Missouri Senate votes for aid for Boeing 777x, now goes to House
This article first appeared in the St. Louis Beacon. - After several hours of discussion and debate, the Missouri Senate has voted 23-8 to approve an incentive package to encourage Boeing Co. to move the construction of its new commercial aircraft, the 777x, to St. Louis.
The measure now goes to the House. Legislators are attempting to meet a Dec. 10 deadline for approving the package and getting it to Gov. Jay Nixon, who initially proposed the incentives.
Senate President Pro Tem Tom Dempsey, R-St. Charles, said after Wednesday's Senate vote that "the incentives are crafted to require Boeing to build infrastructure and hire employees before they would reap any benefits in the form of tax reductions. This was a bipartisan effort to bring thousands of good-paying jobs to the Show-Me State.”
Critics contended that the plan unfairly offered tax breaks to one business, to the detriment of others in Missouri.
In a statement, Nixon praised the Senate's action. “The overwhelming bipartisan support for this bill demonstrates once again that when it comes to transformative opportunities like this one, Missourians know how to work across party lines to move our state forward," he said. "I look forward to working with the House to complete these important efforts in a timely and bipartisan manner.”
Read the Beacon's earlier story:
Missouri Republican and Democratic officials, business executives and labor leaders are engaging in a rare bipartisan blitz in their common quest to land a lucrative Boeing deal that could bring thousands of jobs to the region.
Gov. Jay Nixon, a Democrat, lauded Republican legislative leaders on Tuesday as he also outlined an agreement with construction labor unions in which their members would forgo overtime pay to build a new Boeing facility to handle production of its new commercial aircraft, the 777x.
The labor agreement contrasts with the union fight in Boeing’s home state of Washington that has prompted the company to consider moving the 777x production to another state. So far, more than a dozen states are competing for at least a portion of the 777x business.
U.S. Sens. Roy Blunt, R-Mo., and Claire McCaskill, D-Mo., released a copy of a letter the duo signed and sent this week to Boeing, which cites the “skill, commitment, innovation and tremendous work ethic” of the existing 15,000-strong workforce that the aircraft manufacturer already has in the state. Most of those workers are based at Boeing’s military-production operation near Lambert Field.
St. Louis Mayor Francis Slay and St. Louis County Executive Charlie Dooley were among a crowd of elected officials and development experts who showed up in Jefferson City for Tuesday’s two-pronged legislative hearings to discuss the Nixon administration’s proposed incentives to woo Boeing.
Nixon had called the General Assembly into a special session this week to act on the tax-break package, which must be forwarded to Boeing by Dec. 10. The centerpiece is $150 million a year in tax credits that would be awarded under four existing state programs to encourage job-creation.
His office’s cost-benefit analysis says the various incentives would cost the state $1.7 billion over the next 22 years, which would be more than offset by projected additional state tax income of $2.9 billion.
Those testifying Tuesday included Dan Mehan, president and chief executive of the Missouri Chamber.
“Whether Missouri can land the entire production line, or even just a part of it, this opportunity has the potential to be one of the single, largest economic development boosts our state has ever experienced,” Mehan told legislators. “The new Boeing jobs, coupled with the indirect growth from more than 600 Boeing suppliers across the state, many of which are Missouri Chamber members, would provide a net return of millions of dollars for Missouri taxpayers.”
Proposal could hit Senate floor on Wednesday
The state Senate could begin floor consideration of the measure as soon as Wednesday, said state Sen. Eric Schmitt, R-Glendale, who chairs the chamber’s Jobs and Economic Development Committee. Schmitt will handle the Boeing legislation in the Senate.
The plan calls for the state Senate to act first, perhaps reflecting the traditional challenges in that body when it comes to state tax credits. Some senators have sought for years to scale back the state’s tax-credit program, which now costs roughly $600 million a year in lost revenue.
But Schmitt said the fact that Nixon is seeking to simply bolster four existing tax-credit programs is making some senators more comfortable with the proposal.
The incentives wouldn’t kick in unless Boeing creates at least 2,000 additional jobs in the state over the next 10 years.
“As somebody from the St. Louis region, I thought this idea and the impact that it can have is one worth advancing,” Schmitt said. He cited the estimated 8,000 permanent jobs, and “tens of thousands of construction jobs, capital investment quite frankly that is very rare.”
“It could have an enormous impact,” Schmitt said. “It would just be a huge shot in the arm for our region and for our state.”
Schmitt said he believed that Missouri had a shot at landing the project or “I don’t think the governor would have called us in, if this wasn’t a serious attempt.”
Arguably Missouri’s strongest selling point is that it already is home to much of Boeing’s military production.
Schmitt said that Boeing also could benefit financially by expanding here, since Missouri’s corporate taxes were lower than those in Washington state.
Special-session agenda is narrow
The prospect of partisan sparring in the General Assembly may be curbed because the governor’s “call’’ restricts action to the four tax-credit programs that could be used to entice Boeing. As a result, legislators could not try to curb other tax-credit programs, or consider any extraneous proposals, which would appear to block action on such talked-about items as “right-to-work,” which would curb union rights in the workplace.
Nixon told reporters that his narrowly crafted agenda for the special session is aimed at “the need to stay focused.”
Nixon’s announced agreement with the construction-trade unions also may have been aimed at defusing any anti-labor talk about some Republican legislators.
Nixon told reporters during a conference call that the agreement would have construction workers on a schedule more beneficial to Boeing and forgoing overtime.
St. Louis Building and Trades Council secretary-treasurer Jeff Aboussie wrote that the accord stipulates that workers would be made available to Boeing 24 hours a day in three eight-hour shifts from the project’s start to finish. Typically, he wrote, “projects of this nature involve six 10-hour shifts.”
The letter was signed on behalf of the St. Louis Building and Construction Trades Council, the Eastern Missouri Laborers’ District Council, and the Carpenters District Council of Greater St. Louis.
“We believe that Boeing can find no better location than St. Louis for the construction of the 777X,” Aboussie wrote. “Currently, the St. Louis building trades have an abundance of workers immediately available to perform the necessary work on the 777X project.”
Nixon said during the conference call that the “aggressive work schedule” would “double the amount of work hours each week,” “triple the committed workforce” and “reduce construction, and thus costs, by at least a year.”
“By reducing the cost and time associated with building these facilities, this unprecedented commitment offers Boeing yet another compelling reason to locate production of the 777X right here in the Show Me State,” Nixon said. “It’s also a great example of how when it comes to competing for game-changing economic development projects, Missouri’s skilled workforce is one of the best advantages we have.”
The governor called unions “valuable partners in a competitive bid.”
Missouri nabbing the 777X project only became possible after the Machinist Union at Boeing’s operation near Seattle rejected a proposed contract. According to Bloomberg News,one of the major points of contention involved pension and health-care benefits.
The governor said he wouldn’t speak for union leaders in the St. Louis area, “but everybody is well aware of what occurred in Washington and well aware that moving forward here would necessitate a framework very similar to what’s in Washington. I think everybody from Day One in this process has understood that’s where we need to go.”
Officials cite trickle-down benefits
In their testimony, Slay and Dooley emphasized the job-creation stakes.
“This is a huge opportunity to have an impact not only on existing workers but in creating new jobs,” Dooley said. He cited economic-impact projections that estimate every new Boeing job could result in the creation of three other jobs outside the plant.
“One of the best stories here is the impact on small local business owners who will benefit from people spending money, eating out, doing home improvements and making new purchases all because they will have a job providing them with disposable income,” Dooley said.
Slay noted that Boeing already is Missouri's largest manufacturer and its third-largest employer. Just since 2000, the mayor said, Boeing has invested close to $500 million to create, expand or upgrade its Missouri facilities.
The upshot, Slay added, was that "this is a real company that has created real jobs for real families. Here in Missouri. We know what is at stake. We owe it to ourselves to take this seriously."