California Senate approves property tax break for space firms

SACRAMENTO — Private space companies, such as SpaceX in Hawthorne, would get a local property tax break on launch vehicles, fuel, satellites and other gear under a bill approved overwhelmingly Thursday by the state Senate.

The proposal, AB 777 by Assemblyman Al Muratsuchi (D-Torrance), would create the exemption from local property taxes for a 10-year period that would end Jan. 1, 2024.

Legislation is needed to modernize the state's tax code to encourage companies such as billionaire Elon Musk's SpaceX to build their rockets and spacecraft in California, Muratsuchi said.

"These private companies are not only creating the most advanced space vehicles but are also significantly contributing to the state's economy and our local communities," the assemblyman said. "Despite the groundbreaking advances made by the aerospace industry, California has yet to adapt modern tax policies that reflect realities of this burgeoning sector."

SpaceX asked lawmakers to clarify its tax status after the Los Angeles County Assessor audited the company in 2012 and issued an assessment dating to the 2007-08 fiscal year. SpaceX is appealing the tax bill.

SpaceX — whose formal name is Space Exploration Technologies Corp. — is not the only backer of Muratsuchi's bill. Proponents include Aerojet Rocketdyne Inc., Lockheed Martin Space Systems Co., the Mojave Air and Space Port, Northrop Grumman Aerospace Systems and the Commercial Spaceflight Federation.

The only listed opponent is the Santa Clara County Assessor Lawrence Stone, who argued that the special tax break sets a bad precedent by encouraging corporations to bypass the local property tax system and appeals process.

The bill passed the Senate on a 32-2 vote and cleared the Assembly in January 69 to 5. It is expected to go to the governor after receiving Assembly concurrence in Senate amendments.

Twitter: @MarcLifsher

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