The plan to offer $420 million in tax breaks to an unnamed
aerospace company, said by both sides to be Lockheed Martin Corp,
exposed sharp divisions among Democrats and led many in the party's
progressive wing to vote against the measure.
"This is just more corporate welfare, ladies and gentlemen," said
Democratic state Senator Ben Hueso. "This is money we don't need to
pay out, leaving our state to people who don't need it."
News of the proposed tax credit, spearheaded by the economic
development office of Democratic Governor Jerry Brown, sparked ire
from another company competing for the $55 billion stealth bomber
contract, Northrop Grumman Corp, whose aerospace division is based
in Southern California and had already promised to build the planes
in the state if it won the federal contract.
"Obviously, we felt that was an unfair advantage," said Northrop
Grumman spokesman Tim Paynter. "All we're looking for is a level
Representatives for Lockheed could not immediately be reached.
It was not clear why lawmakers and the governor decided to offer
credits to one company and not the other. Campaign finance reports
for Brown and the bill's authors, Assemblyman Steve Fox and Senator
Steve Knight, did not show recent contributions as of July 3 from
Lockheed or Boeing Co, the primary contractor that has teamed up
But as supporters scrambled for votes, senate Democratic leader
Darrell Steinberg promised the legislature would also take up a tax
credit to benefit Northrop when it returns from summer recess in
August. Brown's representatives said the governor would support such
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Steinberg, who along with other lawmakers said wording in the bill
limiting the break to "subcontractors" referred to Lockheed, said
the tax credits would bring jobs.
"I don't like businesses
sometimes pitting states against each other," Steinberg said. "But I
also think we cannot afford to sit on our hands and not fight for
our economic future."
Mike Rossi, Brown's Senior Advisor for Jobs and Business
Development, said the tax credit is part of the governor's efforts
to encourage businesses to expand operations in California.
"The state is actively pursuing opportunities to spur job creation
in manufacturing and aerospace," Rossi said through a spokesman.
(Reporting by Sharon Bernstein; Editing by Ken Wills)
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