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California bill would provide bomber tax credit for Northrop Grumman

California Assembly unanimously OKs a nearly half-a-billion dollar potential tax credit for Northrop Grumman
Lockheed will get a big California tax credit should it win a new bomber contract. Northrop Grumman may too
Bill would give Northrop Grumman big tax credit should it win bomber contract and build aircraft in California

With almost no debate, the state Assembly on Monday unanimously approved a nearly half-a-billion dollar potential tax credit for Northrop Grumman Corp. should it win a new Air Force bomber contract and build the aircraft in California.

It now is back in the state Senate, where a similar result is expected next week before the proposed legislation goes to the governor for his expected signature.

The bill is being rushed through the Legislature after it became apparent in June that lawmakers were about to approve a potential tax break for Lockheed Martin Corp., which together with Boeing Co., is competing for the same defense contract. Gov. Jerry Brown signed the Lockheed measure July 10.

When Northrop cried foul, lawmakers quickly promised to approve a similar tax break, contingent on the aerospace giant's winning the contract.

California should be the big economic winner if either company is successful. Though neither company is headquartered in California, Northrop and Lockheed, a prime Boeing subcontractor, have pledged to build much of the new generation of stealth bombers at factories in Palmdale, with support from other manufacturing facilities around the state.

Supporters of the Northrop legislation stressed that snagging the $55-billion contract would significantly boost the Golden State's economy by directly creating about 1,100 well-paying jobs, the paychecks of which would help indirectly foster an additional 5,500 positions.

"This bill will help maintain California's position as a national leader in the aerospace industry," said Assemblyman Al Muratsuchi (D-Torrance), who presented the measure shortly before it passed on a 73-0 bipartisan vote.

The tax credit bill, SB 718, by Sens. Richard Roth (D-Riverside) and Stephen Knight (R-Palmdale), has two components. The first authorizes local governments to offer up to 15 years of property tax rebates to manufacturers that invest large amounts of capital to create many jobs. The bill also provides a corporate income tax credit from 2015 to 2030. The credit is calculated using a formula equal to 17.5% of qualified wages paid by a taxpayer to full-time employees.

marc.lifsher@latimes.com

Twitter: @MarcLifsher

Copyright © 2014, Los Angeles Times
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