OPINION-EDITORIAL

January 28, 2004

Boeing deal unmasks true state of business climate

Bob Williams | President | Evergreen Freedom Foundation
It should be startling news that Boeing can no longer make a profit in our state without heavy taxpayer subsidies. What’s gone wrong?

A lot has gone wrong, and the costly deal the governor made to persuade Boeing to stay proves it.

For most of the last decade, Boeing officials have talked about pulling operations and jobs out of our state due to our onerous regulatory, land use, taxing, permitting and transportation policies. Last year, Boeing CEOs announced they were looking elsewhere to build their new 7E7.

This shook up the governor and other lawmakers, who quickly agreed to a few much needed unemployment insurance reforms and $3.2 billion in tax relief for Boeing.

When the news came that Boeing would host its 7E7 project in Washington, the governor and state officials who vied to win the company’s hand were ecstatic. So were most of the rest of us. It was reported that two hundred thousands jobs would be safeguarded.

Surprisingly, when our Foundation asked for a copy of the contract, the governor’s office gave us the runaround. When we had to threaten public embarrassment to pry the contract out of the hands of the state agency in charge, we knew something was wrong.

Once we got the contract, we discovered key parts were missing—like the exhibits that spell out the important details. I asked for the exhibits and was told the state didn’t have any copies. I couldn’t believe it. How could the state negotiate a $3.2 billion contract and not have copies of the explanatory material to which it referred?

As I read the contract’s 70+ pages, I was dismayed to discover a small provision in the agreement instructing all parties with access to the contract to do whatever they could to keep the details out of the hands of the public. And sure enough, when we finally obtained copies of the exhibits, much of the information was blacked out.

Why this attempt at secrecy? Reading page after page of the contract, the answer became clear. The concessions were astounding.

The governor has agreed to consult with Boeing in the hiring of six full-time state employees who will be responsible for expediting Boeing’s permit requests; coordinating projects for Boeing with state and local government; advising Boeing on state tax policies; coordinating all transportation matters between Boeing and state and local agencies; coordinating environmental matters for Boeing; and coordinating workforce development matters.

On top of that, Boeing will receive priority over all other same-day applicants when it applies for permits, and those permits “shall be issued” within 60 days.

The state will build a state-of-the-art employee training center, which Boeing and its suppliers will have exclusive use of for the first five years. All details about the facility—aside from the requirement for the state to pay—were redacted from information provided in response to a public records request. The state will also recruit, screen, assess and train the workforce needed for the 7E7 project.

The state will give Boeing favorable treatment in its environmental impact analyses, and the company will receive sales, use and property tax breaks.

The contract promises the state will hire a nationally-recognized consulting firm to publish a study showing the economic benefits of Boeing’s project for Washington. It allows Boeing to consult on legal counsel the state will use to make final determination about the contract’s legality.

The fact is, every time the governor promises the state will do something, he is promising that the taxpayers will pay for it. The money to fulfill these obligations comes from taxpayers—often the owners of other businesses that do not receive this kind of preferential treatment.

When asked about the special provisions for Boeing, Governor Locke claimed that all businesses in our state receive similar assistance. This is untrue. Our state’s business climate is so bad that more than 90,000 manufacturing jobs have already been lost. The governor only convinced Boeing to stay by offering protection from the policies his own agencies created.

Boeing doesn’t need corporate welfare from taxpayers, and neither does any other business. What they need is the freedom to compete, and the freedom to succeed.

Most lawmakers were shocked to learn about the special provisions made for Boeing on their behalf. Some are downright angry. It remains to be seen if they will strip the contract of the illegitimate offers and extend the legitimate reforms to all businesses in our state. If they do, the 2004 Legislature will leave a wonderful legacy that will last well into the future.

Bob Williams is president of the Evergreen Freedom Foundation, an Olympia-based policy research organization dedicated to individual liberty, free enterprise and limited government.

Contact: Jason Mercier | Budget Research Analyst | 360.956.3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org