| SACRAMENTO, Calif.
SACRAMENTO, Calif. Aug 15 California on Friday
offered tax incentives to an aerospace company seeking to build
the next generation of stealth bombers, after controversy that
the state had earlier offered the valuable tax breaks only to
its main competitor.
The bill to expand a nearly $500 million tax break to
Northrop Grumman Corp that had previously been limited
only to Lockheed Martin Corp was signed Friday by
Democratic Governor Jerry Brown.
"This is a victory for fairness, the aerospace industry and
all Californians," said Northrop Grumman spokesman Tim Paynter.
Northrop Grumman, which headquarters its aerospace
operations in Southern California and had already committed to
building the planes there, was not initially offered the tax
Northrop Grumman complained, saying the tax credits would
benefit the team of Maryland-based Lockheed Martin and
Chicago-based Boeing Co in their efforts to win the
estimated $55 billion contract to build the new stealth bombers.
The plan exposed sharp divisions among Democrats, some
saying the credit amounted to corporate welfare, and others
saying it was unfair to offer the break only to Lockheed Martin,
which was working as a subcontractor to Boeing in pursuit of the
The initial bill, passed last month, did not mention
Lockheed by name, but said the tax credit would apply to
subcontractors working on the contract. Lockheed is the only
subcontractor in the running.
After a tense session on the senate floor, lawmakers agreed
to support the Lockheed credit only if a similar bill benefiting
Northrop was also introduced.
"As a legislature we committed to leveling the playing
field," said Democratic state Senator Richard Roth of Riverside,
a co-author of the Northrop bill. "The state of California is
not in the business of determining winners and losers when it
comes to the Department of Defense contracting process."
His measure does not name Northrop but expands the tax break
beyond sub-contractors to primary contractors.
It was not clear why the state initially offered credits to
just one company. Roth said he was told Brown's economic
development team did not know of Northrop's concern until the
Republican state Senator Steve Knight, co-author of the
Lockheed bill, also co-authored the Northrop measure.
"These extraordinary efforts show that the aerospace
industry is important to California," said Knight, who received
a $1,500 contribution from Lockheed in November, campaign
finance reports showed.
Lockheed Martin did not immediately respond to requests for
(Reporting by Sharon Bernstein; Editing by Lisa Shumaker)