Boeing gets double win as Legislature finishes work

OLYMPIA — Boeing, its unions, homebuilders and other businesses won a major rewrite of the state's unemployment-insurance system last night because of a strategy that cleaved labor, made peace among warring businesses and took advantage of the slipstream behind Washington's pursuit of a new Boeing plant.

Along with the unemployment changes Boeing wanted, the Senate gave final approval to a package of Boeing tax breaks worth more than $3 billion over 20 years. Those cuts would be implemented only if Boeing chooses Washington as the site of a final assembly plant for its proposed new jetliner, the 7E7.

The Senate voted 42-1 to approve the tax cuts, clearing the way for the Legislature to adjourn for the year, which it did at 8:30 last night. Sen. Adam Kline, D-Seattle, was the lone "no" vote. The House approved the tax breaks Tuesday night.

Both bills go to Gov. Gary Locke, who is eager to sign them.

The unemployment-insurance victory for business came despite the best efforts of House Speaker Frank Chopp — the legislature's most powerful member — the Washington State Labor Council and the dozens of union members who rallied here for three days.

The victory was huge.

A year ago, with business split but labor unified, a rewrite of unemployment insurance would have saved businesses about $10 million a year — if homebuilders had not won a voter repeal of the measure in last fall's election. The changes approved last night will save business more than $100 million a year.

The tenfold win had business lobbyists yesterday hoping they had created a template that could be used for future efforts, perhaps major changes to workers' compensation or liability and insurance law.

The House voted 57-33 last night to approve the unemployment bill that its leader had fought so hard to stop; 15 Democrats joined all of the Republicans present to pass the bill.

It was easy to spot the winners and losers.

When the vote came, business lobbyists whooped and clapped in the Boeing House — the company's bungalow across the street from the state House. The lobbyists spilled into the sun on the front lawn, hugging and patting each other on the back.

Across the street, about 20 labor-union lobbyists and activists gathered in a tent adjacent to the House chambers to watch the proceedings on television. Some sobbed or fought back tears, and others jeered at lawmakers who spoke in favor of the bill. Most just sat silently.

"It's a disgrace," Brad Larssen of Kirkland, an organizer for the carpenters' union, said after the vote. The Senate had approved the deal in the predawn hours yesterday. It was the first day of the Legislature's second special session; the first 30-day session ended at midnight Tuesday.

The Legislature also passed a new law setting up a two-year time limit for filing job-related hearing-loss claims. That bill is expected to save the state workers-compensation insurance fund $200 million in future claims. Locke had said the unemployment bill and the tax cuts had to be approved right away to meet the June 20 deadline for states to submit bids to Boeing.

Supporters and opponents of the unemployment changes said wooing Boeing was a powerful force behind the deal approved last night.

"It took on immediate urgency because of the 7E7," said Brian Minnich, legislative director of the Building Industry Association of Washington (BIAW), the homebuilders' lobby.

No lawmaker wants to get blamed for losing Boeing.

Rick Bender, president of the Washington State Labor Council, said business lobbyists "played that to the hilt. ... They took advantage of that and now hundreds of thousands of families are going to hurt because of it."

Early in negotiations with business, labor was put in a difficult position by Boeing's announcement that it would take bids from states interested in the 7E7 plant. Suddenly Locke was saying he'd do whatever it took to win the 7E7. He pressured lawmakers to do the same.

"We had a gun put to our head," Bender said.

The labor council was not fighting just business but some of its members — the unions representing machinists and engineers at Boeing.

Machinists union political director Linda Lanham said passing unemployment fixes clearly helps in the 7E7 derby. She said the machinists have no hard feelings over their split with the state labor council.

But for the unemployment deal to stick, business interests had to mend divisions.

Last year BIAW spent about $378,000 on a referendum campaign to repeal the unemployment bill passed with support of Boeing, labor unions and other big businesses. Those businesses spent $213,000 in an unsuccessful effort to defeat the measure on the November ballot.

In December, the Association of Washington Business brought the two sides together to look for changes that could satisfy a broader range of businesses, said Tom Dooley, the group's director of tax and fiscal policy.

The builders' victory in November strengthened their political hand both within the business community and with lawmakers. Dooley and Minnich said it was key that Boeing agreed not to pursue an unemployment-insurance deal on its own.

"We think it happened because Boeing stood with the business community and used their leverage to get a deal that helps everyone," said Minnich.

Reporters Luke Timmerman and Ralph Thomas contributed to this report.

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