The Assembly has approved a bill offering tax credits to Northrop Grumman Corp. should the company build an advanced bomber for the Air Force – and do some work in the Antelope Valley.
The bill, SB 718, authorizes local governments to offer 15 years of property tax rebates to large manufacturers creating jobs, and provide for a corporate income tax credit for 15 years.
The bill is co-sponsored by Sen. Steve Knight, R-Palmdale, who represents the aerospace rich region of the Antelope Valley. It is seen as a response to legislation signed into law in July by Gov. Jerry Brown that would give tax breaks to Lockheed Martin Corp., which is bidding along with Boeing Co. on the Air Force bomber contract. Lockheed would be the prime subcontractor for Boeing.
The bill benefiting Lockheed, sponsored by Assemblyman Steve Fox (D-Palmdale), would offer credits over 15 years, capped annually at $25 million the first five years, $28 million the next five years and $31 million the final five years.
Both Lockheed and Northrop have facilities in Palmdale where assembly work on the bomber would be done if either company won the contract. The bill approved by the Assembly amended existing law to include prime contractors, such as Northrop, to receive the credits as well.
According to a legislative analysis of the bill, Northrop argued that it would be at a disadvantage if Lockheed received tax credits while it did not.
“Moreover, Northrop Grumman representatives contend that if their firm is awarded the prime contract, it will result in significantly more California-based jobs than if Lockheed Martin emerges as part of the successful bidding team,” the analysis said.
The bill, approved by the Assembly on Monday, now moves back to the Senate where it could be voted on as early as next week.