| SACRAMENTO, Calif., July 3
SACRAMENTO, Calif., July 3 California lawmakers
on Thursday passed a tax credit meant to lure aerospace
companies working on a new stealth bomber to the state, but the
measure will benefit only one of two teams of companies fighting
to win the contract.
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
"Obviously, we felt that was an unfair advantage," said
Northrop Grumman spokesman Tim Paynter. "All we're looking for
is a level playing field."
Representatives for Lockheed could not immediately be
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 with Lockheed.
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 an effort.
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
"The state is actively pursuing opportunities to spur job
creation in manufacturing and aerospace," Rossi said through a
(Reporting by Sharon Bernstein; Editing by Ken Wills)