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August 18, 2014

Brown extends tax credit to Northrop Grumman

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

Brown’s office announced Aug. 15 that he signed SB718 by Sens. Richard Roth, D-Riverside, and Sen. Stephen 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.

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.

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. The governor signed the fast-tracked AB2389 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.

SB718 sailed through the Legislature this week with a 73-0 Assembly vote Aug. 11 and 32-4 Senate vote Aug. 13.

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

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. AP




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