OLYMPIA -- Gov. Jay Inslee on Tuesday called a special legislative session to approve a transportation package, including extension of tax exemptions for Boeing and expansion of other sales and use tax exemptions that would ensure the aircraft maker builds its new 777X in the Puget Sound region.
The special legislative session is expected to start Thursday and last about one week, Inslee said at a news conference.
The package -- developed in talks with Boeing and the Machinists union -- would extend tax breaks for Boeing that were first set up to attract the Boeing 787 assembly to Everett and are now set to expire in 2024; they would be extended to 2040. Inslee said this would be a value to Boeing of about $8 billion through 2040.
But the package would also "expand" the current sales and use tax exemption on construction of buildings that manufacture 'superefficient' airplanes to include all commercial airliners and suppliers of wings and fuselages. It's not immediately clear how much this would cost.
Asked by a reporter at the news conference if this was "extortion" on the part of Boeing, Inslee said, "If we do not act, inaction would cost the state of Washington billions of dollars in lost revenue and jobs."
Inslee said the tax exemptions will pay for themselves. The governor was also asked what it is going to cost taxpayers to keep Boeing here.
"Nothing," he responded. "Because this will create thousands of jobs here."
The Boeing proposal comes in two parts -- one to be met by the state with legislation, the other to be met by the Machinists union that represents more than 35,000 Boeing workers. Within 30 days of ratification of the new deal, all members would be paid a $10,000 signing bonus, Boeing said.
In return, according to the Machinists union, wants "modifications" to the current labor agreement for a new eight-year pact. The modifications would include cessation of pension accrual for current employees and the establishment of an alternative, less costly, company-funded retirement plan. The company would also extend the time for new employees to reach the top of the pay scale from the current six years all the way up to 16 years -- and also raise health care insurance costs.
The International Association of Machinists and Aerospace Workers (IAM) District 751, District W-24 announced its members will vote on the proposal with the following statement:
“Securing the Boeing 777X for the Puget Sound means much more than job security for thousands of IAM members,” said District 751 Directing Business Representative Tom Wroblewski. “It means decades of economic activity for the region and will anchor the next generation of wide-body aircraft production right here in its historic birthplace and will complement the 737MAX narrow body.”
According to estimates, the 777X could mean as many as 10,000 direct and 10,000 indirect jobs in the immediate vicinity, with the project also serving as a long-term hub for advanced technology in electronics, avionics and composite technology required by the 777X.
Full details of all changes in the proposal will be provided directly by District 751 and W-24 to IAM members as soon as printing can be completed. A schedule of ratification voting is also being prepared and will be communicated directly to IAM members.
“Only a project as significant as the 777X and the jobs it will bring to this region warrants consideration of the terms contained in Boeing’s proposal,” said Wroblewski. “While not all will agree with the proposal’s merits, we believe this is a debate and a decision that ultimately belongs to the members themselves.”
It is believed that if the union members fail to approve the pact, Boeing will seek proposals from other states for the 777X assembly plant.
Boeing Commercial Airplanes has issued a statement from President and CEO Ray Conner in response to International Association of Machinists & Aerospace Workers District 751's decision to proceed with its efforts to secure a historic long-term contract extension that would result in locating final assembly of the new 777X and fabrication and assembly of the airplane's wing in Puget Sound.
"I want to congratulate IAM District 751 Directing Business Representative Tom Wroblewski for his leadership, vision and determination to forge an agreement of historic proportion that, when ratified, will secure and extend thousands of high-wage, high-skilled aerospace jobs and expanded economic opportunity for residents of Puget Sound and Portland for many years to come," said Conner. "Tom and his team pressed hard for an agreement that maintains market-leading pay and benefits for the members he represents, while also recognizing the critical importance of our efforts to achieve increasing competitiveness in order to win against a growing list of global competitors.
"This is important to everyone with a stake in Boeing – including our employees, the community and our customers – and we look forward to the ratification and a long successful future as the global leader in aerospace," Conner said.
Inslee said the proposed transportation package, which would include money to finish the SR 520 Bridge and a new highway in Spokane and replace some bridges, would cost about $10 billion over 10 years.