A Washington State House and Senate committee studying tax breaks has recommended that several Boeing-related tax exemptions be reviewed in five years to determine their impact on job creation and the state's revenue.
On Wednesday, over the objection of the committee's five GOP members, its six Democrats voted to include that recommendation in a Joint Legislative Audit & Review Committee report which goes to the full Legislature in January. JLARC is a commission of senators and representatives that examines tax breaks annually, theoretically addressing each exemption every 10 years.
Rep. Gerald Pollet, D-Seattle, called for adding the five-year review on the impact of Boeing tax breaks to a report that had already generically recommended measuring the effectiveness of the $11.9 billion worth of Boeing-related tax exemptions stretching from 2003 through 2040. The exemptions apply to 435 Washington aerospace-related companies. But they were installed in response to Boeing's threats in 2003 and again in 2013 that without tax concessions it would move production elsewhere.
The 11 aerospace industry tax breaks mentioned in the report would generate $489-$502 million in potential revenue for 2015-2017 if the exemptions did not exist. "We should be setting a clear set of criteria [to measure the effectiveness of tax breaks]," said Pollet. "... I think that's fair to ask in return for $400 million in state revenue."
Reps. JT Wilcox, R-Yelm, and Ed Orcutt, R-Kalama, argued that money from a tax break cannot be neatly linked to specific job growth or retention numbers, contending that other economic factors are intertwined in that equation. They also said that evaluating a tax break solely on whether its ripple effects send more money into state tax coffers than the amount of the exemption is difficult. For one thing, said Wilcox, it ignores the value of people having jobs instead of being unemployed.
Wilcox supported the idea of measurable criteria, but suggested that the concept needs more fine-tuning to become an effective tool.
The JLARC's recommendations go to the House Finance Committee and the Senate Ways & Means Committee in January. Boeing opposes tinkering with the language of the current tax breaks. But Rep. Reuven Carlyle, D-Seattle and chairman of the finance committee, expects a bill to be introduced on measuring the effectiveness of the aerospace tax breaks.
Boeing and the state of Washington have a rocky history when it comes to massive tax breaks. Tax break talks have been strained and marked by threats. Even after lawmakers granted Boeing its tax breaks, the company moved some jobs out of state. Still, Boeing grew its Washington workforce from 59,000 jobs in 2005 to 82,000 in 2013.
