Boeing incentive package advances in Missouri Senate after supporters jam hearing
by Virginia Young, St. Louis Post Dispatch
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JEFFERSON CITY • With potentially thousands of jobs hanging in the balance, legislators took the first step Tuesday evening toward offering up to $1.7 billion in state incentives to lure a Boeing Co. plant to St. Louis County.
A Missouri Senate committee endorsed the package after a two-hour hearing that drew an overflow crowd of supporters. The 8-2 committee vote means the fast-moving bill is ready for debate by the full Senate today.
Gov. Jay Nixon called the Missouri Legislature into special session to consider the package, which is due to Boeing next week. Missouri is among about 15 states vying to be the home of production for Boeing’s new 777X commercial jet.
Witnesses at the hearing repeatedly characterized the incentive package as a no-lose proposition for the state because Missouri wouldn’t offer the tax subsidies unless jobs were created.
Winning the assembly plant could generate as many as 8,000 full-time jobs, Nixon has said. But even if Boeing makes only the plane’s wing in St. Louis County, the project could bring up to 3,000 jobs, said the bill’s sponsor, Sen. Eric Schmitt, R-Glendale.
“This is truly a transformational opportunity for good, high-quality, high-paying jobs that, quite honestly, at this scale, we have not seen before,” Schmitt said.
St. Louis Mayor Francis Slay said Boeing’s track record of building military planes in the St. Louis area shows the company would be a solid corporate citizen.
“This has to do with a company we all know,” he said. “This is a reliable company.”
While the St. Louis area would get direct benefits from assembling the next-generation passenger plane, Slay said spinoff benefits would flow to suppliers across the state.
Boeing paid $836 million to 684 suppliers in Missouri in 2012, including 25 suppliers in southern Missouri’s 8th Congressional District, the mayor said.
Some senators questioned whether Boeing might cut existing jobs in St. Louis County as military aircraft production slows, leaving the state without a net gain even if it secures the 777X jet.
Supporters acknowledged that possibility, but said the alternative was a loss in jobs.
“The risk is, we can’t just stand still,” said Chris Pieper, a senior legal and policy adviser to Nixon. He said winning the commercial jet business could provide a “bridge to more defense work.”
The skeptics peppered Nixon’s staff with questions about the economic model that projects Missouri would get more than a dollar back from every dollar it invests in the project.
“You’re making the point over and over again, that this is a net-positive return, that there’s no risk to the state at all,” said Sen. John Lamping, R-Ladue. “It begs the question, why put a cap on the program” if it’s such a moneymaker?
Under Nixon’s proposal, the state could pump as much as $1.7 billion into the aircraft facility over 23 years, depending on how many jobs it created.
In a conference call with reporters Tuesday, the governor said “it’s important to remember there has to be a return on investment” for the incentives to be triggered.
Boeing is on a tight timeline, because it already has more than 259 orders for the 777X and plans to deliver the first planes in 2020. A Machinists union in Washington rejected a proposed deal last month that would have kept the work in the Seattle area.
Labor groups said they anticipate no such hurdles in Missouri.
Mike Louis, secretary-treasurer of the Missouri AFL-CIO, said machinists here “look forward to working with Boeing” and in fact, have already accepted contracts with conditions similar to the one rejected in Washington.
The only opposition at the Senate hearing was voiced by Carl Bearden. He is a lobbyist for United for Missouri, a nonprofit group that lobbies for conservative fiscal policies.
Bearden questioned the economic assumptions for the bill, saying the Legislature was being asked “to make this huge decision based on very little information in a very short period of time.”
Joining Lamping in voting “no” was Sen. Will Kraus, R-Lee’s Summit. Kraus wanted to offset the additional tax subsidies with cuts in other tax credit programs. However, Nixon discouraged that move by narrowly tailoring the special session’s agenda.
