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Office of Governor Gary Locke
Contact:  Governor's Communications Office, 360-902-4136

Gov. Gary Locke Signs Aerospace Tax Incentives Package into Law, Expresses Confidence in State’s Bid for Boeing 7E7

Flanked by Democratic and Republican legislators as well as business and aerospace labor leaders, Gov. Gary Locke today signed into law legislation that offers an estimated $3 billion in tax incentives to the aerospace industry during the next 20 years if the Boeing 7E7 is built in Washington state. The incentives are part of the state’s “Action Washington” bid for final assembly of the 7E7 Dreamliner, which is due Friday.

“This package reflects extraordinary bipartisan commitment and effort,” Locke said. “We set aside political differences to take bold steps for the future of our state. We want to land the 7E7 final assembly. The package I’m signing into law is a resounding statement that we intend to do just that.”

“Aerospace is our state’s most dominant industry. It accounts for 200,000 jobs, direct and indirect, and $700 million per year in state tax revenue,” Locke said. “We know that what’s at stake in the long run is not only the 7E7 final assembly, but other Boeing product lines as well. We will not stand by and watch our state start to lose this industry and these jobs.”

Locke continued, “Two days from now, we will deliver our ‘Action Washington’ proposal to keep the 7E7 Dreamliner in our state. We are ready. We have a highly competitive proposal, and I am confident we will win.”

The governor was joined at a news conference today by Rep. Eric Pettigrew, D-Seattle, the prime sponsor of the tax incentives legislation; Sen. Dino Rossi, R-Issaquah; Martha Choe, director of the Department of Community, Trade and Economic Development; Linda Lanham, political director of the International Association of Machinists and Aerospace Workers District 751; and Steve Reynolds, chief executive officer of Puget Sound Energy. Others in attendance included Sen. Luke Esser, R-Bellevue; Rep. Fred Jarrett, R-Mercer Island; Rep. Skip Priest, R-Federal Way; Moses Lake Mayor Lee Blackwell; Grant County Commissioners Kent Jones and Tim Snead; Paul Roberts, director of planning and community development for the city of Everett; and Chris Marr, president of the Spokane Chamber of Commerce.

“We heard Boeing’s concerns about our state’s business climate and we responded – delivering on a transportation-improvement plan, workers’ compensation reform, higher education tuition-setting authority and more,” Pettigrew said. “This tax incentives package makes us an even more attractive place for Boeing to continue to do business.”

Rossi said he’s proud that the Legislature rose to the challenge. “This will make our state much more competitive with other states in the bid to win the 7E7 Dreamliner. It’s an investment in the future of our economy.”

Choe said, “I want to commend the governor and legislators for working so diligently to get this package passed. “This commitment to competitiveness is what’s helping attract more companies to our state and create more jobs. We are putting our best proposal forward to convince Boeing that Washington is the best place for final assembly of the 7E7 Dreamliner.”

Lanham said, “‘We Can Do It’ is the theme of the machinists’ campaign to land the 7E7 Dreamliner, and the signing of this piece of legislation is proof that we can do it. Gov. Locke displayed incredible insight and creativity as he crafted a very targeted tax incentive that, coupled with the many other advantages this region has to offer, should ensure Washington state is chosen to build Boeing’s next aircraft.”

Reynolds expressed his support of the tax incentives package. “The business community wants Boeing to continue its leadership role in the state,” he said. “Our entire community will benefit as Boeing continues to thrive in Washington.”

The governor proposed his tax incentives plan to the Legislature last week and lawmakers overwhelmingly approved it during the second special session.

Details of Locke’s tax incentives package include:
·B&O rate reduction for the aerospace industry;
·B&O tax credit for research and development;
·Sales tax exemption for computer hardware and software used in design and engineering of airplanes and their components;
·Sales tax exemption on any new construction or improvement either in Everett or Moses Lake; and
·Property tax relief on new facilities and equipment for Everett or Moses Lake.

The entire tax incentives package would be worth about $28 million to the aerospace industry in the 2003-2005 biennium if the project were built in Everett and $108.5 million in the 2005-2007 biennium. The impact in the later years will be about $120 million per year. These totals are higher if the company chooses to site the 7E7 facility in Moses Lake due to the higher level of investment that would be required. The entire package would be contingent upon Boeing choosing Washington as the site for final assembly of the 7E7. The company is expected to make a decision by the end of the year.

Related Links:
- Action Washington Web site
- Governor's Web site

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