Mo. Senate passes tax incentives for Boeing
Wednesday, December 4, 2013
Missouri’s enticement package for a new Boeing assembly plant cleared its most daunting obstacle Wednesday as state senators passed a plan that could offer up to $1.7 billion of incentives over two decades.
The Senate’s 23-8 vote in a special session sends the measure to the House, where final approval could come as soon as Friday.
Then it will be up to Boeing to determine how Missouri’s offer stacks up.
Missouri is among more than a dozen locations invited by Boeing to bid on assembling all or part of its new 777X airplane. The cross-country competition includes states such as Alabama, South Carolina and Utah and comes after union machinists in Washington state rejected a proposed Boeing contract that sought concessions on benefits.
While his home state lawmakers were considering incentives, Missouri congressman Blaine Luetkemeyer met Wednesday in the nation’s capital with Boeing CEO W. James McNerney Jr.
“He didn’t tip his hand as far as whether Missouri was ahead or behind in regards to the decision to be made. Obviously, they’re going to wait until all the proposals have been received,” Leutkemeyer told The Associated Press. “But he was very supportive of the people who work for Boeing right now in St. Louis.”
Missouri already makes military aircraft in the St. Louis area, and Boeing employs about 15,000 people in Missouri, making it the state’s fourth-largest private sector employer.
A Boeing spokesman has said the company isn’t commenting about specific proposals being developed by states, which are due by next Tuesday.
Most states are crafting their proposals privately. But Missouri Gov. Jay Nixon called a special session because he wanted to offer more incentives than currently allowed under state law.
Nixon, a Democrat, issued a written statement Wednesday praising the Senate’s bipartisan vote for the incentives. Majority party Republicans split in the Senate, with 15 supporting the legislation and eight opposing it. All eight Democrats who were present voted “yes.”
The legislation “will put Missouri in a strong position to win the Boeing 777X and create thousands of new high-paying jobs across our state,” Nixon said.
Boeing has said that the 777X should be larger — carrying as many as 400 passengers instead of 365 — and more fuel efficient than the current 777. It already is taking orders for the new airplane and is aiming to deliver the first jets by the end of the decade.
Under Missouri’s proposal, the amount of incentives Boeing gets would depend on the number of jobs created.
Supporters of the incentive package say Missouri could gain 8,000 additional Boeing jobs if it chooses to assemble the new commercial airplane in Missouri, and 2,000 to 3,000 jobs if Boeing decides to build only the airplane wings in St. Louis. Thousands of additional employees could be added at businesses that supply parts to Boeing.
Boeing could get an aggregate of about $435 million of incentives by 2040 if it adds 2,000 jobs in Missouri and up to $1.74 billion if it adds about 8,000 jobs, according to an analysis released by Nixon’s office.
The company also could receive a still unspecified amount of aid from local St. Louis-area governments.
“These are high quality, good-paying jobs that are around for a very long time,” said Sen. Eric Schmitt, R-Glendale, who sponsored the legislation. “These are the kind of jobs you want for your state.”
The Senate vote occurred after Nixon met earlier in the day with five Republican senators who had wanted to offset the Boeing incentives with reductions to existing tax credits benefiting the developers of low-income housing and historic buildings.
The senators who attended the meeting told the AP that Nixon assured them he would work aggressively on a broader tax-credit overhaul during the regular legislative session that starts Jan. 8. Although Nixon didn’t commit to a specific action, the senators expressed hope the governor would use his executive powers to slow down the issuance of tax credits — thus exerting leverage on reluctant lawmakers to pass a tax-credit overhaul bill that has stalled in years past.
“I think the governor is on board in terms managing tax credits in such a way that people realize he’s serious about reform,” said Sen. Ed Emery, R-Lamar, who was in the meeting.
Some senators who voted against the Boeing incentives also questioned the wisdom of tailoring tax breaks for a specific company instead of cutting taxes for all businesses or individuals. Nixon vetoed a broad-based income tax cut earlier this year, and Republican legislative leaders are expected to push again in 2014 for another general income tax cut.
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