hope for a package of three water bills, including a controversial one that would prohibit the state from using water-quality laws to restrict users from diverting or taking water out of a stream.
This report includes information reported by The Associated Press.
I like what Rush said, "I love it when liberals prove that conservatism works!"
Hmmmm.... Well, it remains to be seen whether this is "conservatism." Looks to me to be more like the standard-issue Business Bribe.
IIRC, Boeing's complaints against Washington State have much less to do with taxes, and much more to do with things like health insurance and a "poor business climate." I don't see that the proposals here really address those issues at all.
Admin, please lock this thread as a duplicate.
Actually they did attack the most generous unemployment scheme in the nation. They've trimmed it enough that construction and other labor concerns are crying foul.
You are right however, much, much more could have been done if they were really interested in keeping Boeing here and attracting more businesses to the State. The nasty secret is a certain segment of our neighbors want Boeing gone. It's a dirty, polluting business that manufactures gas guzzling environmental disasters.
Doesn't a company that receives targeted tax breaks like this run afoul of trade regulations in NAFTA, GATT, etc.?
What I want Gov. Loke to explain is how this tax break for the rich is different from the tax breaks he hates from President Bush?
No breaks now. Promise of breaks later.
What do you think will happen 5 years down the line when the plant is built, production is underway, it's too late for Boeing to move elsewhere, and the state deficit is bigger than ever?
Whichever liberal politician is in charge at that point will point to Boeing and spew about loopholes and how many millions Boeing's officers make, and the children, and before you know it the tax shelter is gone!
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