September 9, 2019
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AWB speaks in support of aerospace tax incentives as commission examines auditor's report

A citizen commission took testimony last week on the question of whether aerospace tax incentives created by the Legislature in 2003 and extended in 2013 are accomplishing their goals.

Clay Hill, AWB's government affairs director for tax and fiscal policy, testified (TVW video) and submitted a letter saying that the Legislature's stated policy objective, that the tax incentives "maintain and grow Washington's aerospace industry workforce," has been achieved.

Compared to when the incentives were created in 2003, aerospace employment in Washington is 38 percent higher and there are many more companies in the industry, Hill said during Thursday's hearing of the Citizens Commission for the Performance Measurement of Tax Preferences.

“When performance is properly measured, the facts are unmistakably clear,” Hill said.

He urged the citizen commission not to endorse the Joint Legislative Audit Review Committee's recommendation that the Legislature change the performance metric in the 2003 tax package.

Also testifying was Rosemary Brester, CEO of Hobart Machined Products. She and her husband have manufactured parts for every Boeing airplane since the 707 at their small business. As a part of Washington's rich and growing aerospace ecosystem, their company brings in 15-year-old interns who later go to work at high-paying jobs throughout the state.

Bill McSherry, vice president for government operations for Boeing Commercial Airplanes, testified that in 2018, the average wage of a Boeing employee was more than $124,000, nearly double the average wage of a typical Washington worker. Boeing employs nearly 70,000 people in Washington.

"The incentives make Washington more competitive. The incentives have encouraged the continued presence of the industry in the state, and in fact have encouraged considerable aerospace industry growth," McSherry said.

In 2003, 197 companies used the aerospace tax incentive. In 2018, that number had more than tripled to 663 companies using the incentives.

"We disagree with JLARC's conclusion that it is unclear whether the incentives help maintain and grow the state's aerospace workforce. As a direct result of the extension of the tax incentive in 2013, and the contract with our manufacturing union the IAM, Boeing invested over $1 billion in Everett to construct the 777X composite wing center. Today as that program gets closer to flight tests, we are manufacturing every 777X wing, every 777X fuselage, and every 777X airplane here in the state of Washington. The incentives were a deciding factor in siting the 777X in the state."

He also urged the Legislature not to add an employment figure to the incentive structure. Aerospace employment in Washington is subject to many factors, from the local and international economies, the health of the aerospace industry as a whole, competition within the industry, and other factors.

The Herald covered the hearing and has detailed story about the issue.

Contact Clay Hill to learn more about this and other tax-related issues.

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