JLARC presented its 2024 review of nine tax preferences for Washington’s aerospace industry to the House Finance Committee on Jan. 14 and concluded the preferences continue to reduce costs and support the industry’s presence in the state but leave uncertainty over whether they meet legislative expectations for job growth and workforce development.

Pete Van Moorsil said the nine preferences—a mix of preferential B&O rates, tax credits, sales-and-use exemptions, a property-tax exemption and a leasehold-excise-tax exemption—are estimated to save $205 million in the 2028–29 biennium. The largest preferential manufacturing rate previously available was repealed after a World Trade Organization dispute, Van Moorsil said, which reduced beneficiaries and savings compared with earlier years.

“Washington continues to have a significant aerospace manufacturing industry,” Van Moorsil said, noting industry employment of more than 73,000 workers in 234 establishments and an average aerospace wage of roughly $127,000 in 2022—among the highest stateside. JLARC found that while the preferences lower the effective tax rate and reduce business costs, the agency could not verify that the preferences, by themselves, produce the desired level of aerospace employment because the Legislature has not set a specific employment metric.

JLARC recommended clarifying legislative expectations for aerospace employment and suggested returning to the standard 10-year review cycle rather than the current five-year cycle for these preferences, given the consistency of findings across reviews.

Committee members asked about wage calculations, the effect of the WTO ruling that triggered the repeal of a preferential rate, and the scope of aerospace NAICS definitions for employment counts. Van Moorsil and staff offered to provide supporting data from the Bureau of Labor Statistics and state employment records on request.