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OLYMPIA — A bitter fight between Washington business interests may be headed for the November ballot as homebuilders try to repeal a new law that raised their taxes but cut Boeing's — a tax break builders say came from Boeing's selfish hunger for special favors and Republican "turncoats" who helped it happen.

A referendum petition filed by the Building Industry Association of Washington (BIAW) is fueled by long-standing discontent among some of the state's smaller businesses who think Boeing bullies its way in Olympia.

Now the aerospace giant has run up against the "Bully Boys of Olympia," as the BIAW was once labeled by Seattle Weekly.

The BIAW referendum would repeal most of a bill passed by the Legislature this year that rewrote unemployment-tax law. Besides Boeing, the change helped other industries, including restaurant and retail.

The law adjusted unemployment-tax rates to reduce costs to businesses that pay more in taxes each year than the amount of benefits paid to their unemployed workers. At the same time, it raised rates for industries whose unemployed workers earn more in benefits than the businesses pay in taxes.

Unemployed workers in the highest rate class, including homebuilders, took out $1.8 billion more in benefits than the businesses they worked for paid during the past seven years.

Tom McCabe, executive vice president of the BIAW, said the benefits are unreasonably generous — including payments to people who leave a job voluntarily — and it is unfair to raise builders' taxes to pay them.

"Our members are very angry about having to absorb a massive tax increase in this time of economic recession," he said. "I actually think they are doubly angry because they not only have to absorb a massive tax increase but the government is using the tax increase to give Boeing a tax break."

The bill also extended unemployment benefits to laid off Boeing workers. That section of the law would not be covered by the referendum.

Support from the Boeing Machinists union helped the bill win passage.

The builders are not alone in their opposition to the new law. Small business groups, including the National Federation of Independent Business, will join the referendum effort.

The BIAW's chief lobbyist has filed two versions of a referendum with the Secretary of State's Office. The BIAW needs 98,867 signatures of registered voters by July 5 to qualify the referendum for the November ballot. McCabe said paid signature gatherers would help volunteers circulate petitions.

The builders also are sponsoring a referendum to repeal a law that gave public employees the right to bargain for wages and benefits.

McCabe has been a longtime critic of Boeing's lobbying efforts and says the company should have worked with other businesses to fix the entire unemployment-insurance system, not just cut its taxes.

"Boeing has no allegiance to Republican principles of free enterprise, entrepreneurship and personal responsibility," McCabe wrote to BIAW members in a recent newsletter. "Instead, the company's only motivation is to selfishly win special favors and tax breaks from the big government it helped create.

"If there's any fight Boeing ever fought on principle, what is it?"

Boeing spokeswoman Chris McHugh said the company was just one of many businesses that endorsed the measure, House Bill 2901.

She said the bill was "the first step toward providing a more fair and equitable tax system for businesses and keeping the unemployment system solvent. This bill was not meant to be a total reform of the system."

Boeing's support was important to passage of the bill, said Stan Bowman, director of government affairs for the Washington Restaurant Association, but it was only part of a broader coalition.

He said many small businesses would be helped by the bill, including restaurants.

"These are the mom-and-pop restaurants struggling to survive, and by getting some equity in the system it'll give them some relief," Bowman said.

Carolyn Logue, director of the National Federation of Independent Business, which supports the BIAW's referendum, said other industries were included in the bill as "feel good" to get the bill passed.

"It's just such a blatant political fix," she said. "And by doing this they have screwed up the potential for a real fix."

McCabe also is unhappy with 24 Republicans in the House and Senate who voted for the bill. The bill likely could have been stopped in the Senate if all Republicans had voted against it.

While most of the votes were by Democrats, McCabe said he was angry at Republicans because the builders have long supported the party and its candidates.

"We believe that really the main reason for the Republican party to exist is to reduce taxes," McCabe said, "and when they're running for office they tell us that is their main principle.

"A minority of them peeled off and voted to raise our taxes. And that was disappointing."

The BIAW newsletter asks, "Are your Republican legislators turncoats?"

McCabe says he thinks it will be difficult for any of the 24, who he listed in the newsletter, to receive campaign contributions from builders this year.

Being called a turncoat particularly bothered Rep. Jack Cairnes, R-Renton. He is a builder, though not a member of the BIAW.

"For eight years I've done all their heavy lifting," Cairnes said. "Anything they asked me to do, even if it was really outrageous — and some of it was and I knew I'd take a beating from the environmental community — I did it anyway.

"Now for Tom McCabe and the BIAW to call me a turncoat on one vote, they better turn around and look to see who their friends are and see if they have any left."

David Postman: 360-943-9882 or dpostman@seattletimes.com.