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Brown signs tax credit bill

Posted: July 12, 2014 10:37 p.m.
Updated: July 12, 2014 10:37 p.m.

Legislation touted by Santa Clarita Valley lawmakers that would create tax credits for the aerospace industry and that also includes other tax incentives apparently designed to benefit electric car maker Tesla Motors Inc. has received Gov. Jerry Brown’s signature.

Brown announced Thursday that he signed Assembly Bill 2389, which created a multi-million dollar tax credit for aerospace contractor Lockheed Martin.

The legislation was introduced by Assemblyman Steve Fox, D-Palmdale.

“We have been focusing on economic recovery and job creation,” said Fox, in a statement. “This tax credit will help California gain and retain high-paying jobs for our people.”

In the statement, Fox said the bill will create 1,100 aerospace jobs in California and indirectly create 4,782 jobs in supporting fields.

“California is open for business,” Fox said. “The success of aerospace companies will spill over to supporting industries, and help pull our state out of the Great Recession completely.”

Fox represents the 36th Assembly District, which takes in portions of Canyon Country and north Saugus.

Another Santa Clarita Valley representative, state Sen. Steve Knight, R-Palmdale, was a principal coauthor of AB 2389.

“Dayton, Ohio, can have their bicycle shop, and North Carolina can have the site of the first powered, controlled flight, but California’s imprint on aerospace is unparalleled,” Knight said during remarks on the floor of the Senate. “And today we have an option, an option to move the ball forward, an option to keep aerospace in California, an option to be competitive.”

Knight, whose Senate district takes in central and eastern portions of the Santa Clarita Valley, also touted the impacts the legislation would have in terms of job creation in the state.

“The tax incentives within this bill include a cap along with a trigger mechanism that only applies if the contract gets to be in California creating job in California,” Knight said.

The other state legislators who represent the Santa Clarita Valley — Assemblyman Scott Wilk, R-Santa Clarita, and Sen. Fran Pavley, D-Agoura Hills — also voted in favor of the bill. Wilk was also a coauthor on the measure.

A legislative debate that lasted for hours July 3 over AB 2389 focused nearly entirely on the 15-year tax incentive for Lockheed Martin Corp., which is bidding for a $55 billion federal aerospace contract. Competitor Northrop Grumman Corp. complained it was unfair.

California is also one of five states competing for a $5 billion Tesla battery manufacturing plant, but Brown’s administration has largely declined to discuss what the state is doing to persuade the company to build it in its home state.

The tax changes, including the language helping battery manufacturers, were sought by the governor in the final days before the Legislature broke for its summer recess. That prompted the incoming leader of the state Senate, Sen. Kevin de Leon, D-Los Angeles, to call it a “jam job.”

The changes sought by the Brown administration included adding language covering tax credits for a range of industries, but no companies are specifically named. The word “battery” never appears in the bill’s language, but is referenced in an analysis prepared by the Senate Appropriations Committee dated July 3, the last legislative business day before the summer break and the same day lawmakers voted on it.

The analysis said tax relief would be available to companies that fall under federal NAICS manufacturing code 3359, which includes “battery manufacturing.”

“The publicly stated intent of the bill is to support the aerospace industry; consequently, it is unclear why NAICS 3359 is also included,” the analysis said.

The complex language of the bill appears to make Tesla eligible for the same tax credits as Lockheed Martin, but neither the bill’s author nor the offices of other lawmakers who worked on the legislation could explain exactly what sweeteners are now available to Tesla.

“At their request we put the change in,” said Fox’s chief of staff, Ann Turtle.

She referred questions about the Tesla tax credit to Brown’s GO-Biz Department, which submitted the language for AB 2389 but declined to explain what incentives are available to Tesla. The agency instead issued a statement saying it is dedicated to promoting manufacturing in California.


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