The Joint Legislative Audit and Review Committee reported that Washington’s nine aerospace-related tax preferences continue to reduce the cost of doing business in the state and help maintain aerospace industry presence and wages, but JLARC said it cannot determine whether the preferences meet any undefined legislative employment targets.

Pete Van Moorsil, JLARC staff, told the House Finance Committee the nine preferences—comprising preferential B&O rates (some contingent on international disputes), B&O credits, sales-and-use exemptions, a property tax exemption and a leasehold excise tax exemption—are estimated to produce roughly $205,000,000 in biennial savings for 2028–29 if continued as structured. JLARC reported beneficiaries saved about $95,000,000 in fiscal 2022; prior to a 2020 repeal tied to a WTO ruling the comparable figure was $260,000,000 in 2018.

JLARC said Washington remains a major aerospace manufacturing state with 234 establishments employing more than 73,000 workers in 2022, the second-highest employment total among states behind California. JLARC reported that Washington’s aerospace average annual wage is about $127,000—among the highest states nationally—and concluded the preferences have consistently lowered effective tax rates and supported the industry’s presence.

However, Van Moorsil said employment has fluctuated and, because the Legislature never defined a specific metric for “maintain and grow aerospace employment,” JLARC cannot say whether current employment meets legislative expectations. The auditor recommended the Legislature clarify employment expectations or targets and consider whether to keep the five-year periodic review requirement for this package; JLARC recommended reverting to a ten-year cycle because past reviews reach similar conclusions.

Committee members asked about the WTO-driven repeal of a preferential manufacturing rate, wage calculations (average vs. median), industry employment comparisons with other states, and whether the 2022 wage data reflect new bargaining agreements; JLARC staff said the wage figures are calendar-year 2022 data reported to state unemployment insurance systems and are averages rather than medians.

JLARC recommended legislators consider clarifying performance metrics for employment and could judge whether frequent five-year reviews remain the best use of audit resources if conclusions are recurrent.