Bill Lucia, Washington State Standard

Standing on the picket line outside Boeing’s Everett plant on Friday, Phil Westburg said not much has improved for aircraft machinists in the Puget Sound region since 2008, the last time he and other members of his union walked off the job.

“We’re paying more now for a doctor’s visit and we lost our pension,” said Westburg, who was among roughly 33,000 International Association of Machinists workers who went on strike after voting to reject a Boeing contract offer on Thursday.

“What they’ve offered us now, if you’re asking my opinion, was really a poor attempt to get us to accept the contract. We would like to get our pension back,” said Westburg, who worked on the 787 production line before switching roles due to a workplace injury. “They have to make money in order for us to have a job here, but we want what’s fair to us — a better pay increase.”

The failed tentative agreement reached by union and company leaders last weekend contained a 25% wage increase over four years, improved health care benefits, plus a commitment to make the company’s next commercial airplane in the Puget Sound region. Workers sought 40% and argued that a provision eliminating annual bonuses ate into the wage hike.

On Friday, a federal mediator stepped in. The Federal Mediation and Conciliation Service said it would convene with the two sides, with meetings early next week.

“FMCS has been in contact with both IAM and Boeing to support their return to the negotiation table and commends the parties on their willingness to meet and work towards a mutually acceptable resolution,” the federal agency said in a statement on Friday.

The strike comes as the aerospace giant is on slippery footing. The company is faced with mounting debt, scrutiny over its safety record after a door plug blew out of a 737 Max earlier this year, and hundreds of millions of dollars in fines over deadly crashes in 2018 and 2019.

Boeing Chief Financial Officer Brian West told attendees of a Morgan Stanley investor conference in California on Friday that, in the near term, the company would “be laser-like focused on actions to conserve cash” and cautioned that the strike “will impact production and deliveries and operations and will jeopardize our recovery.”

“We’ve got a very complex situation that we’re solving,” he said, adding that financial impacts will be “dictated by the duration of the work stoppage.”

‘A strong union and a strong Boeing’

Political leaders responding to the strike Friday signaled support for the workers without casting aspersions on the terms in the latest contract offer.

The machinists’ action “reflects both long simmering tensions and the real desire for recognition that workers have carried Boeing on their backs during the last several years of missteps and failures,” said U.S. Rep. Rick Larsen, D-Everett, whose congressional district includes the company’s assembly plant in Everett.

He encouraged the two sides to resume negotiating.

“The community wants both a strong union and a strong Boeing,” Larsen said. “Those two things have been hand in hand for years despite their differences.”

Support for the strike was decisive. The union said 94.6% of voting members rejected the contract and 96% voted in favor of the strike. Most of the workers covered by the contract are in Washington, but some are based in Oregon and California.

“This is about respect, this is about addressing the past and this is about fighting for our future,” IAM District 751 President Jon Holden said Thursday before announcing the strike vote tally.

Holden accused Boeing of labor practice misconduct leading up to the vote, including coercive questioning, unlawful surveillance and unlawful promises of benefits. “Boeing has to stop breaking the law, it has to bargain in good faith,” he said.

Boeing noted Thursday ahead of the vote that average annual machinist pay would’ve climbed during the four-year contract to $106,350 from $75,608. That sum did not include earnings from overtime or a “zoom” increase to maximum pay that machinists receive after six years.

“The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members,” the company said in a statement following the strike vote. “We remain committed to resetting our relationship with our employees and the union and we are ready to get back to the table to reach a new agreement.”

For Boeing, the strike means a major disruption in production. The company says it has more employees in Washington than anywhere else in the world. The strike idled multiple facilities and fabrication sites around the Northwest, including those in Renton, Everett, Auburn and Frederickson in Washington, and Gresham and Portland in Oregon.

Work paused on three commercial airplanes, the 737 Max, 767 and 777, and three military aircraft, the KC 46A Pegasus refueling tanker, P-8 Poseidon patrol plane, and the E-7 Wedgetail, an early warning and reconnaissance plane.

The company’s facility in Everett is the city’s largest employer and a major economic driver in Snohomish County.

“I hope it doesn’t turn into a prolonged strike because it can have a devastating impact on working families and the local economy,” said state Sen. June Robinson, D-Everett.

Snohomish County Executive Dave Somers, a Democrat, echoed that view. “We know a long strike will be hard on workers, the company, and the region’s economy,” he said, adding that he supports “whatever brings about a fair and quick resolution.”

Somers said he hopes the pledge to build the company’s next airliner in the region makes it into a final contract.

‘Enough is enough’

U.S. Rep. Suzan DelBene, D-Wash., who has been in touch with parties on both sides, wrote in a social media post that striking machinists “decided they need more to continue powering our world-class aerospace industry.”

“It’s my hope that union leadership and Boeing will be able to address members’ concerns and reach a stronger, more acceptable contract offer that all parties can support,” she added.

When the machinists last went on strike in 2008 the walkout lasted about eight weeks and cost the company an estimated $100 million a day.

This time, the halt in airplane production comes as Boeing posted a quarterly loss of more than $1.4 billion in the second three months of the year and saw its debt rise to nearly $58 billion from $48 billion during that time.

In July, the company reached a plea deal with the federal government over plane crashes in 2018 and 2019 that killed 346 people. The agreement called for the company to pay a fine of at least $243.6 million and to invest $455 million in safety, quality, and compliance programs.

Wigberto Bello, an aircraft painter for nine years at Boeing who was on the picket line Friday in Everett, said workers are under pressure to meet production schedules.

“The schedule seems to take precedence over quality at times and so we’re just done, we’re pretty much finished with that,” he said. “Enough is enough. We want to put quality out, we know what it takes to get quality out while still satisfying the customer.”

“Despite what some of the leaders may say,” he added, “we’re the ones who are turning the wrenches, putting the paint on, staying up late and working the hours.”

Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence. Contact Editor Bill Lucia for questions: info@washingtonstatestandard.com. Follow Washington State Standard on Facebook and X.

The former clerk-treasurer in the tiny town of Morton, Washington, is accused of stealing upwards of $900,000 from the city over nearly nine years.

A state audit released on Monday found the clerk-treasurer misappropriated $937,584 from the city coffers between 2013 and 2021 using unauthorized ATM withdrawals and other methods – including taking customer cash payments that she did not deposit at the bank and writing city checks to herself and recording them in the city’s accounting system as vendor payments.

Morton, located in Lewis County, southwest of Mount Rainier, has about 1,100 residents and an annual budget of around $4.6 million.

The auditor’s office said it would refer the case to the Lewis County Prosecuting Attorney’s Office and that the city has filed a report with its police department, which is investigating the matter. The findings from the audit will be provided to law enforcement.

In a statement, the city said it has risk management insurance to cover stolen funds.

“The City knows that the community places their trust in the City employees who serve them and that this is damaging to that relationship,” the statement added. “For the sake of transparency and to protect that trust, the City wants the community to know that none of the City’s current employees were involved with stealing City funds.”

Donna Royle, Morton’s current deputy clerk, answered the phone at City Hall on Monday and said the city had no comment beyond the statement, citing an ongoing investigation.

The city’s clerk-treasurer served as a “backup cashier” for the deputy clerk-treasurer and was responsible for overseeing day-to-day city operations, including handling bank deposits and reconciling the city’s accounting system and bank statements, the audit report explains.

In 2021, the Morton City Council passed legislation eliminating the combined clerk-treasurer position and created standalone city clerk and treasurer jobs.

“With the elimination of the joint Clerk/Treasurer position, there was no longer a single person responsible for banking, bill paying, and payroll reconciliation,” Mayor Rick Mead, the City Council, and city staff said in a response included in the audit report.

The city said the former clerk-treasurer resigned shortly after the role’s job duties were split up. In the city’s statement, Morton officials said they “will be pursuing all legal options” to ensure she is prosecuted.

The audit report did not name the former clerk-treasurer, but the city in its statement did name the person accused of the theft. The Standard is not naming her because she could not be reached for comment and it was not clear whether any charges have been filed.

Investigators with the auditor’s office said they interviewed the former clerk-treasurer in May and she “took responsibility for misappropriating city funds.”

The audit report says the former clerk-treasurer began working for the city in July 2012 and drew attention during a scheduled 2014 audit for a $2,400 city check written to herself.

She said the $2,400 was a personal loan, according to the report, and the mayor at the time subsequently wrote to the state auditor’s office indicating that the city approved the loan.

“In January 2015, we recommended the City refrain from loaning public funds, and ensure that the Clerk-Treasurer repays the money in a timely manner,” the audit report said, noting that the latest investigation found that the $2,400 was eventually paid back.

The former clerk-treasurer also ran into trouble for telling the Department of Retirement Services she was no longer working for the city in 2019 and then withdrawing $23,837 from a retirement account – a move not allowed if she were employed. The department later found she was still with the city.

Unusual ATM withdrawals from the city’s bank account detected during a routine 2022 state audit led to the investigation that resulted in the findings released on Monday.

“What is so incredible in this case is that the leadership of Morton took no action when they had been informed of two different problems with the clerk-treasurer. We say, ‘trust but verify,’ for a reason,” State Auditor Pat McCarthy said in a statement.

“Blind trust doesn’t protect the public’s money. Proper controls do,” McCarthy added.

In a separate fraud investigation report, auditors investigated concerns related to a former Morton police chief’s credit card purchases.

The chief also had access to a bank account that was outside the city’s control but had been holding donations for police-related activities. Auditors found the police chief made $199 in personal purchases on a city credit card, as well as additional questionable purchases.

Morton’s episode marks the third six-figure loss of public funds by a Washington local government or state agency that the auditor’s office has reported this year. The others involved the state Office of Administrative Hearings and the town of Cusick.

Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence. Contact Editor Bill Lucia for questions: info@washingtonstatestandard.com. Follow Washington State Standard on Facebook and X.

A proposal headed to voters to repeal Washington’s capital gains tax would knock roughly a billion dollars a year from the state budget, money that would otherwise go to early learning and child care programs and school construction, according to new state estimates.

In 2023, the first year of collections, the tax brought in $890 million. The estimates show that eliminating it would leave similar-sized holes in the state budget going forward. But capital gains taxes are a volatile source of tax revenue, prone to up and down swings from year to year, which means that accurately modeling future revenue is difficult.

Initiative 2109 is on track to appear on this November’s ballot. It would repeal the 7% tax on capital gains over $262,000 (up from $250,000 for taxes due last year). These gains generally come from the sale of investments like stocks and bonds or business interests. The tax does not apply to real estate sales.

The lost-revenue estimates assume the Legislature approves the repeal during the current session and it takes effect by June. This is unlikely because Democrats control the Legislature but support the tax. The estimates are presented this way because the measure is an initiative to the legislature, meaning lawmakers could pass it instead of letting it go to voters.

During the 2025 fiscal year, which begins July 1, a projected $913 million would evaporate from the state’s budget if the tax were nixed. Between $941 million and $1.09 billion would disappear during fiscal years 2026 to 2029, according to the estimates, prepared by the state Department of Revenue.

To put that number in perspective, the state’s operating budget, which covers most day-to-day government operations, public schools and state colleges and universities, is around $69 billion.

Sen. June Robinson, D-Everett, wrote the capital gains tax bill that the Legislature approved in 2021. “If it’s repealed, it is a big hole in the budget,” said Robinson, chair of the Senate Ways and Means Committee. “We’re going to have to come back next year and deal with that reality.”

The measure is backed by the group Let’s Go Washington, a conservative political committee that gets financial support from hedge-fund manager Brian Heywood. But Republicans in the Legislature have aligned themselves with the initiative, along with five other measures the group gathered enough signatures to qualify for this November’s ballot.

Sen. Lynda Wilson, R-Vancouver, lead Republican on the Senate’s Ways and Means Committee, said that if the initiative passes, Democrats will have to find other ways to pay for the education and child care programs the capital gains tax supports. Wilson also noted the difficulties in estimating revenue from the tax given its volatility.

“There’s plenty of money in the budget,” she said. “It’s all about how you prioritize.”

The estimates for repealing the tax were included in a fiscal note released on Feb. 5.

It’s primarily wealthier people who pay the tax. Department of Revenue data through Jan. 3 shows that 3,354 taxpayers who filed returns made capital gains tax payments and that 333 of those payments were $240,000 or more and accounted for about $778 million of revenue collected so far.

Washington State Standard reporters Jerry Cornfield and Laurel Demkovich contributed to this report.Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence. Contact Editor Bill Lucia for questions: info@washingtonstatestandard.com. Follow Washington State Standard on Facebook and Twitter.