Washington State Senate budget kills Office of Aerospace; attention turns to House

The Washington State Senate budget adopted last Friday killed funding for the Office of Aerospace, which was created less than a year ago.

The move was driven by the need to find more than $1bn to fund education and the State’s long-running budget shortfalls, brought on by the 2008 global fiscal crisis.

It’s understandable that the Senate, which is controlled by fiscally conservative Republicans and what we call here “Roadkill Democrats” (they’d be called Blue Dog Democrats in Congress), want to make drastic budget changes. The State, which has been controlled by Democrats in the Governor’s Mansion and in both houses of the Legislature,  went on a spending binge following the election of Christine Gregoire and Democratic Super Majorities in 2004. The Ds increased spending by 33% on projected 16% increases in revenues. It was wholly irresponsible then and was perpetuated until the fiscal crisis began.

When the current Legislature was being formed, two Roadkill Democrats left their caucus and joined the Republicans in the Senate to form the first GOP control of the Senate since…well, we can’t recall specifically but it may have been around 1996, when we first moved here.

We won’t get into the social cuts of the Republican budget, because that’s not the area we cover in this blog. The move cutting the Office of Aerospace is a big mistake.

The amount isn’t that great: a low-six figure salary, plus operating expenses. But this is besides the point. Washington State competes with the South’s new, growing aerospace clusters in Charleston, SC, where Boeing is building up its operations; in North Carolina, where there are major suppliers; and in Alabama, where Airbus only today broke ground for its A320ceo/neo production plant.

Alabama’s neighboring states of Florida and Mississippi are supporting the Airbus cluster with major efforts to attract suppliers.

Each of these states, plus Texas, have aerospace offices with missions to attract aerospace development. Washington State for years was complacent with the Boeing presence. It woke up, briefly, in 2003 when Boeing began shopping around for an assembly site for the forthcoming 7E7. The State approved tax incentives over 20 years worth $2.3bn, and won the assembly site. An Office of Aerospace was supposed to be created then, but then-Gov. Gary Locke and his successor, Gov. Gregoire, did nothing until the latter finally created the office last summer.

Washington State had been downright derelict in promoting and protecting aerospace here. For several years, Gregoire didn’t even go to the Paris or Farnborough air shows and the state Department of Commerce’s budget was so small that its booths at the show were embarrassingly small.

Meanwhile, Alabama, Mississippi and Florida combined to host not only a large display at the shows, in Paris they hosted parties at high profile locations like the Eiffel Tower. One can argue whether the expense was worth it, but nobody could miss the symbolism, including The Seattle Times which wrote an embarrassing story about Washington’s embarrassing presence at the Paris Air Show one year.

The Department of Commerce is being gutted by budget cuts. Now the Office of Aerospace is in danger of disappearing. The House budget has yet to be voted upon. The Pacific Northwest Aerospace Alliance is urging its members to contact Legislators to reverse the Senate’s decision.

Gov. Jay Inslee wants to be sure Boeing assembles the 777X here. Cutting the Office of Aerospace (and gutting Commerce’s aerospace budget) sends exactly the wrong signal. Inslee needs to step in and make sure aerospace doesn’t get gutted.

12 Comments on “Washington State Senate budget kills Office of Aerospace; attention turns to House

  1. The state budget crisis is creating some real challenges to the legislature but, two of the most things they can do help grow the economy and save/create family wage jobs are to fund K-12, Higher Education and the Aerospace cluster driven by Boeing commercial airplanes. Does anyone know if there are private sector initiatives or NGA’s set up to take on some the things this govt office was conceieved to take on?

  2. Even more alarming when one considers that the Province of Quebec just recently stepped up to finance aircraft purchases from Bombardier. Washington has a bad habit of doing bad things for itself. Lack of adequate transportation infrastructure, ignoring education (which landed the state in court). Benign to malicious neglect of Aerospace is just another. Boeing succeeds despite state and national government indifference. At least in other aerospace countries the governments realize that Aerospace is important, and that it provides good living wage jobs. To be honest, the WA and US government couldn’t care less. Look at the budgets for NASA Aeronautics. The first A in NASA should just be removed and call it the way it is. WA loss is SC win. Charleston is a nice city.

  3. I seem to remember a long time ago, when even Boeing was not sure it would survive and people were leaving the Seattle area in groves that there was a Bill Board that said “will the last person leaving Seattle please turn off the lights”, or something to that effect. Yet, the State of Washington did almost nothing to attract business to Washington, or to help Boeing.

    • That was a “joke” put up by 2 real estate brokers. The state actually DID learn from that, they diversified away from Aerospace, encouraged people like Microsoft, Starbucks, biotech companies, etc.

      Much is made of that sign, but it’s not like Seattle was going to dry up and blow away or become a ghost town, not that it wasn’t a hard knock.

  4. Pro-aerospace symbolic gestures are nice, but Boeing has repeatedly demonstrated that it doesn’t care about such things. The main things that matter to Boeing are massive tax exemptions, state-funded highway/xportation projects that help Boeing, and defeating employee unions. The Office of Aerospace won’t matter a whit in the 777X contest.

  5. I’d be curious what the total amount WA state pays for workers in the agriculture industry, Walmart, and Boeing. Adding up state paid benefits for food, housing, medical, and dental of workers and their families. Whatever tax breaks Boeing may get, I bet they are a bargain compared to what gets spent to subsidize agriculture or Walmart.

  6. When I worked at Boeing back in 2001-2002, I remember reading an article about how Boeing was always getting squeezed by every level of government whenever they expanded their facilities. For example, they would be forced to pay for extra roads, utilities provisions and so forth and so on. Things that weren’t required by or for Boeing but things that these bureaucrats could squeeze out of Boeing in order to get freebie infrastructure for the future.

    One Boeing exec was even quoted on the Mühlenberger Loch in Hamburg and how the city state was bending over backwards to accomodate Airbus.

    It seems as if Boeing has learned a bit from that and now the wind has turned 180° but the Washington state politicians and bureacrats don’t seem to want to recognize or accept the change in the weather.

    • Addendum to my previous comment: Perhaps Washington State and Seattle have now diversified to such a degree that the loss of Boeing over a decade or so is seen by them as of no great consequence?
      Another article I had read stated that back in 2003/2003 when Boeing started recalling workers to ramp up production, a curious pattern had newly developed. A much larger proportion of the callbacks did not come back as they found that although they earned more working at Boeing, the endless cycle of layoffs and recalls were too much of a drain on them, both psychologically and mentally.

  7. Washington State do things for businesses they have, that is laughable. Has anyone worked with the new Wa Energy Code for houses. I could support the earlier versions but this one probably adds 5% to the cost of a new house, with return on investment out 20+ years. Intel in Dupont (15 years ago) didn’t get squat for building there, had to pay for, design, and construct the overpass from the freeway because DOT moves TOO slow.

    The same DOT that had a program merging problem at I-5 & WA-16, ala Airbus Catia. $2M to fix when the ramp to a bridge was 10 feet higher than the bridge.

    Ship building and repair, forestry, fishing, agriculture, etc. are all things that our state likes to tax and regulate until they stop wiggling.

  8. In June 2003, Gov. Locke signed a bill giving Boeing an assortment of tax breaks. The tax package included a 40% cut in Boeing’s B&O tax from 0.5% to 0.3%. Plus, all of Boeing’s property taxes on its 787 production facility were set off against the amount of the B&O tax Boeing pays, making Boeing’s effective B&O tax rate zero. The entire tax break (which included other components) was worth $3.2 billion over 20 years. Yes, Boeing pays other state and federal taxes, and its economic benefits to the state have been immense over the decades. However, it’s undeniable that Washington State’s government has largely bent over backward for Boeing during the ‘00s.

    Washington’s not alone in doing so. Ask Kansas about its tax incentive-based efforts to land KC-46 work. I’m not saying such incentives are always bad. On the contrary, I’m sure they pencil out in some circumstances. But claims that “bureaucrats” in WA and other states are bleeding Boeing to death with taxes are meritless.

  9. Funny… people want less connections between companies and politicians then cry when that stops.

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