No Deal on Transportation as Special Session Opens – Lawmakers Question Whether Inslee Speaks for Boeing

Solons Return to Capitol Today for What Could be Raucous Session – Many Skeptical Whether Transportation Package is Among Boeing’s Demands

Gov. Jay Inslee speaks with reporters in a legislative hallway Wednesday.

Gov. Jay Inslee speaks with reporters in a legislative hallway Wednesday.

UPDATED 11:46 a.m. with information about new Boeing letter.

OLYMPIA, Nov. 7 – Lawmakers return to Olympia today for a special legislative session aimed at keeping Boeing in the state of Washington – but if you think passage of a transportation package is a slam dunk, better think again. It could be that Gov. Jay Inslee has injected an issue into the session that will make it one of the wildest on record.

Many lawmakers think Inslee was stretching things a bit Wednesday when he declared that Boeing demanded swift passage of a gas tax increase as one of the conditions for locating its new 777X factory in the state of Washington. Questions about Boeing’s position have thrown the statehouse into an uproar as lawmakers prepare for what might be a very short session or a very long one – a session that could reel quickly out of control.

The aircraft manufacturer wants big tax breaks, to be sure, and lawmakers say they will pass them quickly. But they say linkage between Boeing and transportation may have been a bit of wishful thinking on the governor’s part — a way to promote a bill he would like to see passed with a minimum of debate. And they suspect a pressure tactic that injects a dicey political game into a matter where much is at stake for the state economy. A letter from Boeing released by the governor’s office Wednesday makes no mention of transportation, saying merely that the manufacturer wants “favorable economic incentives” along with a new union contract.

But the labor contract alone may be enough to clinch the deal, without the Legislature lifting a finger. Members of the Machinists Union will vote next week on a contract that makes big concessions on health and retirement benefits and offers a no-strike clause. The contract says in plain language that if the union acts on or before Nov. 13, the Boeing company will locate its plant in the Puget Sound area. Meanwhile the Boeing tax breaks – a 16-year extension of tax reductions that are due to expire in 2024 — are not likely to generate much controversy at the statehouse.

Transportation is another thing entirely. The Republican-leaning Senate choked on the idea of a gas-tax increase last session, and members of the Senate’s Majority Coalition Caucus say the idea it is a necessary condition for Boeing is a figment of the governor’s imagination. They say he appears to be using Boeing as a political tool to put pressure on the Senate to pass the measure fast — in a way that would deny them the chance to shape the bill and strike deals on other issues. And they say Inslee may ultimately be damaging the cause of a Washington-built 777X. “Really we are left with very few bills to pass in special session, extending the tax credit for the Boeing Co. and some legislation for workforce training, very simple bills that have general agreement,” said state Sen. Doug Ericksen, R-Ferndale. “So bringing the transportation tax into the mix today I think is hurtful for trying to keep the Boeing Co. here, because it is a very controversial aspect.”

Transportation tied lawmakers in knots when they were in session the first six months of the year, and ultimately the Senate rejected the idea. Key lawmakers in the House and Senate are negotiating a new proposal, but a bill is a long way from being cooked. Many lawmakers, particularly in House Republican ranks and within the Republican-leaning Majority Coalition Caucus, are demanding big reforms to reduce the cost of road projects and to prevent headline-making goofs that have caused big embarrassment for the Department of Transportation. Perfecting the bill will take some time, they say – and if Inslee tries to force the issue, lawmakers wonder if they will be spending Thanksgiving at the Capitol in a freewheeling session where anything could happen.

What Does Boeing Want?

As Boeing Co. officials watch from a corner of the conference room, Gov. Jay Inslee says the jetmaker is demanding action on a transportation package.

As Boeing Co. officials watch from a corner of the conference room, Gov. Jay Inslee says the jetmaker is demanding action on a transportation package.

It all comes down to that eternal mystery – what does Boeing want? At his news conference Wednesday, Inslee said the aircraft manufacturer was demanding action on transportation as one of its conditions for building its new plant in the state of Washington, rather than locating in South Carolina or any other state eager for the business. The stakes are high – the plant is expected to generate more than 50,000 jobs and billions of dollars in revenue. But did Boeing actually make a transportation bill one of its conditions?

Last session Boeing was among the big business interests that pressed the Legislature to pass a transportation package. But it wasn’t the only thing Boeing was after. The jetmaker also sought an expansion of a limited workers-comp settlement program authorized by the Legislature in 2011, and moderation in a Department of Ecology plan that could impose the nation’s most stringent water-quality standards on manufacturers in Washington state. Both issues pose political problems for the Democratic Inslee Administration. Workers’ comp reform is strongly opposed by the Washington state Labor Council, the water-quality standards are favored by green groups and Indian tribes, both major supporters of Democratic interests. Since last session, a new issue has emerged: Inslee says he wants to pursue a cap-and-trade policy in the interest of CO2 reduction – a measure that would increase the cost of fuel and mean higher costs for manufacturers. Swift passage of a transportation package would give Republican members little leverage to influence those other big-picture business issues.

Thus the question arises – did Boeing really say it wanted a transportation bill passed lickety-split? The only real description of Boeing’s conditions for a Washington plant appear in a letter released by the governor’s office Wednesday afternoon.  In it, Boeing CEO Ray Conner says, “Boeing is committed to placing 777X final assembly and wing fabrication in the Puget Sound region. This commitment, however, will be solidified if the International Association of Machinists and Aerospace Workers (IAM) District 751 contract proposal is ratified in a vote by the membership next week and favorable economic incentives are implemented by the State of Washington.”

Not a mention anywhere of transportation.

A new letter from Boeing senior vice president Tim Keating was released Thursday morning. It congratulates Inslee for calling the session. “Your proposal for workforce investments, permitting efficiencies, tax incentives, water quality regulations and transportation infrastructure improvements, in combination with a forward-looking agreement with our workforce, will ensure our lasting competitiveness in Washington state,” it says.

But in this one, there is not a mention anywhere of a deal.

Does Inslee Speak for Boeing?

Inslee told reporters Tuesday that Boeing is insisting on passage of a transportation bill and the tax breaks if it is to build its new plant here. “The Boeing Co., in clear unequivocal concrete terms, says that if these two things happen, then we are going to get the largest aerospace economic expansion of my lifetime. And it is going to happen when we pass this legislative package and when this deal is finalized by the members. And you can be quite assured I wouldn’t say that if that was not the case.”

Reporters cornered the governor in a legislative hallway Wednesday to press for details – did Boeing really say transportation was a must-do? And if so, when does it expect the Legislature to pass the bill?

The governor offered few specifics. “It is clear that we need a transportation package, and the earlier we get it, the better,” he said. “It helps in a variety of ways. But it is not just Boeing. It is the people of the state of Washington that need this. We are going to have massive losses of bus service starting very quickly, as soon as the next few months, and so we need that and I am confident that we can get this job done.”

Inslee communications director David Postman says Boeing is being clear that transportation has to be part of the deal. The line in Boeing’s letter about economic incentives – that includes a transportation bill, he says. “Boeing and the machinists say transportation is an integral piece of the package of economic incentives. When you say deal, there isn’t legislative agreement yet. But the company has said it is part of the package and the governor is going to push for that to be done over the next week. We will drive toward that. If it doesn’t happen we will discuss timing and next steps later.”

Much at Stake

State Sen. Doug Ericksen, R-Ferndale, chairman of the Energy, Environment and Telecommunications Committee.

State Sen. Doug Ericksen, R-Ferndale, chairman of the Energy, Environment and Telecommunications Committee.

For their part, members of the Senate Majority Coalition Caucus say they hope to pass a transportation bill themselves – but it might take a good deal longer than a simple one-week session to come up with a comprehensive deal. Though Senate Majority Leader Rodney Tom, D-Medina, stood alongside the governor at the Tuesday news conference to pledge support for Boeing-related legislation, he stopped short of promising his caucus would throw together a transportation package at what amounts to legislative lightspeed.

Ericksen scoffed at the idea that the job could be done that quickly. Lawmakers have to put together a convincing package of reforms that will be supported by the Washington electorate as a whole, he said. Even if lawmakers do not refer a legislative referendum to the ballot, one can be certain that an initiative or referendum would be filed to overturn a gas tax increase. “You can’t expect the Legislature to come in for two days, meet behind closed doors and pass massive reforms to how we build roads. It is not fair to the public and it is not the way that we should be doing business. It takes time, it takes public input and effort to have true reform. Any reform package that shows up at midnight without a public hearing is not going to be good reform.”

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