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Millions in tax credit even a score

Senate bill extends same privileges to Northrup Grumman as given to aerospace competitor

Posted: August 16, 2014 10:28 p.m.
Updated: August 16, 2014 10:28 p.m.

Gov. Jerry Brown has signed legislation that extends a $420 million state tax credit to aerospace giant Northrop Grumman Corp. after approving a similar deal for its competitor, Lockheed Martin Corp.

Brown’s office announced Friday that he signed Senate Bill 718 by Sen. Richard Roth, D-Riverside, and Sen. Steve Knight, R-Palmdale. It expands an aerospace tax credit that lawmakers approved in July for Lockheed Martin so it also applies to Northrop Grumman.

Both companies have facilities near Palmdale and are bidding for a $55 billion Pentagon stealth bomber contract.

“These extraordinary efforts show that the aerospace industry is important to California, and that we are serious about welcoming their business, job opportunities and continued innovation,” said Knight in a statement. “The economic benefits of this project to our state can be measured in thousands of new jobs.

“Offering our businesses the advantage of reduced costs will help us compete against other states who are determined to take our jobs and brain trust,” Knight continued.

SB 718 sailed through the Legislature this week with a 73-0 Assembly vote Monday and 32-4 Senate vote Wednesday.

“This is a victory for fairness, the aerospace industry and all Californians,” Northrop spokesman Tim Paynter said in an email.

Northrop Grumman said it would create 1,500 new jobs in Palmdale under the massive bomber contract, even without a tax subsidy. But the company objected to the tax credit being originally offered to only one bidder, saying the Legislature put Northrop Grumman at a disadvantage.

Only one of the companies would be eligible for the tax credit if it is awarded the contract and decides to build its facility in California.

Lawmakers last month approved the initial tax credit, at the request of Brown’s office, to benefit a joint bid being submitted by Lockheed and Boeing Co. The governor signed the fast-tracked Assembly Bill 2389 into law after his office assured Northrop Grumman that it would receive a similar deal.

That bill also included tax credits intended to lure a $5 billion Tesla battery manufacturing plant to California, although the Brown administration has refused to specify what precisely it gives to Tesla.

“California continues to lose aerospace contractors and other critical industries to other states willing to offer incentives, and I’m encouraged by this new effort to stem that tide,” Knight said.


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