Senator Steve Knight (R-Antelope Valley) presented Senate Bills 19 and 412 in committee today with the goal of retention and expansion of the aerospace industry in California.
SB 19 broadens the sales and use tax exemption for the space flight industry by granting a sales tax exemption for equipment and materials used to construct the facilities designed to launch a space vehicle. Currently, only the material and equipment on the space flight vehicle itself are tax exempt.
SB 412 creates sales and use tax exemptions for the aerospace industry in California. The bill creates an incentive for aerospace industries to continue to conduct manufacturing, and research and development work, promoting workforce retention and attraction while increasing California’s competitive advantage in the aerospace field. The measure promotes manufacturing of aerospace products while encouraging ground-breaking research and development.
“The aerospace industry supports more than 640,000 jobs throughout the state, while bringing in an estimated $500 million in annual state revenue to California alone,” said Senator Knight. “These jobs are a vital part of our economy and defense structure. California needs to take steps to ensure that these revenue streams and job opportunities stay in the state.”
The purpose of these measures is to encourage and protect the space flight industry in California. Other states, notably, Florida, Texas (home of NASA) and Alaska are in direct competition with California for space launch sites. Additionally, Alabama, Arizona, Colorado, Nevada, New Mexico, and Virginia have stepped up their efforts to attract the high-dollar space industry. Recognizing the disadvantageous business climate, aerospace companies are relocating, and as a consequence those jobs are leaving California. High tax liability has undermined the state’s ability to attract manufacturing businesses and create new jobs in the state.
“Investing capital in California will not only increase our technical knowledge, but it encourages innovation in the aerospace industry and in our state’s economy,” Knight continued.
Both Senate Bills 19 and 412 unanimously passed Wednesday in the Senate Committee on Governance & Finance on a vote of 7-0. They will be heard next in the Senate Committee on Appropriations to discuss the fiscal impact to California.