Governor quashes hope for manufacturing sector, breaks budget deal and opens Boeing up to international sanctions with a single stroke of his pen
Gov. Jay Inslee today turned his back on Washington manufacturers and Washingtonians looking for work in the struggling manufacturing sector, vetoing a job-promoting, tax-fairness measure that received strong bipartisan support from lawmakers just one week ago.
Sen. Dino Rossi is the prime sponsor of Substitute Senate Bill 5977, which would have reduced the tax on all manufacturers to match the rate paid by Boeing and other aerospace firms. He called Inslee’s move foolish, destructive and a total betrayal of Washington workers.
“It’s not easy to discourage working families, disappoint small employers, threaten one of the state’s biggest employers and break trust with a majority of legislators all in one shot, but leave it to Governor Inslee to find a way,” he said.
“What the governor did is an outrage and a major blow to both small business employers and families desperate to find a job,” said Rossi, R-Sammamish. “While downtown Seattle has weathered the Great Recession just fine, workers in the rest of the state have not been as fortunate. This is especially true for the manufacturing sector, which has historically been a source of good, family-wage jobs for those in the struggling middle class.”
Rossi’s bill, which passed the Senate 33-16, and the House 83-10, included 13 new or expanded tax preferences that are mostly directed toward job creation in rural communities. The provision vetoed by Inslee would have closed the so-called ‘Boeing loophole,” by reducing tax rates for manufacturing employers to match the rate extended to Boeing and other aerospace companies in 2013. For non-aerospace manufacturing businesses, the move to match the aerospace tax rate is equal to a 40-percent reduction in business-and-occupation taxes.
Since Washington originally adopted the aerospace rate of .2904 percent, Boeing employment has expanded by 20,000. However, during roughly the same period, rural manufacturing in Washington has declined by 19 percent.
“Does Inslee even care about workers and families outside of Seattle?” asked Rossi. “By leveling the playing field for all manufacturers, we are only offering employers in other parts of the state the same opportunity as Boeing to invest, be profitable and create new jobs.
“There’s more to being One Washington then just focusing on Boeing and high-tech companies. There are working-class people in communities all over this state who are desperate for opportunity – desperate for a good-paying job that allows them to feed their family. And this governor just stabbed all those families in the back.”
Rossi also raised concerns that the veto by Inslee could end up hurting Boeing workers the most. The Seattle-area’s largest employer has come under scrutiny and criticism from the European Commission and the World Trade Organization for the nearly $325 million tax advantage represented by its preferential B&O rate. On June 9, a WTO compliance panel determined that the ‘Boeing tax loophole’ was a violation of WTO rules, unfairly disadvantaging European competitors.
“Eliminating the Boeing rate and creating a single, uniform Washington state manufacturing rate is not only fair for all Washington employers, it is also vital for Boeing,” explained Rossi. “My bill eliminated the lone remaining complaint against Boeing at the WTO. By vetoing this provision the governor has shortsightedly put Boeing at risk of crippling sanctions and tariffs, which could ultimately cost Washington-based Boeing workers their jobs.”
Rossi also warned that Inslee’s breaking of the budget deal lawmakers approved June 30 could also poison the well for all future negotiations in the Legislature.
“How can we trust anything the Democrats agree to in the future?” asked Rossi. “Job creation is a top priority for our Majority Coalition Caucus, and this tax reform was a critical part of the long-negotiated budget agreement. For the governor to blow up the budget deal with this veto will only make the difficult task of compromise even harder going forward.
“We have to be able to trust that when the Democrat leadership and governor’s key staff say we have a deal, that we really have a deal. This betrayal of Washington workers undermines that trust in what I fear will be a costly way for years to come.”