Boeing gets huge tax break in San Antonio 787 Dreamliner contract

Boeing gets huge tax break in San Antonio 787 Dreamliner contract
Photo illustration by Chuck Kerr

Corporate welfare can feel like an abstraction, until it lands on top of you. Such has been the case of Boeing's decision to have six of the much ballyhooed 787 Dreamliners refurbished at Port San Antonio. In March, Boeing selected San Antonio for the so-called incorporation work. The same month, state lawmakers Harvey Hilderbran and Trey Martinez Fischer filed HB 3727 in the Texas House. The bill, signed by Governor Rick Perry in June, directs the Bexar County Appraisal District to tax the aircraft at a mere 10 percent of appraised value in exchange for bringing the work home to San Antonio.

As originally struck about a year and a half ago, the deal called for each of four Dreamliner aircraft valued then at $165 million ($660 million combined) to be appraised at a mere $66 million apiece – creating a value loss of $594 million. The loss in taxable value equates to about $16.5 million for county jurisdictions — including South San Antonio Independent School District and Edgewood Independent School District, among the county’s poorest, confirmed deputy chief appraiser Mary Kieke of the Bexar County Appraisal District.

Roughly 9 percent of the local Boeing plant is in South San ISD territory, while 91 percent is within the area served by Edgewood ISD. At the lowered valuation, South San stands to lose about $750,000 in property taxes each year under the agreement. Edgewood loses a staggering $7.8 million.

The deal is about to be updated to include six Dreamliner planes with an upped list value of some $200 million apiece, Kieke said. Naturally, the loss in taxable value to taxing entities like the school districts also will grow accordingly.

Local Boeing plant spokeswoman Wendy Parker defended the move, noting it enables state-based aerospace companies to diversify into commercial aviation. “In other words, it encourages the development of commercial aerospace work that would not otherwise be expected to come to Texas,” she wrote in an email. The bill “helped define a fair value on a non-finished product, which helps develop the commercial aviation industry across the state.”

Oh, and another thing — this is not corporate welfare: “HB 3727 is not an exemption or an incentive for Boeing,” Parker added. “Texas law did not define how to value an in-production aircraft undergoing change incorporation and refurbishment work and HB 3827 simply provided the methodology.”

And the loss to schools?

“The school districts will not lose any money given that this is new business and not a tax break,” Parker asserted. Rather, it is “simply an appraisal methodology for in-production commercial aircraft – work that was not previously performed at Boeing’s San Antonio facility.”

Got all that?

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